Download - Singapore Property Outlook 2014
Market Outlook 2014Challenges and opportunities What to look out for in the year ahead
Table of Contents 02
Preface 03
Glossary of Terms 04
Executive Summary 05
2013 The year in review 06
- Cooling Measures and the reduction
in property demand 07
- Transaction volumes take a dip 11
-Thefluctuatingnatureofprices 16
-WhyExecutiveCondoswerehighlysoughtafter 20
-Thevitalrolethatinterestratesplayed22
-Housingsupplysettoincrease25
-Propertyseekersweighin28
Forecast And now in 2014 32
-MoreHDBBTOsToomuchofagoodthing33
-HDBResaleMarketWhatgoesupmustcomedown37
-WherearedemandandpricesintheECMarketheaded41
-ThePrivatePropertyrollercoastercontinues47
-TheGuruViewforthe201453
Japan Follow the big boys 57
Why Thailand deserves a second look 59
UK Look outside London 61
Malaysia in 2014 Still a property hotspot or fading star 62
Galloping ahead into the New Year 64
About Us 68
Disclaimer 69
Credits 70
Table of Contents
2
PrefaceGreetings And a warm welcome to property enthusiasts everywhere
WeareverypleasedtoannouncethelaunchofThePropertyGuru Market Outlook 2014 eBook
ASingaporefirstthisbookistheculminationofouruniqueleadershippositioninpropertylistingsanexpansiveagentnetworkdeveloperpartnershipsndashaswellasrichconsumerandinvestorrelationships
LeveraginghighqualitygovernmentdataanditsownuniqueinformationPropertyGuruestablishedaDataAnalyticsDivisionwithasimpleobjectivetomakenewpropertyanalysisandinsightsavailableforpropertybuyerssellersinvestorsndashandforthosesimplywishingtounderstandthevalueoftheirownhomesorwherethemarketisheadingin2014
Thisdocumentanalysesandreflectsonthepropertymarketin2013andusesthisinformationtoprojectlikelypricingsupplyandpropertydemandndashandvaluetrendsin2014Italsoincludesindustryexpertopinionstoprovideacomprehensiveandrounded view
Youmayalsobeinterestedtolearnaboutthechangingpropertysentimentrecommendationsforthetoppropertypicksin2014ortheoutlookformortgageratesWhile2013provedtobeapivotalyearfortheSingaporemarketitsetpropertyvaluetrendsinplacethatarevitaltounderstandin2014
CoolingmeasurestheeffectoftransactionvolumesonthemarketaccesstocompetitivemortgagefinancendashwhatallthesewillmeanforpropertychoicesandthepricesthatpeoplecanexpectarepartofthecompletemarketpicturethatthiseBookrepresents
Ourhopeisthatyoursquollfindtheinformationusefulinterestingandinformativein2014-whicheverpartofthepropertycycleyoumoveintoNaturallywealwayswelcomeandencourageyourfeedbackAndremembertovisitPropertyGurucomsgtolearnmoreaboutspecificpropertiesmarketsandbreakingnews
Thankyou-andwewishyouthoughtfulandinformativereading
Steve MelhuishCo-FounderandChiefExecutiveOfficerPropertyGuru Group
3
Glossary of Terms ABSD Additional Buyers Stamp Duty
BTO Build-to-order
CCR Core Central Region
COV Cash over valuation
ECs Executive condominiums
HDB Housing Development Board
MAS MonetaryAuthorityofSingapore
MOP Minimum Occupation Period
MSR Mortgage Servicing Ratio
OCR Outside Central Region
PRs Permanent residents
psf persquarefoot
RCR RestofCentralRegion
e-SERS SelectiveEn-blocRedevelopmentScheme
TDSR TotalDebtServicingRatio
4
Executive Summary
uThecoolingmeasureshadtheirintendedeffectofreducing
demandndashslowingactivityandtransactionvolumesthenslowly
softeningprices
uThemeasureswerereflectedindecliningQ1andQ2volumes
followedbyatypicallageffectndashdecliningpricesinQ3ampQ4
2014 WiLL rEFLECT ThE MArKET TrENDS BEGUN iN 2013
uHDBsareexpectedtoseean8-11percentdeclineinpricesandadrop
inthenumberofpropertiestransactedby15-20percent
uPrivatenon-landedpropertiesareforecasttodropbyalesser6-8
percent and will also see reduced transaction volumes
uIn2014overallpropertysupplywillincreasestronglyndashbutthis
supplywillfocusonspecificpropertytypessuchasHDBsand
Executive Condos (ECs)
uOverthenextthreeyearsECswillexperiencealargeincreasein
supplyfrom2013levelsMuchofthiswillbein2015and2016
however2014isexpectedtoseealleviatedpsfpricepressurendash
duealsototheremovalofthefavouredpolicystatusofECs
WhAT DOES ThiS MEAN FOr YOU
uFirst-homebuyerswillbeprovidedwithmorechoicein2014
due to the commitment to increase supply dramatically and
existing developer plans to supply more ECs
u Upgraders may increasingly adopt a more relaxed wait-and-see
approachtothemarketasnewsupplydecliningpricesand
coolingmeasuresreducedemand-andpricessoften
uInvestorsareexpectedtobemoreselectiveinSingapore
astheperceptionofthemarketbeinglsquofullypricedrsquondashand
attractiveoverseasoptionsndashremovetheurgencytopurchase
2013wasapivotalyearfortheSingaporeanpropertymarketdisplaying
acharacteristicrelationshipbetweendecliningtransactionvolumesand
laterpricedeclines
5
PropertyGuru Market Outlook 2014 6
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LastyearsawfundamentalchangesinSingaporersquospropertymarketwhich
havelaidthegroundworkforthemarketwecanexpecttoseeduring2014
Ofparticularimportanceduring2013were
u Government cooling measures
u Declining property transactions
u Average time to transact property increased
u Propertypricespeakedthendeclined
uInterestratesbottomingout
u ImmigrationPopulationgrowth
uIncreasedpropertysupply
uSentimentsaboutpropertyaffordabilityslowlyshiftingfromless
to more positive
2013The year in review
Eachofthesedevelopmentsimpactedthemarketinturnandwillcontinue
toaffectthemarketwellinto2014Thisreportlooksatthesefactors
separatelyandwhattheymeanforthemarketItalsoconsidersthelikely
consequencesndashandofferstheGuruViewonthemarketandwhatcanbe
expectedfortheremainderof2014
2013R E V I E W
coolingmeasuresand the reduction in property demand
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 8
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Cooling measures and the reduction in property demand
n The double threat of Total Debt Servicing Ratio (TDSR) and reduction of maximum loan tenure Introduction of the TDSR framework would mean a
property buyerrsquos total repayment obligations cannot
exceed 60 percent of hisher income This coupled with a
shorter monthly repayment period of up to 30 years for
bank loans severely limits the upgraderrsquosinvestorrsquos access
to capital and the total amount that heshe is allowed
to borrow
n Reduction of MSR to 30 percent for HDB loans This measure reduces the debt leverage in the HDB
market which drives prices higher Hence this new
restriction reduces demand and subdues prices for HDBs
n Rise in ABSD by 7 percent for purchase of more than one property This is a larger tax on purchasing more property reducing
demand and price pressures However transaction
volumes remained high after its introduction indicating
that it was a relatively weak measure for cooling the
market
n 3-year bar period on the purchase of HDB resale flats This measure discourages a large portion of PRs from participating in the market for resale HDBs
thereby reducing demand and upward pressure on prices for that segment
n Rise in Additional Buyers Stamp Duty (ABSD) for PRs by 5-7 percent for purchase of first or subsequent properties Another measure to reduce demand and the pressure on prices by making purchases more
expensive for PRs who make up about 10 percent of the total population in Singapore
n PRs who own a flat are disallowed from subletting the whole flat This measure removes incentive for PRs to lsquobuy-for-rentrsquo thereby reducing overall demand and
upward pressure on prices
n PRs must sell their HDB flats within six months of purchasing a private property This puts more resale HDBs on the market for sale thereby increasing their supply providing more
choice for Singaporeans and placing downward pressure on prices
z upgraderslocal investor
n Reduction of maximum loan tenure to 25 years for Housing Development Board (HDB) flats Shorter time period means prospective first-time home buyers need to meet higher
repayments each month
n Reduction of the Mortgage Servicing Ratio (MSR) to 30 percent for HDB loans Restricting the maximum amount of mortgage debt reduces demand in the market and
creates a safety margin for the borrower should mortgage rates increase
z First-time home buyers
z permanent residents (prs) and Foreigners
PropertyGuru Market Outlook 2014 9
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T his section can be summarised in two words demand reduction
Through these measures the governmentrsquos objective was to deliberately slow the market and also manage the price growth of certain property types Combined they have reduced the total mortgage debt in the market ndash or the leverage in the industry ndash by
The measures have curtailed property demand by reducing the individualrsquos access to new finance to purchase property This in turn has reduced the demand for property where the measures have been targeted
One immediate effect of these measures was to extend the time taken to sell property in the market Effectively this helped turn a sellersrsquo market into a buyersrsquo market More choices were available to those buyers that remained in the market
There was also less time pressure on the purchase improving the negotiating position for the buyer who is prepared to wait for the right property at the right price
Later sections in this report look at reduced demand and what that means for the market in 2014 a
Cooling measures and the reduction in property demand
2013 was the year where the government made strategic decisions to reduce the price inflationofHDBsandECsandtolimitthepurchaseofcondosbyforeigners
n Measuring debt ratios across both mortgage servicing and the total debt carried
n Calculating ratios at a higher industry-wide standard interest rate of 35 percent
n Altering these rules depending on how many properties are owned
n Targeting some buyer groups such as PRs and foreigners more than others
n Targeting specifically the HDB and EC segments
PropertyGuru Market Outlook 2014 10
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Cooling measures and the reduction in property demand
Source PropertyGuru Consumer Sentiment Survey
TransacTionVolumestake a dip
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 12
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f Co
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Share
T ransaction volumes are critical but often overlooked when measuring and forecasting trends in a property market In 2013 the declining trend in transaction volumes provided
just such a lsquoforward indicatorrsquo with volumes serving as a key market driver for prices in 2014
Put simply transaction volume trends usually precede and drive price trends Typically there is also a lag of around six months for this to occur This happens in most property markets around the world
When all other factors are stable transaction volumes can be a very reliable predictor of price growth or fall ndash and so volume serves as a very simple and extremely powerful forward view of expected price trends for the coming year
Perhaps this relationship is best illustrated by example for instance Hong Kong - Singaporersquos sister economy
HONG KONG An example of the relationship between transaction volume and price
Hong Kong has provided an arguably extreme but instructive example of the relationship between transaction volumes and future prices
Transaction volumes take a dip
This is useful when looking at the transaction volumes in Singapore in 2013 ndash and their likely effects going forward
In Hong Kong volumes declined significantly in mid-2013 Only some seven months later ndash in January 2014 ndash there was a double digit market price decline
Interestingly by the middle of 2013 journalists were already confident enough ndash based on the transaction data ndash to suggest that the drop in transaction volumes signalled significant price declines to follow
There are three relevant points for Singapore to note from this n The relationship between volume and pricing is a universal feature of property markets it is very likely that Singapore prices will be affected by the same relationships in 2014 n The relationship is solid enough for commentators to use it confidently as a price predictor n The lsquolag effectrsquo between volume and price changes is consistent and in a range typically of between five to nine months
PropertyGuru Market Outlook 2014 13
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HDB Resale Transaction Volumes in 2013
Looking first at HDB resales we see a distinct downward trend in volumes from Q3 2012 Over the course of 2013 transaction volumes continued to decline steadily
Again the relationship between transaction volume and price is clearly visible with prices peaking some nine months after volumes peaked Prices then begin to decline in response to the earlier falling transaction volumes The nine-month lag period is very evident
The significant transaction volume declines in 2013 of approximately 8 percent in Q4 2012 will continue to influence the prices of HDB properties at least well into Q3 of 2014
Condo Transaction Volumes in 2013
The chart below shows the total volume of transactions in the private market These are plotted against the Singapore property price index
Q1 2013 saw a decline in volumes from previous years Corresponding prices peaked in Q3 of 2013 ndash thus following the same pattern However the decline in volumes was not significant until the second half of 2013 As such the corresponding decline in prices was also only slight in the last quarter of the year
At the same time it is price that affects upgraders the most given the spate of cooling measures imposed on the market Therefore some upgraders may choose to play the waiting game and defer purchases until market forces dictate that prices drop even further - or when upcoming launches offer more attractive entry prices to offset the downside risks in property purchasing
The two weak quarters of Q3 and Q4 2013 strongly suggest renewed and much stronger downward pressure on prices in the first half of 2014
Transaction volumes take a dip
Source Housing Development Board (HDB)
PropertyGuru Market Outlook 2014 14
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Transactions have experienced a significant dip of about 58 percent since the middle of 2013 at least partly as a result of market sentiment turning cautious and the inability to actually borrow sufficient amounts to buy These effects have followed the announcement of tighter Monetary Authority of Singapore (MAS) financing regulations namely TDSR and MSR in late June and their earlier ABSD changes
Whatrsquos interesting is that not only have these measures resulted in consecutive quarters of decline in transactions in Q3 and Q4 but they have also caused total volume to return to 2008 levels in the condo market
Watch video Industry analysts share their inisghts into how the CCR RCR and OCR regions fared in 2013
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
PropertyGuru Market Outlook 2014 15
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Condo Transaction Volumes - By Area
Condo transaction volumes in 2013 did not match the record number of transactions seen in 2012 They declined some 386 percent ndash reflecting weakening buyer sentiments for private properties in part due to MAS regulations
However the drop in transactions differs from region to region The transactions in the Core Central Region (CCR) trended down the most severely registering an average of a 40 percent decrease quarter-on-quarter
Of particular note for the regions in 2013 n In Q2 2013 the Rest of Central Region (RCR) and Outside Central Region (OCR) regions grew transaction volumes by a healthy 44 percent and 18 percent respectively from the previous quarter ndash despite the introduction of the ABSD However the new TDSR and MSR in the second half of the year curtailed these volumes n In the RCR property seekers purchased a total of 2062 units in Q3 and Q4 2013 combined being half the level of a year prior While down significantly these volumes were a better result than those recorded by the CR and OCR n Despite most buying activity occurring in the OCR the area saw transactions decline from 4673 units to 3105 units between Q2
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
and Q3 2013 ndash and further drop to around 1430 by Q4 This made the volumes in Q4 just 30 percent (approximately) of the level they were six months prior n The CCR and the OCR regions recorded the largest percentage decline in volume from the peak in 2012 and through 2013 n Despite transaction volume ratios that would indicate that the OCR will experience the worst pricing pressures many analysts are expecting this effect to be offset largely by significant new demand in this area a
The FlucTuaTing nature of prices
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 17
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T he declining transaction volumes of the last two quarters of 2013 finally drove down price levels in Q4 Until Q3 2013 prices continued to defy gravity as the gap between prices
and their supporting volumes grew larger
From the previous sections we recognise that this is a text book market response to declining volumes where prices can remain elevated for two or more quarters before plateauing and then declining
The predictable relationship between volume and price
Many factors influence the lsquotime laggedrsquo relationship between volumes and prices However one of the strongest is also one of the simplest It is also the most constant in any property marketplace in the world It is human behaviour
Humans have an entirely understandable and common tendency to hold on to their properties rather than to accept lower offers They typically do this for many months as the offers dry up before reluctantly accepting lower offers ndash and recognising in turn that the market has moved
The fluctuating nature of prices
This behaviour helps explain why during the period of declining transaction volumes the average time it takes to sell a property also increases
Expanding time on market and declining transaction volumes are forward indicators of coming softness in prices ndash and usually go hand in hand Significantly both were apparent in the Singapore market in the latter half of 2013
During 2013 the Singaporean market behaved very predictably in response to the financing restrictions and corresponding transaction declines This augers well for predicting trends in 2014
Reading the 2013 data we can confidently expect to see further downward pressure on prices into 2014 ndash providing other factors remain stable Despite the fact that many other micro and macro factors can influence prices these forces will need to be particularly strong now to offset the well-entrenched price decline process that has been set in play by the declining transaction volumes of late 2013
PropertyGuru Market Outlook 2014 18
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2013 Price Outcomes HDBs VS Condos
From the chart below both property types saw price declines in 2013 However HDBs led the way ahead of condos From earlier sections we also recognise that the earlier price declines of HDBs were preceded by earlier transaction volume declines
By Q3 the HDB market had begun to sag under the new cooling measures ndash aimed specifically at curtailing the availability of mortgage credit to the market and placing other restrictions on purchasers However it was not until Q4 led by the mild declines in volumes that were seen in Q1 2013 that the condo market began to correct
These pricing forces were accompanied by the first of the new supply coming online - and some mild reductions in the rates of population growth Additionally restrictions governing the purchase of HDB resale properties by Singapore PRs introduced in August played a role in reducing effective demand for HDBs ndash and also contributed to their faster price declines
The largest contributing factors in 2013 were the new purchasing restrictions and the implementation of the MSR TDSR and ABSD policy changes These effectively reduced both the eligibility of individuals for new mortgage debt and increased the purchasing costs at the same time
The fluctuating nature of prices
Source Urban Redevelopment Authority (URA) Housing Development Board (HDB)
Locality-based fluctuations in the Condo market
In 2013 the price changes and transaction volume of condos varied between regions Below we compare the CCR the OCR and RCR
The CCR registered a decline of 21 percent while prices in the RCR and OCR increased by 03 percent and 68 percent respectively
PropertyGuru Market Outlook 2014 19
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The fluctuating nature of prices
Source Urban Redevelopment Authority (URA)
Significantly the CCR registered a price fall across the last three quarters of 2013 This fall also coincided with the introduction of the ABSD in Q1 which saw higher taxes on second and subsequent properties imposed on a majority of potential buyers including high-net worth individuals and foreigners
The downward trend of luxury properties appeared to be further exacerbated with the TDSR changes introduced in late June These resulted in a price fall of 22 percent by Q4 2013 a rate of decline that was seven times larger than the 03 percent decline in the previous quarter
The RCR region also witnessed price declines for the first time since Q1 2012 This was after the TDSR came into effect However unlike the CCR the RCR maintained positive market activity throughout 2013 This was spurred by the launch of units that were competitively priced at the level of affordability that buyers were comfortable with
The OCR continued to be the fastest growing market segment which contributed much to the increase in the overall private property price index In spite of a decline of 09 percent in Q4 2013 the first after almost two years the rate of price growth for the OCR in 2013 was 20 percent higher than the levels in 2012 - which registered only a 54 percent rise a
why execuTiVe condos were highly sought after
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 21
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Why executive condos were highly sought after
A report compiled by PropertyGuru found that the market value of fully and partially privatised ECs grew strongly in 2013
Examples from the report n Unit prices at Eastvale in Pasir Ris the first EC in Singapore increased from $454 per square foot (psf) in September 1996 to $909 psf by November 2013 This translates to a rise of 100 percent n Two partially privatised ECs also located in Pasir Ris - The Esparis and Whitewater - showed higher growth of 130 percent and 140 percent respectively In January 2002 the Esparis had a psf of $370 and reached $859 psf by November 2013 n Similarly prices at Whitewater which was completed in 2005 increased to $883 psf in December 2013 from an initial price of $362 psf in December 2002
These very strong 2013 price increases provide clear evidence to suggest why the government has elected to increase the supply of ECs in the market by an average of 330 percent over the next three years compared to 2013
Demand for ECs contributed strongly to rapid price growth
In 2013 the top ECs were concentrated in certain districts particularly in the developing areas of the west and the central areas of Ang Mo Kio and Bishan As detailed in the chart below we can see that for example in the case of Bishan Loft and Nuovo the values of these
specific properties are valued at approximately 150 percent of the average psf of private properties within the same district District 20
This chart indicates that some ECs in 2013 exhibited high psf growth and now command very high psfs
The scarcity of ECs in certain localities has enabled some to command higher psfs than the average private district psf However the age of the property psfs needs to be considered when making a determination A strong EC supply increased ndash and the policy changes that remove the EC-favoured status are expected to rectify some of the price inbalance going forward in 2014 a
Source Urban Redevelopment Authority (URA) PropertyGuru Analysis
The ViTalrole that interest rates played
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 23
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E xamination of the 2013 market requires an investigation of the important role that interest rates and the cost of capital have on the property sector
The interest rate ndash and the outlook for interest rates ndash represents the effective and expected cost of servicing the mortgage debt In 2013 the cost of servicing a mortgage remained at near record lows
The Singapore Interbank Offered Rate or SIBOR is set by the Association of Banks in Singapore Mortgage rates are effectively set by the base SIBOR rate plus a bank margin
The majority of mortgage debt in Singapore is variable ndash and where fixed it is fixed for a maximum period of five years This is significant as other countries allow longer periods of fixed term mortgages The US for example typically has 30-year fixed loans
Combined with the high personal debt levels carried by property buyers in Singapore the very high percentage of Singaporeans on variable mortgage rates makes the property market highly susceptible to changes in interest rates
As at 2013 the interest rate environment remained very accommodative being directly influenced by the bond buying (QE) of the US Federal Reserve Singapore effectively has its ultra-low interest rate environment driven by the US
The vital role that interest rates played
Though ultra-low rates were a primary driver in the 2013 market they cannot necessarily be assumed to remain as positive for the market during 2014
The chart below looks in more detail at the most recent rate influences on the market in 2013
Source Monetary Authority of Singapore (MAS)
PropertyGuru Market Outlook 2014 24
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The three-month SIBOR rate has fallen from approximately 18 percent in Q3Q4 2008 to the historically low values at present This most recent behaviour is uncharacteristically stable given that SIBOR rates have displayed much volatility over the past 25 years
The ultra benign interest rate environment over the last five years has increased the capacity of consumers and investors to borrow large sums cheaply This has allowed Singaporersquos property markets to flourish after the global market correction in 2009 ndash and for the very strong market to continue into 2013
ACCESS TO fiNANCE iN 2013
In 2013 the access to finance or the amount that people could borrow was curtailed by cooling measures This was a simple and efficient effort by the government to reduce effective property demand
Property sectors that attract the highest proportion of mortgage debt to finance the purchase were hit hardest by the measures
The sector that was especially susceptible to the cooling measures and showed the biggest correction was the HDB resale market a
While PropertyGuru does not see an imminent
reversiontothehistoricalinterestratemeanof
around3percentitdoesseeaslowtightening
processoccurringduringthecourseof2014
Howeverowingtothenascentrecoveryofthe
USeconomyweexpectthatrateswillriseonly
at a slow pace over the coming years
While this will not provide an additional stimulus
tothemarketndashasitdidin2013-itwillalsonot
beasignificantdragonthemarketInsummary
theinterestrateenvironmentof2013isexpected
tocontinueinto2014withonlyagradualrisendash
andwithaveragemortgageratesfinishingthe
yearbeneath225percent
Howeverthereducedaccesstofinancethrough
cooling measures is expected to continue to
beadragonpricesThesegovernmentmacro-
prudential policy measures remain the only
effectivefinancialinstrumenttheSingapore
government has to alleviate rising property
pricesIntroductionoftheTDSRframeworkis
recognitionofthisItwasagame-changerinthe
marketin2013andunlikelytoberelaxedin2014
The vital role that interest rates played
housingsuPPlYset to increase
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 26
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I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
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S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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le o
f Co
nte
nts
Share
iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
Tab
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f Co
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nts
Share
In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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f Co
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Share
Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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Share
The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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f Co
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nts
Share
Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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Share
ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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Table of Contents 02
Preface 03
Glossary of Terms 04
Executive Summary 05
2013 The year in review 06
- Cooling Measures and the reduction
in property demand 07
- Transaction volumes take a dip 11
-Thefluctuatingnatureofprices 16
-WhyExecutiveCondoswerehighlysoughtafter 20
-Thevitalrolethatinterestratesplayed22
-Housingsupplysettoincrease25
-Propertyseekersweighin28
Forecast And now in 2014 32
-MoreHDBBTOsToomuchofagoodthing33
-HDBResaleMarketWhatgoesupmustcomedown37
-WherearedemandandpricesintheECMarketheaded41
-ThePrivatePropertyrollercoastercontinues47
-TheGuruViewforthe201453
Japan Follow the big boys 57
Why Thailand deserves a second look 59
UK Look outside London 61
Malaysia in 2014 Still a property hotspot or fading star 62
Galloping ahead into the New Year 64
About Us 68
Disclaimer 69
Credits 70
Table of Contents
2
PrefaceGreetings And a warm welcome to property enthusiasts everywhere
WeareverypleasedtoannouncethelaunchofThePropertyGuru Market Outlook 2014 eBook
ASingaporefirstthisbookistheculminationofouruniqueleadershippositioninpropertylistingsanexpansiveagentnetworkdeveloperpartnershipsndashaswellasrichconsumerandinvestorrelationships
LeveraginghighqualitygovernmentdataanditsownuniqueinformationPropertyGuruestablishedaDataAnalyticsDivisionwithasimpleobjectivetomakenewpropertyanalysisandinsightsavailableforpropertybuyerssellersinvestorsndashandforthosesimplywishingtounderstandthevalueoftheirownhomesorwherethemarketisheadingin2014
Thisdocumentanalysesandreflectsonthepropertymarketin2013andusesthisinformationtoprojectlikelypricingsupplyandpropertydemandndashandvaluetrendsin2014Italsoincludesindustryexpertopinionstoprovideacomprehensiveandrounded view
Youmayalsobeinterestedtolearnaboutthechangingpropertysentimentrecommendationsforthetoppropertypicksin2014ortheoutlookformortgageratesWhile2013provedtobeapivotalyearfortheSingaporemarketitsetpropertyvaluetrendsinplacethatarevitaltounderstandin2014
CoolingmeasurestheeffectoftransactionvolumesonthemarketaccesstocompetitivemortgagefinancendashwhatallthesewillmeanforpropertychoicesandthepricesthatpeoplecanexpectarepartofthecompletemarketpicturethatthiseBookrepresents
Ourhopeisthatyoursquollfindtheinformationusefulinterestingandinformativein2014-whicheverpartofthepropertycycleyoumoveintoNaturallywealwayswelcomeandencourageyourfeedbackAndremembertovisitPropertyGurucomsgtolearnmoreaboutspecificpropertiesmarketsandbreakingnews
Thankyou-andwewishyouthoughtfulandinformativereading
Steve MelhuishCo-FounderandChiefExecutiveOfficerPropertyGuru Group
3
Glossary of Terms ABSD Additional Buyers Stamp Duty
BTO Build-to-order
CCR Core Central Region
COV Cash over valuation
ECs Executive condominiums
HDB Housing Development Board
MAS MonetaryAuthorityofSingapore
MOP Minimum Occupation Period
MSR Mortgage Servicing Ratio
OCR Outside Central Region
PRs Permanent residents
psf persquarefoot
RCR RestofCentralRegion
e-SERS SelectiveEn-blocRedevelopmentScheme
TDSR TotalDebtServicingRatio
4
Executive Summary
uThecoolingmeasureshadtheirintendedeffectofreducing
demandndashslowingactivityandtransactionvolumesthenslowly
softeningprices
uThemeasureswerereflectedindecliningQ1andQ2volumes
followedbyatypicallageffectndashdecliningpricesinQ3ampQ4
2014 WiLL rEFLECT ThE MArKET TrENDS BEGUN iN 2013
uHDBsareexpectedtoseean8-11percentdeclineinpricesandadrop
inthenumberofpropertiestransactedby15-20percent
uPrivatenon-landedpropertiesareforecasttodropbyalesser6-8
percent and will also see reduced transaction volumes
uIn2014overallpropertysupplywillincreasestronglyndashbutthis
supplywillfocusonspecificpropertytypessuchasHDBsand
Executive Condos (ECs)
uOverthenextthreeyearsECswillexperiencealargeincreasein
supplyfrom2013levelsMuchofthiswillbein2015and2016
however2014isexpectedtoseealleviatedpsfpricepressurendash
duealsototheremovalofthefavouredpolicystatusofECs
WhAT DOES ThiS MEAN FOr YOU
uFirst-homebuyerswillbeprovidedwithmorechoicein2014
due to the commitment to increase supply dramatically and
existing developer plans to supply more ECs
u Upgraders may increasingly adopt a more relaxed wait-and-see
approachtothemarketasnewsupplydecliningpricesand
coolingmeasuresreducedemand-andpricessoften
uInvestorsareexpectedtobemoreselectiveinSingapore
astheperceptionofthemarketbeinglsquofullypricedrsquondashand
attractiveoverseasoptionsndashremovetheurgencytopurchase
2013wasapivotalyearfortheSingaporeanpropertymarketdisplaying
acharacteristicrelationshipbetweendecliningtransactionvolumesand
laterpricedeclines
5
PropertyGuru Market Outlook 2014 6
Tab
le o
f Co
nte
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Share
LastyearsawfundamentalchangesinSingaporersquospropertymarketwhich
havelaidthegroundworkforthemarketwecanexpecttoseeduring2014
Ofparticularimportanceduring2013were
u Government cooling measures
u Declining property transactions
u Average time to transact property increased
u Propertypricespeakedthendeclined
uInterestratesbottomingout
u ImmigrationPopulationgrowth
uIncreasedpropertysupply
uSentimentsaboutpropertyaffordabilityslowlyshiftingfromless
to more positive
2013The year in review
Eachofthesedevelopmentsimpactedthemarketinturnandwillcontinue
toaffectthemarketwellinto2014Thisreportlooksatthesefactors
separatelyandwhattheymeanforthemarketItalsoconsidersthelikely
consequencesndashandofferstheGuruViewonthemarketandwhatcanbe
expectedfortheremainderof2014
2013R E V I E W
coolingmeasuresand the reduction in property demand
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 8
Tab
le o
f Co
nte
nts
Share
Cooling measures and the reduction in property demand
n The double threat of Total Debt Servicing Ratio (TDSR) and reduction of maximum loan tenure Introduction of the TDSR framework would mean a
property buyerrsquos total repayment obligations cannot
exceed 60 percent of hisher income This coupled with a
shorter monthly repayment period of up to 30 years for
bank loans severely limits the upgraderrsquosinvestorrsquos access
to capital and the total amount that heshe is allowed
to borrow
n Reduction of MSR to 30 percent for HDB loans This measure reduces the debt leverage in the HDB
market which drives prices higher Hence this new
restriction reduces demand and subdues prices for HDBs
n Rise in ABSD by 7 percent for purchase of more than one property This is a larger tax on purchasing more property reducing
demand and price pressures However transaction
volumes remained high after its introduction indicating
that it was a relatively weak measure for cooling the
market
n 3-year bar period on the purchase of HDB resale flats This measure discourages a large portion of PRs from participating in the market for resale HDBs
thereby reducing demand and upward pressure on prices for that segment
n Rise in Additional Buyers Stamp Duty (ABSD) for PRs by 5-7 percent for purchase of first or subsequent properties Another measure to reduce demand and the pressure on prices by making purchases more
expensive for PRs who make up about 10 percent of the total population in Singapore
n PRs who own a flat are disallowed from subletting the whole flat This measure removes incentive for PRs to lsquobuy-for-rentrsquo thereby reducing overall demand and
upward pressure on prices
n PRs must sell their HDB flats within six months of purchasing a private property This puts more resale HDBs on the market for sale thereby increasing their supply providing more
choice for Singaporeans and placing downward pressure on prices
z upgraderslocal investor
n Reduction of maximum loan tenure to 25 years for Housing Development Board (HDB) flats Shorter time period means prospective first-time home buyers need to meet higher
repayments each month
n Reduction of the Mortgage Servicing Ratio (MSR) to 30 percent for HDB loans Restricting the maximum amount of mortgage debt reduces demand in the market and
creates a safety margin for the borrower should mortgage rates increase
z First-time home buyers
z permanent residents (prs) and Foreigners
PropertyGuru Market Outlook 2014 9
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T his section can be summarised in two words demand reduction
Through these measures the governmentrsquos objective was to deliberately slow the market and also manage the price growth of certain property types Combined they have reduced the total mortgage debt in the market ndash or the leverage in the industry ndash by
The measures have curtailed property demand by reducing the individualrsquos access to new finance to purchase property This in turn has reduced the demand for property where the measures have been targeted
One immediate effect of these measures was to extend the time taken to sell property in the market Effectively this helped turn a sellersrsquo market into a buyersrsquo market More choices were available to those buyers that remained in the market
There was also less time pressure on the purchase improving the negotiating position for the buyer who is prepared to wait for the right property at the right price
Later sections in this report look at reduced demand and what that means for the market in 2014 a
Cooling measures and the reduction in property demand
2013 was the year where the government made strategic decisions to reduce the price inflationofHDBsandECsandtolimitthepurchaseofcondosbyforeigners
n Measuring debt ratios across both mortgage servicing and the total debt carried
n Calculating ratios at a higher industry-wide standard interest rate of 35 percent
n Altering these rules depending on how many properties are owned
n Targeting some buyer groups such as PRs and foreigners more than others
n Targeting specifically the HDB and EC segments
PropertyGuru Market Outlook 2014 10
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Cooling measures and the reduction in property demand
Source PropertyGuru Consumer Sentiment Survey
TransacTionVolumestake a dip
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 12
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le o
f Co
nte
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Share
T ransaction volumes are critical but often overlooked when measuring and forecasting trends in a property market In 2013 the declining trend in transaction volumes provided
just such a lsquoforward indicatorrsquo with volumes serving as a key market driver for prices in 2014
Put simply transaction volume trends usually precede and drive price trends Typically there is also a lag of around six months for this to occur This happens in most property markets around the world
When all other factors are stable transaction volumes can be a very reliable predictor of price growth or fall ndash and so volume serves as a very simple and extremely powerful forward view of expected price trends for the coming year
Perhaps this relationship is best illustrated by example for instance Hong Kong - Singaporersquos sister economy
HONG KONG An example of the relationship between transaction volume and price
Hong Kong has provided an arguably extreme but instructive example of the relationship between transaction volumes and future prices
Transaction volumes take a dip
This is useful when looking at the transaction volumes in Singapore in 2013 ndash and their likely effects going forward
In Hong Kong volumes declined significantly in mid-2013 Only some seven months later ndash in January 2014 ndash there was a double digit market price decline
Interestingly by the middle of 2013 journalists were already confident enough ndash based on the transaction data ndash to suggest that the drop in transaction volumes signalled significant price declines to follow
There are three relevant points for Singapore to note from this n The relationship between volume and pricing is a universal feature of property markets it is very likely that Singapore prices will be affected by the same relationships in 2014 n The relationship is solid enough for commentators to use it confidently as a price predictor n The lsquolag effectrsquo between volume and price changes is consistent and in a range typically of between five to nine months
PropertyGuru Market Outlook 2014 13
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HDB Resale Transaction Volumes in 2013
Looking first at HDB resales we see a distinct downward trend in volumes from Q3 2012 Over the course of 2013 transaction volumes continued to decline steadily
Again the relationship between transaction volume and price is clearly visible with prices peaking some nine months after volumes peaked Prices then begin to decline in response to the earlier falling transaction volumes The nine-month lag period is very evident
The significant transaction volume declines in 2013 of approximately 8 percent in Q4 2012 will continue to influence the prices of HDB properties at least well into Q3 of 2014
Condo Transaction Volumes in 2013
The chart below shows the total volume of transactions in the private market These are plotted against the Singapore property price index
Q1 2013 saw a decline in volumes from previous years Corresponding prices peaked in Q3 of 2013 ndash thus following the same pattern However the decline in volumes was not significant until the second half of 2013 As such the corresponding decline in prices was also only slight in the last quarter of the year
At the same time it is price that affects upgraders the most given the spate of cooling measures imposed on the market Therefore some upgraders may choose to play the waiting game and defer purchases until market forces dictate that prices drop even further - or when upcoming launches offer more attractive entry prices to offset the downside risks in property purchasing
The two weak quarters of Q3 and Q4 2013 strongly suggest renewed and much stronger downward pressure on prices in the first half of 2014
Transaction volumes take a dip
Source Housing Development Board (HDB)
PropertyGuru Market Outlook 2014 14
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Transactions have experienced a significant dip of about 58 percent since the middle of 2013 at least partly as a result of market sentiment turning cautious and the inability to actually borrow sufficient amounts to buy These effects have followed the announcement of tighter Monetary Authority of Singapore (MAS) financing regulations namely TDSR and MSR in late June and their earlier ABSD changes
Whatrsquos interesting is that not only have these measures resulted in consecutive quarters of decline in transactions in Q3 and Q4 but they have also caused total volume to return to 2008 levels in the condo market
Watch video Industry analysts share their inisghts into how the CCR RCR and OCR regions fared in 2013
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
PropertyGuru Market Outlook 2014 15
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Condo Transaction Volumes - By Area
Condo transaction volumes in 2013 did not match the record number of transactions seen in 2012 They declined some 386 percent ndash reflecting weakening buyer sentiments for private properties in part due to MAS regulations
However the drop in transactions differs from region to region The transactions in the Core Central Region (CCR) trended down the most severely registering an average of a 40 percent decrease quarter-on-quarter
Of particular note for the regions in 2013 n In Q2 2013 the Rest of Central Region (RCR) and Outside Central Region (OCR) regions grew transaction volumes by a healthy 44 percent and 18 percent respectively from the previous quarter ndash despite the introduction of the ABSD However the new TDSR and MSR in the second half of the year curtailed these volumes n In the RCR property seekers purchased a total of 2062 units in Q3 and Q4 2013 combined being half the level of a year prior While down significantly these volumes were a better result than those recorded by the CR and OCR n Despite most buying activity occurring in the OCR the area saw transactions decline from 4673 units to 3105 units between Q2
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
and Q3 2013 ndash and further drop to around 1430 by Q4 This made the volumes in Q4 just 30 percent (approximately) of the level they were six months prior n The CCR and the OCR regions recorded the largest percentage decline in volume from the peak in 2012 and through 2013 n Despite transaction volume ratios that would indicate that the OCR will experience the worst pricing pressures many analysts are expecting this effect to be offset largely by significant new demand in this area a
The FlucTuaTing nature of prices
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 17
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le o
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T he declining transaction volumes of the last two quarters of 2013 finally drove down price levels in Q4 Until Q3 2013 prices continued to defy gravity as the gap between prices
and their supporting volumes grew larger
From the previous sections we recognise that this is a text book market response to declining volumes where prices can remain elevated for two or more quarters before plateauing and then declining
The predictable relationship between volume and price
Many factors influence the lsquotime laggedrsquo relationship between volumes and prices However one of the strongest is also one of the simplest It is also the most constant in any property marketplace in the world It is human behaviour
Humans have an entirely understandable and common tendency to hold on to their properties rather than to accept lower offers They typically do this for many months as the offers dry up before reluctantly accepting lower offers ndash and recognising in turn that the market has moved
The fluctuating nature of prices
This behaviour helps explain why during the period of declining transaction volumes the average time it takes to sell a property also increases
Expanding time on market and declining transaction volumes are forward indicators of coming softness in prices ndash and usually go hand in hand Significantly both were apparent in the Singapore market in the latter half of 2013
During 2013 the Singaporean market behaved very predictably in response to the financing restrictions and corresponding transaction declines This augers well for predicting trends in 2014
Reading the 2013 data we can confidently expect to see further downward pressure on prices into 2014 ndash providing other factors remain stable Despite the fact that many other micro and macro factors can influence prices these forces will need to be particularly strong now to offset the well-entrenched price decline process that has been set in play by the declining transaction volumes of late 2013
PropertyGuru Market Outlook 2014 18
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2013 Price Outcomes HDBs VS Condos
From the chart below both property types saw price declines in 2013 However HDBs led the way ahead of condos From earlier sections we also recognise that the earlier price declines of HDBs were preceded by earlier transaction volume declines
By Q3 the HDB market had begun to sag under the new cooling measures ndash aimed specifically at curtailing the availability of mortgage credit to the market and placing other restrictions on purchasers However it was not until Q4 led by the mild declines in volumes that were seen in Q1 2013 that the condo market began to correct
These pricing forces were accompanied by the first of the new supply coming online - and some mild reductions in the rates of population growth Additionally restrictions governing the purchase of HDB resale properties by Singapore PRs introduced in August played a role in reducing effective demand for HDBs ndash and also contributed to their faster price declines
The largest contributing factors in 2013 were the new purchasing restrictions and the implementation of the MSR TDSR and ABSD policy changes These effectively reduced both the eligibility of individuals for new mortgage debt and increased the purchasing costs at the same time
The fluctuating nature of prices
Source Urban Redevelopment Authority (URA) Housing Development Board (HDB)
Locality-based fluctuations in the Condo market
In 2013 the price changes and transaction volume of condos varied between regions Below we compare the CCR the OCR and RCR
The CCR registered a decline of 21 percent while prices in the RCR and OCR increased by 03 percent and 68 percent respectively
PropertyGuru Market Outlook 2014 19
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The fluctuating nature of prices
Source Urban Redevelopment Authority (URA)
Significantly the CCR registered a price fall across the last three quarters of 2013 This fall also coincided with the introduction of the ABSD in Q1 which saw higher taxes on second and subsequent properties imposed on a majority of potential buyers including high-net worth individuals and foreigners
The downward trend of luxury properties appeared to be further exacerbated with the TDSR changes introduced in late June These resulted in a price fall of 22 percent by Q4 2013 a rate of decline that was seven times larger than the 03 percent decline in the previous quarter
The RCR region also witnessed price declines for the first time since Q1 2012 This was after the TDSR came into effect However unlike the CCR the RCR maintained positive market activity throughout 2013 This was spurred by the launch of units that were competitively priced at the level of affordability that buyers were comfortable with
The OCR continued to be the fastest growing market segment which contributed much to the increase in the overall private property price index In spite of a decline of 09 percent in Q4 2013 the first after almost two years the rate of price growth for the OCR in 2013 was 20 percent higher than the levels in 2012 - which registered only a 54 percent rise a
why execuTiVe condos were highly sought after
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 21
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Why executive condos were highly sought after
A report compiled by PropertyGuru found that the market value of fully and partially privatised ECs grew strongly in 2013
Examples from the report n Unit prices at Eastvale in Pasir Ris the first EC in Singapore increased from $454 per square foot (psf) in September 1996 to $909 psf by November 2013 This translates to a rise of 100 percent n Two partially privatised ECs also located in Pasir Ris - The Esparis and Whitewater - showed higher growth of 130 percent and 140 percent respectively In January 2002 the Esparis had a psf of $370 and reached $859 psf by November 2013 n Similarly prices at Whitewater which was completed in 2005 increased to $883 psf in December 2013 from an initial price of $362 psf in December 2002
These very strong 2013 price increases provide clear evidence to suggest why the government has elected to increase the supply of ECs in the market by an average of 330 percent over the next three years compared to 2013
Demand for ECs contributed strongly to rapid price growth
In 2013 the top ECs were concentrated in certain districts particularly in the developing areas of the west and the central areas of Ang Mo Kio and Bishan As detailed in the chart below we can see that for example in the case of Bishan Loft and Nuovo the values of these
specific properties are valued at approximately 150 percent of the average psf of private properties within the same district District 20
This chart indicates that some ECs in 2013 exhibited high psf growth and now command very high psfs
The scarcity of ECs in certain localities has enabled some to command higher psfs than the average private district psf However the age of the property psfs needs to be considered when making a determination A strong EC supply increased ndash and the policy changes that remove the EC-favoured status are expected to rectify some of the price inbalance going forward in 2014 a
Source Urban Redevelopment Authority (URA) PropertyGuru Analysis
The ViTalrole that interest rates played
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 23
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E xamination of the 2013 market requires an investigation of the important role that interest rates and the cost of capital have on the property sector
The interest rate ndash and the outlook for interest rates ndash represents the effective and expected cost of servicing the mortgage debt In 2013 the cost of servicing a mortgage remained at near record lows
The Singapore Interbank Offered Rate or SIBOR is set by the Association of Banks in Singapore Mortgage rates are effectively set by the base SIBOR rate plus a bank margin
The majority of mortgage debt in Singapore is variable ndash and where fixed it is fixed for a maximum period of five years This is significant as other countries allow longer periods of fixed term mortgages The US for example typically has 30-year fixed loans
Combined with the high personal debt levels carried by property buyers in Singapore the very high percentage of Singaporeans on variable mortgage rates makes the property market highly susceptible to changes in interest rates
As at 2013 the interest rate environment remained very accommodative being directly influenced by the bond buying (QE) of the US Federal Reserve Singapore effectively has its ultra-low interest rate environment driven by the US
The vital role that interest rates played
Though ultra-low rates were a primary driver in the 2013 market they cannot necessarily be assumed to remain as positive for the market during 2014
The chart below looks in more detail at the most recent rate influences on the market in 2013
Source Monetary Authority of Singapore (MAS)
PropertyGuru Market Outlook 2014 24
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The three-month SIBOR rate has fallen from approximately 18 percent in Q3Q4 2008 to the historically low values at present This most recent behaviour is uncharacteristically stable given that SIBOR rates have displayed much volatility over the past 25 years
The ultra benign interest rate environment over the last five years has increased the capacity of consumers and investors to borrow large sums cheaply This has allowed Singaporersquos property markets to flourish after the global market correction in 2009 ndash and for the very strong market to continue into 2013
ACCESS TO fiNANCE iN 2013
In 2013 the access to finance or the amount that people could borrow was curtailed by cooling measures This was a simple and efficient effort by the government to reduce effective property demand
Property sectors that attract the highest proportion of mortgage debt to finance the purchase were hit hardest by the measures
The sector that was especially susceptible to the cooling measures and showed the biggest correction was the HDB resale market a
While PropertyGuru does not see an imminent
reversiontothehistoricalinterestratemeanof
around3percentitdoesseeaslowtightening
processoccurringduringthecourseof2014
Howeverowingtothenascentrecoveryofthe
USeconomyweexpectthatrateswillriseonly
at a slow pace over the coming years
While this will not provide an additional stimulus
tothemarketndashasitdidin2013-itwillalsonot
beasignificantdragonthemarketInsummary
theinterestrateenvironmentof2013isexpected
tocontinueinto2014withonlyagradualrisendash
andwithaveragemortgageratesfinishingthe
yearbeneath225percent
Howeverthereducedaccesstofinancethrough
cooling measures is expected to continue to
beadragonpricesThesegovernmentmacro-
prudential policy measures remain the only
effectivefinancialinstrumenttheSingapore
government has to alleviate rising property
pricesIntroductionoftheTDSRframeworkis
recognitionofthisItwasagame-changerinthe
marketin2013andunlikelytoberelaxedin2014
The vital role that interest rates played
housingsuPPlYset to increase
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 26
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I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
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le o
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Share
S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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PrefaceGreetings And a warm welcome to property enthusiasts everywhere
WeareverypleasedtoannouncethelaunchofThePropertyGuru Market Outlook 2014 eBook
ASingaporefirstthisbookistheculminationofouruniqueleadershippositioninpropertylistingsanexpansiveagentnetworkdeveloperpartnershipsndashaswellasrichconsumerandinvestorrelationships
LeveraginghighqualitygovernmentdataanditsownuniqueinformationPropertyGuruestablishedaDataAnalyticsDivisionwithasimpleobjectivetomakenewpropertyanalysisandinsightsavailableforpropertybuyerssellersinvestorsndashandforthosesimplywishingtounderstandthevalueoftheirownhomesorwherethemarketisheadingin2014
Thisdocumentanalysesandreflectsonthepropertymarketin2013andusesthisinformationtoprojectlikelypricingsupplyandpropertydemandndashandvaluetrendsin2014Italsoincludesindustryexpertopinionstoprovideacomprehensiveandrounded view
Youmayalsobeinterestedtolearnaboutthechangingpropertysentimentrecommendationsforthetoppropertypicksin2014ortheoutlookformortgageratesWhile2013provedtobeapivotalyearfortheSingaporemarketitsetpropertyvaluetrendsinplacethatarevitaltounderstandin2014
CoolingmeasurestheeffectoftransactionvolumesonthemarketaccesstocompetitivemortgagefinancendashwhatallthesewillmeanforpropertychoicesandthepricesthatpeoplecanexpectarepartofthecompletemarketpicturethatthiseBookrepresents
Ourhopeisthatyoursquollfindtheinformationusefulinterestingandinformativein2014-whicheverpartofthepropertycycleyoumoveintoNaturallywealwayswelcomeandencourageyourfeedbackAndremembertovisitPropertyGurucomsgtolearnmoreaboutspecificpropertiesmarketsandbreakingnews
Thankyou-andwewishyouthoughtfulandinformativereading
Steve MelhuishCo-FounderandChiefExecutiveOfficerPropertyGuru Group
3
Glossary of Terms ABSD Additional Buyers Stamp Duty
BTO Build-to-order
CCR Core Central Region
COV Cash over valuation
ECs Executive condominiums
HDB Housing Development Board
MAS MonetaryAuthorityofSingapore
MOP Minimum Occupation Period
MSR Mortgage Servicing Ratio
OCR Outside Central Region
PRs Permanent residents
psf persquarefoot
RCR RestofCentralRegion
e-SERS SelectiveEn-blocRedevelopmentScheme
TDSR TotalDebtServicingRatio
4
Executive Summary
uThecoolingmeasureshadtheirintendedeffectofreducing
demandndashslowingactivityandtransactionvolumesthenslowly
softeningprices
uThemeasureswerereflectedindecliningQ1andQ2volumes
followedbyatypicallageffectndashdecliningpricesinQ3ampQ4
2014 WiLL rEFLECT ThE MArKET TrENDS BEGUN iN 2013
uHDBsareexpectedtoseean8-11percentdeclineinpricesandadrop
inthenumberofpropertiestransactedby15-20percent
uPrivatenon-landedpropertiesareforecasttodropbyalesser6-8
percent and will also see reduced transaction volumes
uIn2014overallpropertysupplywillincreasestronglyndashbutthis
supplywillfocusonspecificpropertytypessuchasHDBsand
Executive Condos (ECs)
uOverthenextthreeyearsECswillexperiencealargeincreasein
supplyfrom2013levelsMuchofthiswillbein2015and2016
however2014isexpectedtoseealleviatedpsfpricepressurendash
duealsototheremovalofthefavouredpolicystatusofECs
WhAT DOES ThiS MEAN FOr YOU
uFirst-homebuyerswillbeprovidedwithmorechoicein2014
due to the commitment to increase supply dramatically and
existing developer plans to supply more ECs
u Upgraders may increasingly adopt a more relaxed wait-and-see
approachtothemarketasnewsupplydecliningpricesand
coolingmeasuresreducedemand-andpricessoften
uInvestorsareexpectedtobemoreselectiveinSingapore
astheperceptionofthemarketbeinglsquofullypricedrsquondashand
attractiveoverseasoptionsndashremovetheurgencytopurchase
2013wasapivotalyearfortheSingaporeanpropertymarketdisplaying
acharacteristicrelationshipbetweendecliningtransactionvolumesand
laterpricedeclines
5
PropertyGuru Market Outlook 2014 6
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LastyearsawfundamentalchangesinSingaporersquospropertymarketwhich
havelaidthegroundworkforthemarketwecanexpecttoseeduring2014
Ofparticularimportanceduring2013were
u Government cooling measures
u Declining property transactions
u Average time to transact property increased
u Propertypricespeakedthendeclined
uInterestratesbottomingout
u ImmigrationPopulationgrowth
uIncreasedpropertysupply
uSentimentsaboutpropertyaffordabilityslowlyshiftingfromless
to more positive
2013The year in review
Eachofthesedevelopmentsimpactedthemarketinturnandwillcontinue
toaffectthemarketwellinto2014Thisreportlooksatthesefactors
separatelyandwhattheymeanforthemarketItalsoconsidersthelikely
consequencesndashandofferstheGuruViewonthemarketandwhatcanbe
expectedfortheremainderof2014
2013R E V I E W
coolingmeasuresand the reduction in property demand
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 8
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Share
Cooling measures and the reduction in property demand
n The double threat of Total Debt Servicing Ratio (TDSR) and reduction of maximum loan tenure Introduction of the TDSR framework would mean a
property buyerrsquos total repayment obligations cannot
exceed 60 percent of hisher income This coupled with a
shorter monthly repayment period of up to 30 years for
bank loans severely limits the upgraderrsquosinvestorrsquos access
to capital and the total amount that heshe is allowed
to borrow
n Reduction of MSR to 30 percent for HDB loans This measure reduces the debt leverage in the HDB
market which drives prices higher Hence this new
restriction reduces demand and subdues prices for HDBs
n Rise in ABSD by 7 percent for purchase of more than one property This is a larger tax on purchasing more property reducing
demand and price pressures However transaction
volumes remained high after its introduction indicating
that it was a relatively weak measure for cooling the
market
n 3-year bar period on the purchase of HDB resale flats This measure discourages a large portion of PRs from participating in the market for resale HDBs
thereby reducing demand and upward pressure on prices for that segment
n Rise in Additional Buyers Stamp Duty (ABSD) for PRs by 5-7 percent for purchase of first or subsequent properties Another measure to reduce demand and the pressure on prices by making purchases more
expensive for PRs who make up about 10 percent of the total population in Singapore
n PRs who own a flat are disallowed from subletting the whole flat This measure removes incentive for PRs to lsquobuy-for-rentrsquo thereby reducing overall demand and
upward pressure on prices
n PRs must sell their HDB flats within six months of purchasing a private property This puts more resale HDBs on the market for sale thereby increasing their supply providing more
choice for Singaporeans and placing downward pressure on prices
z upgraderslocal investor
n Reduction of maximum loan tenure to 25 years for Housing Development Board (HDB) flats Shorter time period means prospective first-time home buyers need to meet higher
repayments each month
n Reduction of the Mortgage Servicing Ratio (MSR) to 30 percent for HDB loans Restricting the maximum amount of mortgage debt reduces demand in the market and
creates a safety margin for the borrower should mortgage rates increase
z First-time home buyers
z permanent residents (prs) and Foreigners
PropertyGuru Market Outlook 2014 9
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T his section can be summarised in two words demand reduction
Through these measures the governmentrsquos objective was to deliberately slow the market and also manage the price growth of certain property types Combined they have reduced the total mortgage debt in the market ndash or the leverage in the industry ndash by
The measures have curtailed property demand by reducing the individualrsquos access to new finance to purchase property This in turn has reduced the demand for property where the measures have been targeted
One immediate effect of these measures was to extend the time taken to sell property in the market Effectively this helped turn a sellersrsquo market into a buyersrsquo market More choices were available to those buyers that remained in the market
There was also less time pressure on the purchase improving the negotiating position for the buyer who is prepared to wait for the right property at the right price
Later sections in this report look at reduced demand and what that means for the market in 2014 a
Cooling measures and the reduction in property demand
2013 was the year where the government made strategic decisions to reduce the price inflationofHDBsandECsandtolimitthepurchaseofcondosbyforeigners
n Measuring debt ratios across both mortgage servicing and the total debt carried
n Calculating ratios at a higher industry-wide standard interest rate of 35 percent
n Altering these rules depending on how many properties are owned
n Targeting some buyer groups such as PRs and foreigners more than others
n Targeting specifically the HDB and EC segments
PropertyGuru Market Outlook 2014 10
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Cooling measures and the reduction in property demand
Source PropertyGuru Consumer Sentiment Survey
TransacTionVolumestake a dip
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 12
Tab
le o
f Co
nte
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Share
T ransaction volumes are critical but often overlooked when measuring and forecasting trends in a property market In 2013 the declining trend in transaction volumes provided
just such a lsquoforward indicatorrsquo with volumes serving as a key market driver for prices in 2014
Put simply transaction volume trends usually precede and drive price trends Typically there is also a lag of around six months for this to occur This happens in most property markets around the world
When all other factors are stable transaction volumes can be a very reliable predictor of price growth or fall ndash and so volume serves as a very simple and extremely powerful forward view of expected price trends for the coming year
Perhaps this relationship is best illustrated by example for instance Hong Kong - Singaporersquos sister economy
HONG KONG An example of the relationship between transaction volume and price
Hong Kong has provided an arguably extreme but instructive example of the relationship between transaction volumes and future prices
Transaction volumes take a dip
This is useful when looking at the transaction volumes in Singapore in 2013 ndash and their likely effects going forward
In Hong Kong volumes declined significantly in mid-2013 Only some seven months later ndash in January 2014 ndash there was a double digit market price decline
Interestingly by the middle of 2013 journalists were already confident enough ndash based on the transaction data ndash to suggest that the drop in transaction volumes signalled significant price declines to follow
There are three relevant points for Singapore to note from this n The relationship between volume and pricing is a universal feature of property markets it is very likely that Singapore prices will be affected by the same relationships in 2014 n The relationship is solid enough for commentators to use it confidently as a price predictor n The lsquolag effectrsquo between volume and price changes is consistent and in a range typically of between five to nine months
PropertyGuru Market Outlook 2014 13
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HDB Resale Transaction Volumes in 2013
Looking first at HDB resales we see a distinct downward trend in volumes from Q3 2012 Over the course of 2013 transaction volumes continued to decline steadily
Again the relationship between transaction volume and price is clearly visible with prices peaking some nine months after volumes peaked Prices then begin to decline in response to the earlier falling transaction volumes The nine-month lag period is very evident
The significant transaction volume declines in 2013 of approximately 8 percent in Q4 2012 will continue to influence the prices of HDB properties at least well into Q3 of 2014
Condo Transaction Volumes in 2013
The chart below shows the total volume of transactions in the private market These are plotted against the Singapore property price index
Q1 2013 saw a decline in volumes from previous years Corresponding prices peaked in Q3 of 2013 ndash thus following the same pattern However the decline in volumes was not significant until the second half of 2013 As such the corresponding decline in prices was also only slight in the last quarter of the year
At the same time it is price that affects upgraders the most given the spate of cooling measures imposed on the market Therefore some upgraders may choose to play the waiting game and defer purchases until market forces dictate that prices drop even further - or when upcoming launches offer more attractive entry prices to offset the downside risks in property purchasing
The two weak quarters of Q3 and Q4 2013 strongly suggest renewed and much stronger downward pressure on prices in the first half of 2014
Transaction volumes take a dip
Source Housing Development Board (HDB)
PropertyGuru Market Outlook 2014 14
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Transactions have experienced a significant dip of about 58 percent since the middle of 2013 at least partly as a result of market sentiment turning cautious and the inability to actually borrow sufficient amounts to buy These effects have followed the announcement of tighter Monetary Authority of Singapore (MAS) financing regulations namely TDSR and MSR in late June and their earlier ABSD changes
Whatrsquos interesting is that not only have these measures resulted in consecutive quarters of decline in transactions in Q3 and Q4 but they have also caused total volume to return to 2008 levels in the condo market
Watch video Industry analysts share their inisghts into how the CCR RCR and OCR regions fared in 2013
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
PropertyGuru Market Outlook 2014 15
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Condo Transaction Volumes - By Area
Condo transaction volumes in 2013 did not match the record number of transactions seen in 2012 They declined some 386 percent ndash reflecting weakening buyer sentiments for private properties in part due to MAS regulations
However the drop in transactions differs from region to region The transactions in the Core Central Region (CCR) trended down the most severely registering an average of a 40 percent decrease quarter-on-quarter
Of particular note for the regions in 2013 n In Q2 2013 the Rest of Central Region (RCR) and Outside Central Region (OCR) regions grew transaction volumes by a healthy 44 percent and 18 percent respectively from the previous quarter ndash despite the introduction of the ABSD However the new TDSR and MSR in the second half of the year curtailed these volumes n In the RCR property seekers purchased a total of 2062 units in Q3 and Q4 2013 combined being half the level of a year prior While down significantly these volumes were a better result than those recorded by the CR and OCR n Despite most buying activity occurring in the OCR the area saw transactions decline from 4673 units to 3105 units between Q2
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
and Q3 2013 ndash and further drop to around 1430 by Q4 This made the volumes in Q4 just 30 percent (approximately) of the level they were six months prior n The CCR and the OCR regions recorded the largest percentage decline in volume from the peak in 2012 and through 2013 n Despite transaction volume ratios that would indicate that the OCR will experience the worst pricing pressures many analysts are expecting this effect to be offset largely by significant new demand in this area a
The FlucTuaTing nature of prices
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 17
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le o
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T he declining transaction volumes of the last two quarters of 2013 finally drove down price levels in Q4 Until Q3 2013 prices continued to defy gravity as the gap between prices
and their supporting volumes grew larger
From the previous sections we recognise that this is a text book market response to declining volumes where prices can remain elevated for two or more quarters before plateauing and then declining
The predictable relationship between volume and price
Many factors influence the lsquotime laggedrsquo relationship between volumes and prices However one of the strongest is also one of the simplest It is also the most constant in any property marketplace in the world It is human behaviour
Humans have an entirely understandable and common tendency to hold on to their properties rather than to accept lower offers They typically do this for many months as the offers dry up before reluctantly accepting lower offers ndash and recognising in turn that the market has moved
The fluctuating nature of prices
This behaviour helps explain why during the period of declining transaction volumes the average time it takes to sell a property also increases
Expanding time on market and declining transaction volumes are forward indicators of coming softness in prices ndash and usually go hand in hand Significantly both were apparent in the Singapore market in the latter half of 2013
During 2013 the Singaporean market behaved very predictably in response to the financing restrictions and corresponding transaction declines This augers well for predicting trends in 2014
Reading the 2013 data we can confidently expect to see further downward pressure on prices into 2014 ndash providing other factors remain stable Despite the fact that many other micro and macro factors can influence prices these forces will need to be particularly strong now to offset the well-entrenched price decline process that has been set in play by the declining transaction volumes of late 2013
PropertyGuru Market Outlook 2014 18
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2013 Price Outcomes HDBs VS Condos
From the chart below both property types saw price declines in 2013 However HDBs led the way ahead of condos From earlier sections we also recognise that the earlier price declines of HDBs were preceded by earlier transaction volume declines
By Q3 the HDB market had begun to sag under the new cooling measures ndash aimed specifically at curtailing the availability of mortgage credit to the market and placing other restrictions on purchasers However it was not until Q4 led by the mild declines in volumes that were seen in Q1 2013 that the condo market began to correct
These pricing forces were accompanied by the first of the new supply coming online - and some mild reductions in the rates of population growth Additionally restrictions governing the purchase of HDB resale properties by Singapore PRs introduced in August played a role in reducing effective demand for HDBs ndash and also contributed to their faster price declines
The largest contributing factors in 2013 were the new purchasing restrictions and the implementation of the MSR TDSR and ABSD policy changes These effectively reduced both the eligibility of individuals for new mortgage debt and increased the purchasing costs at the same time
The fluctuating nature of prices
Source Urban Redevelopment Authority (URA) Housing Development Board (HDB)
Locality-based fluctuations in the Condo market
In 2013 the price changes and transaction volume of condos varied between regions Below we compare the CCR the OCR and RCR
The CCR registered a decline of 21 percent while prices in the RCR and OCR increased by 03 percent and 68 percent respectively
PropertyGuru Market Outlook 2014 19
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The fluctuating nature of prices
Source Urban Redevelopment Authority (URA)
Significantly the CCR registered a price fall across the last three quarters of 2013 This fall also coincided with the introduction of the ABSD in Q1 which saw higher taxes on second and subsequent properties imposed on a majority of potential buyers including high-net worth individuals and foreigners
The downward trend of luxury properties appeared to be further exacerbated with the TDSR changes introduced in late June These resulted in a price fall of 22 percent by Q4 2013 a rate of decline that was seven times larger than the 03 percent decline in the previous quarter
The RCR region also witnessed price declines for the first time since Q1 2012 This was after the TDSR came into effect However unlike the CCR the RCR maintained positive market activity throughout 2013 This was spurred by the launch of units that were competitively priced at the level of affordability that buyers were comfortable with
The OCR continued to be the fastest growing market segment which contributed much to the increase in the overall private property price index In spite of a decline of 09 percent in Q4 2013 the first after almost two years the rate of price growth for the OCR in 2013 was 20 percent higher than the levels in 2012 - which registered only a 54 percent rise a
why execuTiVe condos were highly sought after
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 21
Tab
le o
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Why executive condos were highly sought after
A report compiled by PropertyGuru found that the market value of fully and partially privatised ECs grew strongly in 2013
Examples from the report n Unit prices at Eastvale in Pasir Ris the first EC in Singapore increased from $454 per square foot (psf) in September 1996 to $909 psf by November 2013 This translates to a rise of 100 percent n Two partially privatised ECs also located in Pasir Ris - The Esparis and Whitewater - showed higher growth of 130 percent and 140 percent respectively In January 2002 the Esparis had a psf of $370 and reached $859 psf by November 2013 n Similarly prices at Whitewater which was completed in 2005 increased to $883 psf in December 2013 from an initial price of $362 psf in December 2002
These very strong 2013 price increases provide clear evidence to suggest why the government has elected to increase the supply of ECs in the market by an average of 330 percent over the next three years compared to 2013
Demand for ECs contributed strongly to rapid price growth
In 2013 the top ECs were concentrated in certain districts particularly in the developing areas of the west and the central areas of Ang Mo Kio and Bishan As detailed in the chart below we can see that for example in the case of Bishan Loft and Nuovo the values of these
specific properties are valued at approximately 150 percent of the average psf of private properties within the same district District 20
This chart indicates that some ECs in 2013 exhibited high psf growth and now command very high psfs
The scarcity of ECs in certain localities has enabled some to command higher psfs than the average private district psf However the age of the property psfs needs to be considered when making a determination A strong EC supply increased ndash and the policy changes that remove the EC-favoured status are expected to rectify some of the price inbalance going forward in 2014 a
Source Urban Redevelopment Authority (URA) PropertyGuru Analysis
The ViTalrole that interest rates played
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 23
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le o
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Share
E xamination of the 2013 market requires an investigation of the important role that interest rates and the cost of capital have on the property sector
The interest rate ndash and the outlook for interest rates ndash represents the effective and expected cost of servicing the mortgage debt In 2013 the cost of servicing a mortgage remained at near record lows
The Singapore Interbank Offered Rate or SIBOR is set by the Association of Banks in Singapore Mortgage rates are effectively set by the base SIBOR rate plus a bank margin
The majority of mortgage debt in Singapore is variable ndash and where fixed it is fixed for a maximum period of five years This is significant as other countries allow longer periods of fixed term mortgages The US for example typically has 30-year fixed loans
Combined with the high personal debt levels carried by property buyers in Singapore the very high percentage of Singaporeans on variable mortgage rates makes the property market highly susceptible to changes in interest rates
As at 2013 the interest rate environment remained very accommodative being directly influenced by the bond buying (QE) of the US Federal Reserve Singapore effectively has its ultra-low interest rate environment driven by the US
The vital role that interest rates played
Though ultra-low rates were a primary driver in the 2013 market they cannot necessarily be assumed to remain as positive for the market during 2014
The chart below looks in more detail at the most recent rate influences on the market in 2013
Source Monetary Authority of Singapore (MAS)
PropertyGuru Market Outlook 2014 24
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The three-month SIBOR rate has fallen from approximately 18 percent in Q3Q4 2008 to the historically low values at present This most recent behaviour is uncharacteristically stable given that SIBOR rates have displayed much volatility over the past 25 years
The ultra benign interest rate environment over the last five years has increased the capacity of consumers and investors to borrow large sums cheaply This has allowed Singaporersquos property markets to flourish after the global market correction in 2009 ndash and for the very strong market to continue into 2013
ACCESS TO fiNANCE iN 2013
In 2013 the access to finance or the amount that people could borrow was curtailed by cooling measures This was a simple and efficient effort by the government to reduce effective property demand
Property sectors that attract the highest proportion of mortgage debt to finance the purchase were hit hardest by the measures
The sector that was especially susceptible to the cooling measures and showed the biggest correction was the HDB resale market a
While PropertyGuru does not see an imminent
reversiontothehistoricalinterestratemeanof
around3percentitdoesseeaslowtightening
processoccurringduringthecourseof2014
Howeverowingtothenascentrecoveryofthe
USeconomyweexpectthatrateswillriseonly
at a slow pace over the coming years
While this will not provide an additional stimulus
tothemarketndashasitdidin2013-itwillalsonot
beasignificantdragonthemarketInsummary
theinterestrateenvironmentof2013isexpected
tocontinueinto2014withonlyagradualrisendash
andwithaveragemortgageratesfinishingthe
yearbeneath225percent
Howeverthereducedaccesstofinancethrough
cooling measures is expected to continue to
beadragonpricesThesegovernmentmacro-
prudential policy measures remain the only
effectivefinancialinstrumenttheSingapore
government has to alleviate rising property
pricesIntroductionoftheTDSRframeworkis
recognitionofthisItwasagame-changerinthe
marketin2013andunlikelytoberelaxedin2014
The vital role that interest rates played
housingsuPPlYset to increase
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 26
Tab
le o
f Co
nte
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I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
Tab
le o
f Co
nte
nts
Share
S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
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toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
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WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
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Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
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PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
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andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
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70
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Glossary of Terms ABSD Additional Buyers Stamp Duty
BTO Build-to-order
CCR Core Central Region
COV Cash over valuation
ECs Executive condominiums
HDB Housing Development Board
MAS MonetaryAuthorityofSingapore
MOP Minimum Occupation Period
MSR Mortgage Servicing Ratio
OCR Outside Central Region
PRs Permanent residents
psf persquarefoot
RCR RestofCentralRegion
e-SERS SelectiveEn-blocRedevelopmentScheme
TDSR TotalDebtServicingRatio
4
Executive Summary
uThecoolingmeasureshadtheirintendedeffectofreducing
demandndashslowingactivityandtransactionvolumesthenslowly
softeningprices
uThemeasureswerereflectedindecliningQ1andQ2volumes
followedbyatypicallageffectndashdecliningpricesinQ3ampQ4
2014 WiLL rEFLECT ThE MArKET TrENDS BEGUN iN 2013
uHDBsareexpectedtoseean8-11percentdeclineinpricesandadrop
inthenumberofpropertiestransactedby15-20percent
uPrivatenon-landedpropertiesareforecasttodropbyalesser6-8
percent and will also see reduced transaction volumes
uIn2014overallpropertysupplywillincreasestronglyndashbutthis
supplywillfocusonspecificpropertytypessuchasHDBsand
Executive Condos (ECs)
uOverthenextthreeyearsECswillexperiencealargeincreasein
supplyfrom2013levelsMuchofthiswillbein2015and2016
however2014isexpectedtoseealleviatedpsfpricepressurendash
duealsototheremovalofthefavouredpolicystatusofECs
WhAT DOES ThiS MEAN FOr YOU
uFirst-homebuyerswillbeprovidedwithmorechoicein2014
due to the commitment to increase supply dramatically and
existing developer plans to supply more ECs
u Upgraders may increasingly adopt a more relaxed wait-and-see
approachtothemarketasnewsupplydecliningpricesand
coolingmeasuresreducedemand-andpricessoften
uInvestorsareexpectedtobemoreselectiveinSingapore
astheperceptionofthemarketbeinglsquofullypricedrsquondashand
attractiveoverseasoptionsndashremovetheurgencytopurchase
2013wasapivotalyearfortheSingaporeanpropertymarketdisplaying
acharacteristicrelationshipbetweendecliningtransactionvolumesand
laterpricedeclines
5
PropertyGuru Market Outlook 2014 6
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LastyearsawfundamentalchangesinSingaporersquospropertymarketwhich
havelaidthegroundworkforthemarketwecanexpecttoseeduring2014
Ofparticularimportanceduring2013were
u Government cooling measures
u Declining property transactions
u Average time to transact property increased
u Propertypricespeakedthendeclined
uInterestratesbottomingout
u ImmigrationPopulationgrowth
uIncreasedpropertysupply
uSentimentsaboutpropertyaffordabilityslowlyshiftingfromless
to more positive
2013The year in review
Eachofthesedevelopmentsimpactedthemarketinturnandwillcontinue
toaffectthemarketwellinto2014Thisreportlooksatthesefactors
separatelyandwhattheymeanforthemarketItalsoconsidersthelikely
consequencesndashandofferstheGuruViewonthemarketandwhatcanbe
expectedfortheremainderof2014
2013R E V I E W
coolingmeasuresand the reduction in property demand
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 8
Tab
le o
f Co
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Share
Cooling measures and the reduction in property demand
n The double threat of Total Debt Servicing Ratio (TDSR) and reduction of maximum loan tenure Introduction of the TDSR framework would mean a
property buyerrsquos total repayment obligations cannot
exceed 60 percent of hisher income This coupled with a
shorter monthly repayment period of up to 30 years for
bank loans severely limits the upgraderrsquosinvestorrsquos access
to capital and the total amount that heshe is allowed
to borrow
n Reduction of MSR to 30 percent for HDB loans This measure reduces the debt leverage in the HDB
market which drives prices higher Hence this new
restriction reduces demand and subdues prices for HDBs
n Rise in ABSD by 7 percent for purchase of more than one property This is a larger tax on purchasing more property reducing
demand and price pressures However transaction
volumes remained high after its introduction indicating
that it was a relatively weak measure for cooling the
market
n 3-year bar period on the purchase of HDB resale flats This measure discourages a large portion of PRs from participating in the market for resale HDBs
thereby reducing demand and upward pressure on prices for that segment
n Rise in Additional Buyers Stamp Duty (ABSD) for PRs by 5-7 percent for purchase of first or subsequent properties Another measure to reduce demand and the pressure on prices by making purchases more
expensive for PRs who make up about 10 percent of the total population in Singapore
n PRs who own a flat are disallowed from subletting the whole flat This measure removes incentive for PRs to lsquobuy-for-rentrsquo thereby reducing overall demand and
upward pressure on prices
n PRs must sell their HDB flats within six months of purchasing a private property This puts more resale HDBs on the market for sale thereby increasing their supply providing more
choice for Singaporeans and placing downward pressure on prices
z upgraderslocal investor
n Reduction of maximum loan tenure to 25 years for Housing Development Board (HDB) flats Shorter time period means prospective first-time home buyers need to meet higher
repayments each month
n Reduction of the Mortgage Servicing Ratio (MSR) to 30 percent for HDB loans Restricting the maximum amount of mortgage debt reduces demand in the market and
creates a safety margin for the borrower should mortgage rates increase
z First-time home buyers
z permanent residents (prs) and Foreigners
PropertyGuru Market Outlook 2014 9
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Share
T his section can be summarised in two words demand reduction
Through these measures the governmentrsquos objective was to deliberately slow the market and also manage the price growth of certain property types Combined they have reduced the total mortgage debt in the market ndash or the leverage in the industry ndash by
The measures have curtailed property demand by reducing the individualrsquos access to new finance to purchase property This in turn has reduced the demand for property where the measures have been targeted
One immediate effect of these measures was to extend the time taken to sell property in the market Effectively this helped turn a sellersrsquo market into a buyersrsquo market More choices were available to those buyers that remained in the market
There was also less time pressure on the purchase improving the negotiating position for the buyer who is prepared to wait for the right property at the right price
Later sections in this report look at reduced demand and what that means for the market in 2014 a
Cooling measures and the reduction in property demand
2013 was the year where the government made strategic decisions to reduce the price inflationofHDBsandECsandtolimitthepurchaseofcondosbyforeigners
n Measuring debt ratios across both mortgage servicing and the total debt carried
n Calculating ratios at a higher industry-wide standard interest rate of 35 percent
n Altering these rules depending on how many properties are owned
n Targeting some buyer groups such as PRs and foreigners more than others
n Targeting specifically the HDB and EC segments
PropertyGuru Market Outlook 2014 10
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Share
Cooling measures and the reduction in property demand
Source PropertyGuru Consumer Sentiment Survey
TransacTionVolumestake a dip
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 12
Tab
le o
f Co
nte
nts
Share
T ransaction volumes are critical but often overlooked when measuring and forecasting trends in a property market In 2013 the declining trend in transaction volumes provided
just such a lsquoforward indicatorrsquo with volumes serving as a key market driver for prices in 2014
Put simply transaction volume trends usually precede and drive price trends Typically there is also a lag of around six months for this to occur This happens in most property markets around the world
When all other factors are stable transaction volumes can be a very reliable predictor of price growth or fall ndash and so volume serves as a very simple and extremely powerful forward view of expected price trends for the coming year
Perhaps this relationship is best illustrated by example for instance Hong Kong - Singaporersquos sister economy
HONG KONG An example of the relationship between transaction volume and price
Hong Kong has provided an arguably extreme but instructive example of the relationship between transaction volumes and future prices
Transaction volumes take a dip
This is useful when looking at the transaction volumes in Singapore in 2013 ndash and their likely effects going forward
In Hong Kong volumes declined significantly in mid-2013 Only some seven months later ndash in January 2014 ndash there was a double digit market price decline
Interestingly by the middle of 2013 journalists were already confident enough ndash based on the transaction data ndash to suggest that the drop in transaction volumes signalled significant price declines to follow
There are three relevant points for Singapore to note from this n The relationship between volume and pricing is a universal feature of property markets it is very likely that Singapore prices will be affected by the same relationships in 2014 n The relationship is solid enough for commentators to use it confidently as a price predictor n The lsquolag effectrsquo between volume and price changes is consistent and in a range typically of between five to nine months
PropertyGuru Market Outlook 2014 13
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HDB Resale Transaction Volumes in 2013
Looking first at HDB resales we see a distinct downward trend in volumes from Q3 2012 Over the course of 2013 transaction volumes continued to decline steadily
Again the relationship between transaction volume and price is clearly visible with prices peaking some nine months after volumes peaked Prices then begin to decline in response to the earlier falling transaction volumes The nine-month lag period is very evident
The significant transaction volume declines in 2013 of approximately 8 percent in Q4 2012 will continue to influence the prices of HDB properties at least well into Q3 of 2014
Condo Transaction Volumes in 2013
The chart below shows the total volume of transactions in the private market These are plotted against the Singapore property price index
Q1 2013 saw a decline in volumes from previous years Corresponding prices peaked in Q3 of 2013 ndash thus following the same pattern However the decline in volumes was not significant until the second half of 2013 As such the corresponding decline in prices was also only slight in the last quarter of the year
At the same time it is price that affects upgraders the most given the spate of cooling measures imposed on the market Therefore some upgraders may choose to play the waiting game and defer purchases until market forces dictate that prices drop even further - or when upcoming launches offer more attractive entry prices to offset the downside risks in property purchasing
The two weak quarters of Q3 and Q4 2013 strongly suggest renewed and much stronger downward pressure on prices in the first half of 2014
Transaction volumes take a dip
Source Housing Development Board (HDB)
PropertyGuru Market Outlook 2014 14
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Transactions have experienced a significant dip of about 58 percent since the middle of 2013 at least partly as a result of market sentiment turning cautious and the inability to actually borrow sufficient amounts to buy These effects have followed the announcement of tighter Monetary Authority of Singapore (MAS) financing regulations namely TDSR and MSR in late June and their earlier ABSD changes
Whatrsquos interesting is that not only have these measures resulted in consecutive quarters of decline in transactions in Q3 and Q4 but they have also caused total volume to return to 2008 levels in the condo market
Watch video Industry analysts share their inisghts into how the CCR RCR and OCR regions fared in 2013
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
PropertyGuru Market Outlook 2014 15
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Condo Transaction Volumes - By Area
Condo transaction volumes in 2013 did not match the record number of transactions seen in 2012 They declined some 386 percent ndash reflecting weakening buyer sentiments for private properties in part due to MAS regulations
However the drop in transactions differs from region to region The transactions in the Core Central Region (CCR) trended down the most severely registering an average of a 40 percent decrease quarter-on-quarter
Of particular note for the regions in 2013 n In Q2 2013 the Rest of Central Region (RCR) and Outside Central Region (OCR) regions grew transaction volumes by a healthy 44 percent and 18 percent respectively from the previous quarter ndash despite the introduction of the ABSD However the new TDSR and MSR in the second half of the year curtailed these volumes n In the RCR property seekers purchased a total of 2062 units in Q3 and Q4 2013 combined being half the level of a year prior While down significantly these volumes were a better result than those recorded by the CR and OCR n Despite most buying activity occurring in the OCR the area saw transactions decline from 4673 units to 3105 units between Q2
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
and Q3 2013 ndash and further drop to around 1430 by Q4 This made the volumes in Q4 just 30 percent (approximately) of the level they were six months prior n The CCR and the OCR regions recorded the largest percentage decline in volume from the peak in 2012 and through 2013 n Despite transaction volume ratios that would indicate that the OCR will experience the worst pricing pressures many analysts are expecting this effect to be offset largely by significant new demand in this area a
The FlucTuaTing nature of prices
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 17
Tab
le o
f Co
nte
nts
Share
T he declining transaction volumes of the last two quarters of 2013 finally drove down price levels in Q4 Until Q3 2013 prices continued to defy gravity as the gap between prices
and their supporting volumes grew larger
From the previous sections we recognise that this is a text book market response to declining volumes where prices can remain elevated for two or more quarters before plateauing and then declining
The predictable relationship between volume and price
Many factors influence the lsquotime laggedrsquo relationship between volumes and prices However one of the strongest is also one of the simplest It is also the most constant in any property marketplace in the world It is human behaviour
Humans have an entirely understandable and common tendency to hold on to their properties rather than to accept lower offers They typically do this for many months as the offers dry up before reluctantly accepting lower offers ndash and recognising in turn that the market has moved
The fluctuating nature of prices
This behaviour helps explain why during the period of declining transaction volumes the average time it takes to sell a property also increases
Expanding time on market and declining transaction volumes are forward indicators of coming softness in prices ndash and usually go hand in hand Significantly both were apparent in the Singapore market in the latter half of 2013
During 2013 the Singaporean market behaved very predictably in response to the financing restrictions and corresponding transaction declines This augers well for predicting trends in 2014
Reading the 2013 data we can confidently expect to see further downward pressure on prices into 2014 ndash providing other factors remain stable Despite the fact that many other micro and macro factors can influence prices these forces will need to be particularly strong now to offset the well-entrenched price decline process that has been set in play by the declining transaction volumes of late 2013
PropertyGuru Market Outlook 2014 18
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2013 Price Outcomes HDBs VS Condos
From the chart below both property types saw price declines in 2013 However HDBs led the way ahead of condos From earlier sections we also recognise that the earlier price declines of HDBs were preceded by earlier transaction volume declines
By Q3 the HDB market had begun to sag under the new cooling measures ndash aimed specifically at curtailing the availability of mortgage credit to the market and placing other restrictions on purchasers However it was not until Q4 led by the mild declines in volumes that were seen in Q1 2013 that the condo market began to correct
These pricing forces were accompanied by the first of the new supply coming online - and some mild reductions in the rates of population growth Additionally restrictions governing the purchase of HDB resale properties by Singapore PRs introduced in August played a role in reducing effective demand for HDBs ndash and also contributed to their faster price declines
The largest contributing factors in 2013 were the new purchasing restrictions and the implementation of the MSR TDSR and ABSD policy changes These effectively reduced both the eligibility of individuals for new mortgage debt and increased the purchasing costs at the same time
The fluctuating nature of prices
Source Urban Redevelopment Authority (URA) Housing Development Board (HDB)
Locality-based fluctuations in the Condo market
In 2013 the price changes and transaction volume of condos varied between regions Below we compare the CCR the OCR and RCR
The CCR registered a decline of 21 percent while prices in the RCR and OCR increased by 03 percent and 68 percent respectively
PropertyGuru Market Outlook 2014 19
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The fluctuating nature of prices
Source Urban Redevelopment Authority (URA)
Significantly the CCR registered a price fall across the last three quarters of 2013 This fall also coincided with the introduction of the ABSD in Q1 which saw higher taxes on second and subsequent properties imposed on a majority of potential buyers including high-net worth individuals and foreigners
The downward trend of luxury properties appeared to be further exacerbated with the TDSR changes introduced in late June These resulted in a price fall of 22 percent by Q4 2013 a rate of decline that was seven times larger than the 03 percent decline in the previous quarter
The RCR region also witnessed price declines for the first time since Q1 2012 This was after the TDSR came into effect However unlike the CCR the RCR maintained positive market activity throughout 2013 This was spurred by the launch of units that were competitively priced at the level of affordability that buyers were comfortable with
The OCR continued to be the fastest growing market segment which contributed much to the increase in the overall private property price index In spite of a decline of 09 percent in Q4 2013 the first after almost two years the rate of price growth for the OCR in 2013 was 20 percent higher than the levels in 2012 - which registered only a 54 percent rise a
why execuTiVe condos were highly sought after
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 21
Tab
le o
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Why executive condos were highly sought after
A report compiled by PropertyGuru found that the market value of fully and partially privatised ECs grew strongly in 2013
Examples from the report n Unit prices at Eastvale in Pasir Ris the first EC in Singapore increased from $454 per square foot (psf) in September 1996 to $909 psf by November 2013 This translates to a rise of 100 percent n Two partially privatised ECs also located in Pasir Ris - The Esparis and Whitewater - showed higher growth of 130 percent and 140 percent respectively In January 2002 the Esparis had a psf of $370 and reached $859 psf by November 2013 n Similarly prices at Whitewater which was completed in 2005 increased to $883 psf in December 2013 from an initial price of $362 psf in December 2002
These very strong 2013 price increases provide clear evidence to suggest why the government has elected to increase the supply of ECs in the market by an average of 330 percent over the next three years compared to 2013
Demand for ECs contributed strongly to rapid price growth
In 2013 the top ECs were concentrated in certain districts particularly in the developing areas of the west and the central areas of Ang Mo Kio and Bishan As detailed in the chart below we can see that for example in the case of Bishan Loft and Nuovo the values of these
specific properties are valued at approximately 150 percent of the average psf of private properties within the same district District 20
This chart indicates that some ECs in 2013 exhibited high psf growth and now command very high psfs
The scarcity of ECs in certain localities has enabled some to command higher psfs than the average private district psf However the age of the property psfs needs to be considered when making a determination A strong EC supply increased ndash and the policy changes that remove the EC-favoured status are expected to rectify some of the price inbalance going forward in 2014 a
Source Urban Redevelopment Authority (URA) PropertyGuru Analysis
The ViTalrole that interest rates played
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 23
Tab
le o
f Co
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Share
E xamination of the 2013 market requires an investigation of the important role that interest rates and the cost of capital have on the property sector
The interest rate ndash and the outlook for interest rates ndash represents the effective and expected cost of servicing the mortgage debt In 2013 the cost of servicing a mortgage remained at near record lows
The Singapore Interbank Offered Rate or SIBOR is set by the Association of Banks in Singapore Mortgage rates are effectively set by the base SIBOR rate plus a bank margin
The majority of mortgage debt in Singapore is variable ndash and where fixed it is fixed for a maximum period of five years This is significant as other countries allow longer periods of fixed term mortgages The US for example typically has 30-year fixed loans
Combined with the high personal debt levels carried by property buyers in Singapore the very high percentage of Singaporeans on variable mortgage rates makes the property market highly susceptible to changes in interest rates
As at 2013 the interest rate environment remained very accommodative being directly influenced by the bond buying (QE) of the US Federal Reserve Singapore effectively has its ultra-low interest rate environment driven by the US
The vital role that interest rates played
Though ultra-low rates were a primary driver in the 2013 market they cannot necessarily be assumed to remain as positive for the market during 2014
The chart below looks in more detail at the most recent rate influences on the market in 2013
Source Monetary Authority of Singapore (MAS)
PropertyGuru Market Outlook 2014 24
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le o
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Share
The three-month SIBOR rate has fallen from approximately 18 percent in Q3Q4 2008 to the historically low values at present This most recent behaviour is uncharacteristically stable given that SIBOR rates have displayed much volatility over the past 25 years
The ultra benign interest rate environment over the last five years has increased the capacity of consumers and investors to borrow large sums cheaply This has allowed Singaporersquos property markets to flourish after the global market correction in 2009 ndash and for the very strong market to continue into 2013
ACCESS TO fiNANCE iN 2013
In 2013 the access to finance or the amount that people could borrow was curtailed by cooling measures This was a simple and efficient effort by the government to reduce effective property demand
Property sectors that attract the highest proportion of mortgage debt to finance the purchase were hit hardest by the measures
The sector that was especially susceptible to the cooling measures and showed the biggest correction was the HDB resale market a
While PropertyGuru does not see an imminent
reversiontothehistoricalinterestratemeanof
around3percentitdoesseeaslowtightening
processoccurringduringthecourseof2014
Howeverowingtothenascentrecoveryofthe
USeconomyweexpectthatrateswillriseonly
at a slow pace over the coming years
While this will not provide an additional stimulus
tothemarketndashasitdidin2013-itwillalsonot
beasignificantdragonthemarketInsummary
theinterestrateenvironmentof2013isexpected
tocontinueinto2014withonlyagradualrisendash
andwithaveragemortgageratesfinishingthe
yearbeneath225percent
Howeverthereducedaccesstofinancethrough
cooling measures is expected to continue to
beadragonpricesThesegovernmentmacro-
prudential policy measures remain the only
effectivefinancialinstrumenttheSingapore
government has to alleviate rising property
pricesIntroductionoftheTDSRframeworkis
recognitionofthisItwasagame-changerinthe
marketin2013andunlikelytoberelaxedin2014
The vital role that interest rates played
housingsuPPlYset to increase
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 26
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I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
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le o
f Co
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S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
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70
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Executive Summary
uThecoolingmeasureshadtheirintendedeffectofreducing
demandndashslowingactivityandtransactionvolumesthenslowly
softeningprices
uThemeasureswerereflectedindecliningQ1andQ2volumes
followedbyatypicallageffectndashdecliningpricesinQ3ampQ4
2014 WiLL rEFLECT ThE MArKET TrENDS BEGUN iN 2013
uHDBsareexpectedtoseean8-11percentdeclineinpricesandadrop
inthenumberofpropertiestransactedby15-20percent
uPrivatenon-landedpropertiesareforecasttodropbyalesser6-8
percent and will also see reduced transaction volumes
uIn2014overallpropertysupplywillincreasestronglyndashbutthis
supplywillfocusonspecificpropertytypessuchasHDBsand
Executive Condos (ECs)
uOverthenextthreeyearsECswillexperiencealargeincreasein
supplyfrom2013levelsMuchofthiswillbein2015and2016
however2014isexpectedtoseealleviatedpsfpricepressurendash
duealsototheremovalofthefavouredpolicystatusofECs
WhAT DOES ThiS MEAN FOr YOU
uFirst-homebuyerswillbeprovidedwithmorechoicein2014
due to the commitment to increase supply dramatically and
existing developer plans to supply more ECs
u Upgraders may increasingly adopt a more relaxed wait-and-see
approachtothemarketasnewsupplydecliningpricesand
coolingmeasuresreducedemand-andpricessoften
uInvestorsareexpectedtobemoreselectiveinSingapore
astheperceptionofthemarketbeinglsquofullypricedrsquondashand
attractiveoverseasoptionsndashremovetheurgencytopurchase
2013wasapivotalyearfortheSingaporeanpropertymarketdisplaying
acharacteristicrelationshipbetweendecliningtransactionvolumesand
laterpricedeclines
5
PropertyGuru Market Outlook 2014 6
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LastyearsawfundamentalchangesinSingaporersquospropertymarketwhich
havelaidthegroundworkforthemarketwecanexpecttoseeduring2014
Ofparticularimportanceduring2013were
u Government cooling measures
u Declining property transactions
u Average time to transact property increased
u Propertypricespeakedthendeclined
uInterestratesbottomingout
u ImmigrationPopulationgrowth
uIncreasedpropertysupply
uSentimentsaboutpropertyaffordabilityslowlyshiftingfromless
to more positive
2013The year in review
Eachofthesedevelopmentsimpactedthemarketinturnandwillcontinue
toaffectthemarketwellinto2014Thisreportlooksatthesefactors
separatelyandwhattheymeanforthemarketItalsoconsidersthelikely
consequencesndashandofferstheGuruViewonthemarketandwhatcanbe
expectedfortheremainderof2014
2013R E V I E W
coolingmeasuresand the reduction in property demand
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 8
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Cooling measures and the reduction in property demand
n The double threat of Total Debt Servicing Ratio (TDSR) and reduction of maximum loan tenure Introduction of the TDSR framework would mean a
property buyerrsquos total repayment obligations cannot
exceed 60 percent of hisher income This coupled with a
shorter monthly repayment period of up to 30 years for
bank loans severely limits the upgraderrsquosinvestorrsquos access
to capital and the total amount that heshe is allowed
to borrow
n Reduction of MSR to 30 percent for HDB loans This measure reduces the debt leverage in the HDB
market which drives prices higher Hence this new
restriction reduces demand and subdues prices for HDBs
n Rise in ABSD by 7 percent for purchase of more than one property This is a larger tax on purchasing more property reducing
demand and price pressures However transaction
volumes remained high after its introduction indicating
that it was a relatively weak measure for cooling the
market
n 3-year bar period on the purchase of HDB resale flats This measure discourages a large portion of PRs from participating in the market for resale HDBs
thereby reducing demand and upward pressure on prices for that segment
n Rise in Additional Buyers Stamp Duty (ABSD) for PRs by 5-7 percent for purchase of first or subsequent properties Another measure to reduce demand and the pressure on prices by making purchases more
expensive for PRs who make up about 10 percent of the total population in Singapore
n PRs who own a flat are disallowed from subletting the whole flat This measure removes incentive for PRs to lsquobuy-for-rentrsquo thereby reducing overall demand and
upward pressure on prices
n PRs must sell their HDB flats within six months of purchasing a private property This puts more resale HDBs on the market for sale thereby increasing their supply providing more
choice for Singaporeans and placing downward pressure on prices
z upgraderslocal investor
n Reduction of maximum loan tenure to 25 years for Housing Development Board (HDB) flats Shorter time period means prospective first-time home buyers need to meet higher
repayments each month
n Reduction of the Mortgage Servicing Ratio (MSR) to 30 percent for HDB loans Restricting the maximum amount of mortgage debt reduces demand in the market and
creates a safety margin for the borrower should mortgage rates increase
z First-time home buyers
z permanent residents (prs) and Foreigners
PropertyGuru Market Outlook 2014 9
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T his section can be summarised in two words demand reduction
Through these measures the governmentrsquos objective was to deliberately slow the market and also manage the price growth of certain property types Combined they have reduced the total mortgage debt in the market ndash or the leverage in the industry ndash by
The measures have curtailed property demand by reducing the individualrsquos access to new finance to purchase property This in turn has reduced the demand for property where the measures have been targeted
One immediate effect of these measures was to extend the time taken to sell property in the market Effectively this helped turn a sellersrsquo market into a buyersrsquo market More choices were available to those buyers that remained in the market
There was also less time pressure on the purchase improving the negotiating position for the buyer who is prepared to wait for the right property at the right price
Later sections in this report look at reduced demand and what that means for the market in 2014 a
Cooling measures and the reduction in property demand
2013 was the year where the government made strategic decisions to reduce the price inflationofHDBsandECsandtolimitthepurchaseofcondosbyforeigners
n Measuring debt ratios across both mortgage servicing and the total debt carried
n Calculating ratios at a higher industry-wide standard interest rate of 35 percent
n Altering these rules depending on how many properties are owned
n Targeting some buyer groups such as PRs and foreigners more than others
n Targeting specifically the HDB and EC segments
PropertyGuru Market Outlook 2014 10
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Cooling measures and the reduction in property demand
Source PropertyGuru Consumer Sentiment Survey
TransacTionVolumestake a dip
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 12
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le o
f Co
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Share
T ransaction volumes are critical but often overlooked when measuring and forecasting trends in a property market In 2013 the declining trend in transaction volumes provided
just such a lsquoforward indicatorrsquo with volumes serving as a key market driver for prices in 2014
Put simply transaction volume trends usually precede and drive price trends Typically there is also a lag of around six months for this to occur This happens in most property markets around the world
When all other factors are stable transaction volumes can be a very reliable predictor of price growth or fall ndash and so volume serves as a very simple and extremely powerful forward view of expected price trends for the coming year
Perhaps this relationship is best illustrated by example for instance Hong Kong - Singaporersquos sister economy
HONG KONG An example of the relationship between transaction volume and price
Hong Kong has provided an arguably extreme but instructive example of the relationship between transaction volumes and future prices
Transaction volumes take a dip
This is useful when looking at the transaction volumes in Singapore in 2013 ndash and their likely effects going forward
In Hong Kong volumes declined significantly in mid-2013 Only some seven months later ndash in January 2014 ndash there was a double digit market price decline
Interestingly by the middle of 2013 journalists were already confident enough ndash based on the transaction data ndash to suggest that the drop in transaction volumes signalled significant price declines to follow
There are three relevant points for Singapore to note from this n The relationship between volume and pricing is a universal feature of property markets it is very likely that Singapore prices will be affected by the same relationships in 2014 n The relationship is solid enough for commentators to use it confidently as a price predictor n The lsquolag effectrsquo between volume and price changes is consistent and in a range typically of between five to nine months
PropertyGuru Market Outlook 2014 13
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HDB Resale Transaction Volumes in 2013
Looking first at HDB resales we see a distinct downward trend in volumes from Q3 2012 Over the course of 2013 transaction volumes continued to decline steadily
Again the relationship between transaction volume and price is clearly visible with prices peaking some nine months after volumes peaked Prices then begin to decline in response to the earlier falling transaction volumes The nine-month lag period is very evident
The significant transaction volume declines in 2013 of approximately 8 percent in Q4 2012 will continue to influence the prices of HDB properties at least well into Q3 of 2014
Condo Transaction Volumes in 2013
The chart below shows the total volume of transactions in the private market These are plotted against the Singapore property price index
Q1 2013 saw a decline in volumes from previous years Corresponding prices peaked in Q3 of 2013 ndash thus following the same pattern However the decline in volumes was not significant until the second half of 2013 As such the corresponding decline in prices was also only slight in the last quarter of the year
At the same time it is price that affects upgraders the most given the spate of cooling measures imposed on the market Therefore some upgraders may choose to play the waiting game and defer purchases until market forces dictate that prices drop even further - or when upcoming launches offer more attractive entry prices to offset the downside risks in property purchasing
The two weak quarters of Q3 and Q4 2013 strongly suggest renewed and much stronger downward pressure on prices in the first half of 2014
Transaction volumes take a dip
Source Housing Development Board (HDB)
PropertyGuru Market Outlook 2014 14
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Transactions have experienced a significant dip of about 58 percent since the middle of 2013 at least partly as a result of market sentiment turning cautious and the inability to actually borrow sufficient amounts to buy These effects have followed the announcement of tighter Monetary Authority of Singapore (MAS) financing regulations namely TDSR and MSR in late June and their earlier ABSD changes
Whatrsquos interesting is that not only have these measures resulted in consecutive quarters of decline in transactions in Q3 and Q4 but they have also caused total volume to return to 2008 levels in the condo market
Watch video Industry analysts share their inisghts into how the CCR RCR and OCR regions fared in 2013
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
PropertyGuru Market Outlook 2014 15
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Condo Transaction Volumes - By Area
Condo transaction volumes in 2013 did not match the record number of transactions seen in 2012 They declined some 386 percent ndash reflecting weakening buyer sentiments for private properties in part due to MAS regulations
However the drop in transactions differs from region to region The transactions in the Core Central Region (CCR) trended down the most severely registering an average of a 40 percent decrease quarter-on-quarter
Of particular note for the regions in 2013 n In Q2 2013 the Rest of Central Region (RCR) and Outside Central Region (OCR) regions grew transaction volumes by a healthy 44 percent and 18 percent respectively from the previous quarter ndash despite the introduction of the ABSD However the new TDSR and MSR in the second half of the year curtailed these volumes n In the RCR property seekers purchased a total of 2062 units in Q3 and Q4 2013 combined being half the level of a year prior While down significantly these volumes were a better result than those recorded by the CR and OCR n Despite most buying activity occurring in the OCR the area saw transactions decline from 4673 units to 3105 units between Q2
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
and Q3 2013 ndash and further drop to around 1430 by Q4 This made the volumes in Q4 just 30 percent (approximately) of the level they were six months prior n The CCR and the OCR regions recorded the largest percentage decline in volume from the peak in 2012 and through 2013 n Despite transaction volume ratios that would indicate that the OCR will experience the worst pricing pressures many analysts are expecting this effect to be offset largely by significant new demand in this area a
The FlucTuaTing nature of prices
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 17
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le o
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T he declining transaction volumes of the last two quarters of 2013 finally drove down price levels in Q4 Until Q3 2013 prices continued to defy gravity as the gap between prices
and their supporting volumes grew larger
From the previous sections we recognise that this is a text book market response to declining volumes where prices can remain elevated for two or more quarters before plateauing and then declining
The predictable relationship between volume and price
Many factors influence the lsquotime laggedrsquo relationship between volumes and prices However one of the strongest is also one of the simplest It is also the most constant in any property marketplace in the world It is human behaviour
Humans have an entirely understandable and common tendency to hold on to their properties rather than to accept lower offers They typically do this for many months as the offers dry up before reluctantly accepting lower offers ndash and recognising in turn that the market has moved
The fluctuating nature of prices
This behaviour helps explain why during the period of declining transaction volumes the average time it takes to sell a property also increases
Expanding time on market and declining transaction volumes are forward indicators of coming softness in prices ndash and usually go hand in hand Significantly both were apparent in the Singapore market in the latter half of 2013
During 2013 the Singaporean market behaved very predictably in response to the financing restrictions and corresponding transaction declines This augers well for predicting trends in 2014
Reading the 2013 data we can confidently expect to see further downward pressure on prices into 2014 ndash providing other factors remain stable Despite the fact that many other micro and macro factors can influence prices these forces will need to be particularly strong now to offset the well-entrenched price decline process that has been set in play by the declining transaction volumes of late 2013
PropertyGuru Market Outlook 2014 18
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2013 Price Outcomes HDBs VS Condos
From the chart below both property types saw price declines in 2013 However HDBs led the way ahead of condos From earlier sections we also recognise that the earlier price declines of HDBs were preceded by earlier transaction volume declines
By Q3 the HDB market had begun to sag under the new cooling measures ndash aimed specifically at curtailing the availability of mortgage credit to the market and placing other restrictions on purchasers However it was not until Q4 led by the mild declines in volumes that were seen in Q1 2013 that the condo market began to correct
These pricing forces were accompanied by the first of the new supply coming online - and some mild reductions in the rates of population growth Additionally restrictions governing the purchase of HDB resale properties by Singapore PRs introduced in August played a role in reducing effective demand for HDBs ndash and also contributed to their faster price declines
The largest contributing factors in 2013 were the new purchasing restrictions and the implementation of the MSR TDSR and ABSD policy changes These effectively reduced both the eligibility of individuals for new mortgage debt and increased the purchasing costs at the same time
The fluctuating nature of prices
Source Urban Redevelopment Authority (URA) Housing Development Board (HDB)
Locality-based fluctuations in the Condo market
In 2013 the price changes and transaction volume of condos varied between regions Below we compare the CCR the OCR and RCR
The CCR registered a decline of 21 percent while prices in the RCR and OCR increased by 03 percent and 68 percent respectively
PropertyGuru Market Outlook 2014 19
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The fluctuating nature of prices
Source Urban Redevelopment Authority (URA)
Significantly the CCR registered a price fall across the last three quarters of 2013 This fall also coincided with the introduction of the ABSD in Q1 which saw higher taxes on second and subsequent properties imposed on a majority of potential buyers including high-net worth individuals and foreigners
The downward trend of luxury properties appeared to be further exacerbated with the TDSR changes introduced in late June These resulted in a price fall of 22 percent by Q4 2013 a rate of decline that was seven times larger than the 03 percent decline in the previous quarter
The RCR region also witnessed price declines for the first time since Q1 2012 This was after the TDSR came into effect However unlike the CCR the RCR maintained positive market activity throughout 2013 This was spurred by the launch of units that were competitively priced at the level of affordability that buyers were comfortable with
The OCR continued to be the fastest growing market segment which contributed much to the increase in the overall private property price index In spite of a decline of 09 percent in Q4 2013 the first after almost two years the rate of price growth for the OCR in 2013 was 20 percent higher than the levels in 2012 - which registered only a 54 percent rise a
why execuTiVe condos were highly sought after
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 21
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Why executive condos were highly sought after
A report compiled by PropertyGuru found that the market value of fully and partially privatised ECs grew strongly in 2013
Examples from the report n Unit prices at Eastvale in Pasir Ris the first EC in Singapore increased from $454 per square foot (psf) in September 1996 to $909 psf by November 2013 This translates to a rise of 100 percent n Two partially privatised ECs also located in Pasir Ris - The Esparis and Whitewater - showed higher growth of 130 percent and 140 percent respectively In January 2002 the Esparis had a psf of $370 and reached $859 psf by November 2013 n Similarly prices at Whitewater which was completed in 2005 increased to $883 psf in December 2013 from an initial price of $362 psf in December 2002
These very strong 2013 price increases provide clear evidence to suggest why the government has elected to increase the supply of ECs in the market by an average of 330 percent over the next three years compared to 2013
Demand for ECs contributed strongly to rapid price growth
In 2013 the top ECs were concentrated in certain districts particularly in the developing areas of the west and the central areas of Ang Mo Kio and Bishan As detailed in the chart below we can see that for example in the case of Bishan Loft and Nuovo the values of these
specific properties are valued at approximately 150 percent of the average psf of private properties within the same district District 20
This chart indicates that some ECs in 2013 exhibited high psf growth and now command very high psfs
The scarcity of ECs in certain localities has enabled some to command higher psfs than the average private district psf However the age of the property psfs needs to be considered when making a determination A strong EC supply increased ndash and the policy changes that remove the EC-favoured status are expected to rectify some of the price inbalance going forward in 2014 a
Source Urban Redevelopment Authority (URA) PropertyGuru Analysis
The ViTalrole that interest rates played
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 23
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E xamination of the 2013 market requires an investigation of the important role that interest rates and the cost of capital have on the property sector
The interest rate ndash and the outlook for interest rates ndash represents the effective and expected cost of servicing the mortgage debt In 2013 the cost of servicing a mortgage remained at near record lows
The Singapore Interbank Offered Rate or SIBOR is set by the Association of Banks in Singapore Mortgage rates are effectively set by the base SIBOR rate plus a bank margin
The majority of mortgage debt in Singapore is variable ndash and where fixed it is fixed for a maximum period of five years This is significant as other countries allow longer periods of fixed term mortgages The US for example typically has 30-year fixed loans
Combined with the high personal debt levels carried by property buyers in Singapore the very high percentage of Singaporeans on variable mortgage rates makes the property market highly susceptible to changes in interest rates
As at 2013 the interest rate environment remained very accommodative being directly influenced by the bond buying (QE) of the US Federal Reserve Singapore effectively has its ultra-low interest rate environment driven by the US
The vital role that interest rates played
Though ultra-low rates were a primary driver in the 2013 market they cannot necessarily be assumed to remain as positive for the market during 2014
The chart below looks in more detail at the most recent rate influences on the market in 2013
Source Monetary Authority of Singapore (MAS)
PropertyGuru Market Outlook 2014 24
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The three-month SIBOR rate has fallen from approximately 18 percent in Q3Q4 2008 to the historically low values at present This most recent behaviour is uncharacteristically stable given that SIBOR rates have displayed much volatility over the past 25 years
The ultra benign interest rate environment over the last five years has increased the capacity of consumers and investors to borrow large sums cheaply This has allowed Singaporersquos property markets to flourish after the global market correction in 2009 ndash and for the very strong market to continue into 2013
ACCESS TO fiNANCE iN 2013
In 2013 the access to finance or the amount that people could borrow was curtailed by cooling measures This was a simple and efficient effort by the government to reduce effective property demand
Property sectors that attract the highest proportion of mortgage debt to finance the purchase were hit hardest by the measures
The sector that was especially susceptible to the cooling measures and showed the biggest correction was the HDB resale market a
While PropertyGuru does not see an imminent
reversiontothehistoricalinterestratemeanof
around3percentitdoesseeaslowtightening
processoccurringduringthecourseof2014
Howeverowingtothenascentrecoveryofthe
USeconomyweexpectthatrateswillriseonly
at a slow pace over the coming years
While this will not provide an additional stimulus
tothemarketndashasitdidin2013-itwillalsonot
beasignificantdragonthemarketInsummary
theinterestrateenvironmentof2013isexpected
tocontinueinto2014withonlyagradualrisendash
andwithaveragemortgageratesfinishingthe
yearbeneath225percent
Howeverthereducedaccesstofinancethrough
cooling measures is expected to continue to
beadragonpricesThesegovernmentmacro-
prudential policy measures remain the only
effectivefinancialinstrumenttheSingapore
government has to alleviate rising property
pricesIntroductionoftheTDSRframeworkis
recognitionofthisItwasagame-changerinthe
marketin2013andunlikelytoberelaxedin2014
The vital role that interest rates played
housingsuPPlYset to increase
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 26
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I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
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S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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- Page 6 Off
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PropertyGuru Market Outlook 2014 6
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LastyearsawfundamentalchangesinSingaporersquospropertymarketwhich
havelaidthegroundworkforthemarketwecanexpecttoseeduring2014
Ofparticularimportanceduring2013were
u Government cooling measures
u Declining property transactions
u Average time to transact property increased
u Propertypricespeakedthendeclined
uInterestratesbottomingout
u ImmigrationPopulationgrowth
uIncreasedpropertysupply
uSentimentsaboutpropertyaffordabilityslowlyshiftingfromless
to more positive
2013The year in review
Eachofthesedevelopmentsimpactedthemarketinturnandwillcontinue
toaffectthemarketwellinto2014Thisreportlooksatthesefactors
separatelyandwhattheymeanforthemarketItalsoconsidersthelikely
consequencesndashandofferstheGuruViewonthemarketandwhatcanbe
expectedfortheremainderof2014
2013R E V I E W
coolingmeasuresand the reduction in property demand
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 8
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Cooling measures and the reduction in property demand
n The double threat of Total Debt Servicing Ratio (TDSR) and reduction of maximum loan tenure Introduction of the TDSR framework would mean a
property buyerrsquos total repayment obligations cannot
exceed 60 percent of hisher income This coupled with a
shorter monthly repayment period of up to 30 years for
bank loans severely limits the upgraderrsquosinvestorrsquos access
to capital and the total amount that heshe is allowed
to borrow
n Reduction of MSR to 30 percent for HDB loans This measure reduces the debt leverage in the HDB
market which drives prices higher Hence this new
restriction reduces demand and subdues prices for HDBs
n Rise in ABSD by 7 percent for purchase of more than one property This is a larger tax on purchasing more property reducing
demand and price pressures However transaction
volumes remained high after its introduction indicating
that it was a relatively weak measure for cooling the
market
n 3-year bar period on the purchase of HDB resale flats This measure discourages a large portion of PRs from participating in the market for resale HDBs
thereby reducing demand and upward pressure on prices for that segment
n Rise in Additional Buyers Stamp Duty (ABSD) for PRs by 5-7 percent for purchase of first or subsequent properties Another measure to reduce demand and the pressure on prices by making purchases more
expensive for PRs who make up about 10 percent of the total population in Singapore
n PRs who own a flat are disallowed from subletting the whole flat This measure removes incentive for PRs to lsquobuy-for-rentrsquo thereby reducing overall demand and
upward pressure on prices
n PRs must sell their HDB flats within six months of purchasing a private property This puts more resale HDBs on the market for sale thereby increasing their supply providing more
choice for Singaporeans and placing downward pressure on prices
z upgraderslocal investor
n Reduction of maximum loan tenure to 25 years for Housing Development Board (HDB) flats Shorter time period means prospective first-time home buyers need to meet higher
repayments each month
n Reduction of the Mortgage Servicing Ratio (MSR) to 30 percent for HDB loans Restricting the maximum amount of mortgage debt reduces demand in the market and
creates a safety margin for the borrower should mortgage rates increase
z First-time home buyers
z permanent residents (prs) and Foreigners
PropertyGuru Market Outlook 2014 9
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T his section can be summarised in two words demand reduction
Through these measures the governmentrsquos objective was to deliberately slow the market and also manage the price growth of certain property types Combined they have reduced the total mortgage debt in the market ndash or the leverage in the industry ndash by
The measures have curtailed property demand by reducing the individualrsquos access to new finance to purchase property This in turn has reduced the demand for property where the measures have been targeted
One immediate effect of these measures was to extend the time taken to sell property in the market Effectively this helped turn a sellersrsquo market into a buyersrsquo market More choices were available to those buyers that remained in the market
There was also less time pressure on the purchase improving the negotiating position for the buyer who is prepared to wait for the right property at the right price
Later sections in this report look at reduced demand and what that means for the market in 2014 a
Cooling measures and the reduction in property demand
2013 was the year where the government made strategic decisions to reduce the price inflationofHDBsandECsandtolimitthepurchaseofcondosbyforeigners
n Measuring debt ratios across both mortgage servicing and the total debt carried
n Calculating ratios at a higher industry-wide standard interest rate of 35 percent
n Altering these rules depending on how many properties are owned
n Targeting some buyer groups such as PRs and foreigners more than others
n Targeting specifically the HDB and EC segments
PropertyGuru Market Outlook 2014 10
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Cooling measures and the reduction in property demand
Source PropertyGuru Consumer Sentiment Survey
TransacTionVolumestake a dip
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 12
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Share
T ransaction volumes are critical but often overlooked when measuring and forecasting trends in a property market In 2013 the declining trend in transaction volumes provided
just such a lsquoforward indicatorrsquo with volumes serving as a key market driver for prices in 2014
Put simply transaction volume trends usually precede and drive price trends Typically there is also a lag of around six months for this to occur This happens in most property markets around the world
When all other factors are stable transaction volumes can be a very reliable predictor of price growth or fall ndash and so volume serves as a very simple and extremely powerful forward view of expected price trends for the coming year
Perhaps this relationship is best illustrated by example for instance Hong Kong - Singaporersquos sister economy
HONG KONG An example of the relationship between transaction volume and price
Hong Kong has provided an arguably extreme but instructive example of the relationship between transaction volumes and future prices
Transaction volumes take a dip
This is useful when looking at the transaction volumes in Singapore in 2013 ndash and their likely effects going forward
In Hong Kong volumes declined significantly in mid-2013 Only some seven months later ndash in January 2014 ndash there was a double digit market price decline
Interestingly by the middle of 2013 journalists were already confident enough ndash based on the transaction data ndash to suggest that the drop in transaction volumes signalled significant price declines to follow
There are three relevant points for Singapore to note from this n The relationship between volume and pricing is a universal feature of property markets it is very likely that Singapore prices will be affected by the same relationships in 2014 n The relationship is solid enough for commentators to use it confidently as a price predictor n The lsquolag effectrsquo between volume and price changes is consistent and in a range typically of between five to nine months
PropertyGuru Market Outlook 2014 13
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HDB Resale Transaction Volumes in 2013
Looking first at HDB resales we see a distinct downward trend in volumes from Q3 2012 Over the course of 2013 transaction volumes continued to decline steadily
Again the relationship between transaction volume and price is clearly visible with prices peaking some nine months after volumes peaked Prices then begin to decline in response to the earlier falling transaction volumes The nine-month lag period is very evident
The significant transaction volume declines in 2013 of approximately 8 percent in Q4 2012 will continue to influence the prices of HDB properties at least well into Q3 of 2014
Condo Transaction Volumes in 2013
The chart below shows the total volume of transactions in the private market These are plotted against the Singapore property price index
Q1 2013 saw a decline in volumes from previous years Corresponding prices peaked in Q3 of 2013 ndash thus following the same pattern However the decline in volumes was not significant until the second half of 2013 As such the corresponding decline in prices was also only slight in the last quarter of the year
At the same time it is price that affects upgraders the most given the spate of cooling measures imposed on the market Therefore some upgraders may choose to play the waiting game and defer purchases until market forces dictate that prices drop even further - or when upcoming launches offer more attractive entry prices to offset the downside risks in property purchasing
The two weak quarters of Q3 and Q4 2013 strongly suggest renewed and much stronger downward pressure on prices in the first half of 2014
Transaction volumes take a dip
Source Housing Development Board (HDB)
PropertyGuru Market Outlook 2014 14
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Transactions have experienced a significant dip of about 58 percent since the middle of 2013 at least partly as a result of market sentiment turning cautious and the inability to actually borrow sufficient amounts to buy These effects have followed the announcement of tighter Monetary Authority of Singapore (MAS) financing regulations namely TDSR and MSR in late June and their earlier ABSD changes
Whatrsquos interesting is that not only have these measures resulted in consecutive quarters of decline in transactions in Q3 and Q4 but they have also caused total volume to return to 2008 levels in the condo market
Watch video Industry analysts share their inisghts into how the CCR RCR and OCR regions fared in 2013
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
PropertyGuru Market Outlook 2014 15
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Condo Transaction Volumes - By Area
Condo transaction volumes in 2013 did not match the record number of transactions seen in 2012 They declined some 386 percent ndash reflecting weakening buyer sentiments for private properties in part due to MAS regulations
However the drop in transactions differs from region to region The transactions in the Core Central Region (CCR) trended down the most severely registering an average of a 40 percent decrease quarter-on-quarter
Of particular note for the regions in 2013 n In Q2 2013 the Rest of Central Region (RCR) and Outside Central Region (OCR) regions grew transaction volumes by a healthy 44 percent and 18 percent respectively from the previous quarter ndash despite the introduction of the ABSD However the new TDSR and MSR in the second half of the year curtailed these volumes n In the RCR property seekers purchased a total of 2062 units in Q3 and Q4 2013 combined being half the level of a year prior While down significantly these volumes were a better result than those recorded by the CR and OCR n Despite most buying activity occurring in the OCR the area saw transactions decline from 4673 units to 3105 units between Q2
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
and Q3 2013 ndash and further drop to around 1430 by Q4 This made the volumes in Q4 just 30 percent (approximately) of the level they were six months prior n The CCR and the OCR regions recorded the largest percentage decline in volume from the peak in 2012 and through 2013 n Despite transaction volume ratios that would indicate that the OCR will experience the worst pricing pressures many analysts are expecting this effect to be offset largely by significant new demand in this area a
The FlucTuaTing nature of prices
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 17
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T he declining transaction volumes of the last two quarters of 2013 finally drove down price levels in Q4 Until Q3 2013 prices continued to defy gravity as the gap between prices
and their supporting volumes grew larger
From the previous sections we recognise that this is a text book market response to declining volumes where prices can remain elevated for two or more quarters before plateauing and then declining
The predictable relationship between volume and price
Many factors influence the lsquotime laggedrsquo relationship between volumes and prices However one of the strongest is also one of the simplest It is also the most constant in any property marketplace in the world It is human behaviour
Humans have an entirely understandable and common tendency to hold on to their properties rather than to accept lower offers They typically do this for many months as the offers dry up before reluctantly accepting lower offers ndash and recognising in turn that the market has moved
The fluctuating nature of prices
This behaviour helps explain why during the period of declining transaction volumes the average time it takes to sell a property also increases
Expanding time on market and declining transaction volumes are forward indicators of coming softness in prices ndash and usually go hand in hand Significantly both were apparent in the Singapore market in the latter half of 2013
During 2013 the Singaporean market behaved very predictably in response to the financing restrictions and corresponding transaction declines This augers well for predicting trends in 2014
Reading the 2013 data we can confidently expect to see further downward pressure on prices into 2014 ndash providing other factors remain stable Despite the fact that many other micro and macro factors can influence prices these forces will need to be particularly strong now to offset the well-entrenched price decline process that has been set in play by the declining transaction volumes of late 2013
PropertyGuru Market Outlook 2014 18
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2013 Price Outcomes HDBs VS Condos
From the chart below both property types saw price declines in 2013 However HDBs led the way ahead of condos From earlier sections we also recognise that the earlier price declines of HDBs were preceded by earlier transaction volume declines
By Q3 the HDB market had begun to sag under the new cooling measures ndash aimed specifically at curtailing the availability of mortgage credit to the market and placing other restrictions on purchasers However it was not until Q4 led by the mild declines in volumes that were seen in Q1 2013 that the condo market began to correct
These pricing forces were accompanied by the first of the new supply coming online - and some mild reductions in the rates of population growth Additionally restrictions governing the purchase of HDB resale properties by Singapore PRs introduced in August played a role in reducing effective demand for HDBs ndash and also contributed to their faster price declines
The largest contributing factors in 2013 were the new purchasing restrictions and the implementation of the MSR TDSR and ABSD policy changes These effectively reduced both the eligibility of individuals for new mortgage debt and increased the purchasing costs at the same time
The fluctuating nature of prices
Source Urban Redevelopment Authority (URA) Housing Development Board (HDB)
Locality-based fluctuations in the Condo market
In 2013 the price changes and transaction volume of condos varied between regions Below we compare the CCR the OCR and RCR
The CCR registered a decline of 21 percent while prices in the RCR and OCR increased by 03 percent and 68 percent respectively
PropertyGuru Market Outlook 2014 19
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The fluctuating nature of prices
Source Urban Redevelopment Authority (URA)
Significantly the CCR registered a price fall across the last three quarters of 2013 This fall also coincided with the introduction of the ABSD in Q1 which saw higher taxes on second and subsequent properties imposed on a majority of potential buyers including high-net worth individuals and foreigners
The downward trend of luxury properties appeared to be further exacerbated with the TDSR changes introduced in late June These resulted in a price fall of 22 percent by Q4 2013 a rate of decline that was seven times larger than the 03 percent decline in the previous quarter
The RCR region also witnessed price declines for the first time since Q1 2012 This was after the TDSR came into effect However unlike the CCR the RCR maintained positive market activity throughout 2013 This was spurred by the launch of units that were competitively priced at the level of affordability that buyers were comfortable with
The OCR continued to be the fastest growing market segment which contributed much to the increase in the overall private property price index In spite of a decline of 09 percent in Q4 2013 the first after almost two years the rate of price growth for the OCR in 2013 was 20 percent higher than the levels in 2012 - which registered only a 54 percent rise a
why execuTiVe condos were highly sought after
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 21
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Why executive condos were highly sought after
A report compiled by PropertyGuru found that the market value of fully and partially privatised ECs grew strongly in 2013
Examples from the report n Unit prices at Eastvale in Pasir Ris the first EC in Singapore increased from $454 per square foot (psf) in September 1996 to $909 psf by November 2013 This translates to a rise of 100 percent n Two partially privatised ECs also located in Pasir Ris - The Esparis and Whitewater - showed higher growth of 130 percent and 140 percent respectively In January 2002 the Esparis had a psf of $370 and reached $859 psf by November 2013 n Similarly prices at Whitewater which was completed in 2005 increased to $883 psf in December 2013 from an initial price of $362 psf in December 2002
These very strong 2013 price increases provide clear evidence to suggest why the government has elected to increase the supply of ECs in the market by an average of 330 percent over the next three years compared to 2013
Demand for ECs contributed strongly to rapid price growth
In 2013 the top ECs were concentrated in certain districts particularly in the developing areas of the west and the central areas of Ang Mo Kio and Bishan As detailed in the chart below we can see that for example in the case of Bishan Loft and Nuovo the values of these
specific properties are valued at approximately 150 percent of the average psf of private properties within the same district District 20
This chart indicates that some ECs in 2013 exhibited high psf growth and now command very high psfs
The scarcity of ECs in certain localities has enabled some to command higher psfs than the average private district psf However the age of the property psfs needs to be considered when making a determination A strong EC supply increased ndash and the policy changes that remove the EC-favoured status are expected to rectify some of the price inbalance going forward in 2014 a
Source Urban Redevelopment Authority (URA) PropertyGuru Analysis
The ViTalrole that interest rates played
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 23
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E xamination of the 2013 market requires an investigation of the important role that interest rates and the cost of capital have on the property sector
The interest rate ndash and the outlook for interest rates ndash represents the effective and expected cost of servicing the mortgage debt In 2013 the cost of servicing a mortgage remained at near record lows
The Singapore Interbank Offered Rate or SIBOR is set by the Association of Banks in Singapore Mortgage rates are effectively set by the base SIBOR rate plus a bank margin
The majority of mortgage debt in Singapore is variable ndash and where fixed it is fixed for a maximum period of five years This is significant as other countries allow longer periods of fixed term mortgages The US for example typically has 30-year fixed loans
Combined with the high personal debt levels carried by property buyers in Singapore the very high percentage of Singaporeans on variable mortgage rates makes the property market highly susceptible to changes in interest rates
As at 2013 the interest rate environment remained very accommodative being directly influenced by the bond buying (QE) of the US Federal Reserve Singapore effectively has its ultra-low interest rate environment driven by the US
The vital role that interest rates played
Though ultra-low rates were a primary driver in the 2013 market they cannot necessarily be assumed to remain as positive for the market during 2014
The chart below looks in more detail at the most recent rate influences on the market in 2013
Source Monetary Authority of Singapore (MAS)
PropertyGuru Market Outlook 2014 24
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The three-month SIBOR rate has fallen from approximately 18 percent in Q3Q4 2008 to the historically low values at present This most recent behaviour is uncharacteristically stable given that SIBOR rates have displayed much volatility over the past 25 years
The ultra benign interest rate environment over the last five years has increased the capacity of consumers and investors to borrow large sums cheaply This has allowed Singaporersquos property markets to flourish after the global market correction in 2009 ndash and for the very strong market to continue into 2013
ACCESS TO fiNANCE iN 2013
In 2013 the access to finance or the amount that people could borrow was curtailed by cooling measures This was a simple and efficient effort by the government to reduce effective property demand
Property sectors that attract the highest proportion of mortgage debt to finance the purchase were hit hardest by the measures
The sector that was especially susceptible to the cooling measures and showed the biggest correction was the HDB resale market a
While PropertyGuru does not see an imminent
reversiontothehistoricalinterestratemeanof
around3percentitdoesseeaslowtightening
processoccurringduringthecourseof2014
Howeverowingtothenascentrecoveryofthe
USeconomyweexpectthatrateswillriseonly
at a slow pace over the coming years
While this will not provide an additional stimulus
tothemarketndashasitdidin2013-itwillalsonot
beasignificantdragonthemarketInsummary
theinterestrateenvironmentof2013isexpected
tocontinueinto2014withonlyagradualrisendash
andwithaveragemortgageratesfinishingthe
yearbeneath225percent
Howeverthereducedaccesstofinancethrough
cooling measures is expected to continue to
beadragonpricesThesegovernmentmacro-
prudential policy measures remain the only
effectivefinancialinstrumenttheSingapore
government has to alleviate rising property
pricesIntroductionoftheTDSRframeworkis
recognitionofthisItwasagame-changerinthe
marketin2013andunlikelytoberelaxedin2014
The vital role that interest rates played
housingsuPPlYset to increase
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 26
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le o
f Co
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I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
Tab
le o
f Co
nte
nts
Share
S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
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69
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andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
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70
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2013R E V I E W
coolingmeasuresand the reduction in property demand
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 8
Tab
le o
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Share
Cooling measures and the reduction in property demand
n The double threat of Total Debt Servicing Ratio (TDSR) and reduction of maximum loan tenure Introduction of the TDSR framework would mean a
property buyerrsquos total repayment obligations cannot
exceed 60 percent of hisher income This coupled with a
shorter monthly repayment period of up to 30 years for
bank loans severely limits the upgraderrsquosinvestorrsquos access
to capital and the total amount that heshe is allowed
to borrow
n Reduction of MSR to 30 percent for HDB loans This measure reduces the debt leverage in the HDB
market which drives prices higher Hence this new
restriction reduces demand and subdues prices for HDBs
n Rise in ABSD by 7 percent for purchase of more than one property This is a larger tax on purchasing more property reducing
demand and price pressures However transaction
volumes remained high after its introduction indicating
that it was a relatively weak measure for cooling the
market
n 3-year bar period on the purchase of HDB resale flats This measure discourages a large portion of PRs from participating in the market for resale HDBs
thereby reducing demand and upward pressure on prices for that segment
n Rise in Additional Buyers Stamp Duty (ABSD) for PRs by 5-7 percent for purchase of first or subsequent properties Another measure to reduce demand and the pressure on prices by making purchases more
expensive for PRs who make up about 10 percent of the total population in Singapore
n PRs who own a flat are disallowed from subletting the whole flat This measure removes incentive for PRs to lsquobuy-for-rentrsquo thereby reducing overall demand and
upward pressure on prices
n PRs must sell their HDB flats within six months of purchasing a private property This puts more resale HDBs on the market for sale thereby increasing their supply providing more
choice for Singaporeans and placing downward pressure on prices
z upgraderslocal investor
n Reduction of maximum loan tenure to 25 years for Housing Development Board (HDB) flats Shorter time period means prospective first-time home buyers need to meet higher
repayments each month
n Reduction of the Mortgage Servicing Ratio (MSR) to 30 percent for HDB loans Restricting the maximum amount of mortgage debt reduces demand in the market and
creates a safety margin for the borrower should mortgage rates increase
z First-time home buyers
z permanent residents (prs) and Foreigners
PropertyGuru Market Outlook 2014 9
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Share
T his section can be summarised in two words demand reduction
Through these measures the governmentrsquos objective was to deliberately slow the market and also manage the price growth of certain property types Combined they have reduced the total mortgage debt in the market ndash or the leverage in the industry ndash by
The measures have curtailed property demand by reducing the individualrsquos access to new finance to purchase property This in turn has reduced the demand for property where the measures have been targeted
One immediate effect of these measures was to extend the time taken to sell property in the market Effectively this helped turn a sellersrsquo market into a buyersrsquo market More choices were available to those buyers that remained in the market
There was also less time pressure on the purchase improving the negotiating position for the buyer who is prepared to wait for the right property at the right price
Later sections in this report look at reduced demand and what that means for the market in 2014 a
Cooling measures and the reduction in property demand
2013 was the year where the government made strategic decisions to reduce the price inflationofHDBsandECsandtolimitthepurchaseofcondosbyforeigners
n Measuring debt ratios across both mortgage servicing and the total debt carried
n Calculating ratios at a higher industry-wide standard interest rate of 35 percent
n Altering these rules depending on how many properties are owned
n Targeting some buyer groups such as PRs and foreigners more than others
n Targeting specifically the HDB and EC segments
PropertyGuru Market Outlook 2014 10
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Share
Cooling measures and the reduction in property demand
Source PropertyGuru Consumer Sentiment Survey
TransacTionVolumestake a dip
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 12
Tab
le o
f Co
nte
nts
Share
T ransaction volumes are critical but often overlooked when measuring and forecasting trends in a property market In 2013 the declining trend in transaction volumes provided
just such a lsquoforward indicatorrsquo with volumes serving as a key market driver for prices in 2014
Put simply transaction volume trends usually precede and drive price trends Typically there is also a lag of around six months for this to occur This happens in most property markets around the world
When all other factors are stable transaction volumes can be a very reliable predictor of price growth or fall ndash and so volume serves as a very simple and extremely powerful forward view of expected price trends for the coming year
Perhaps this relationship is best illustrated by example for instance Hong Kong - Singaporersquos sister economy
HONG KONG An example of the relationship between transaction volume and price
Hong Kong has provided an arguably extreme but instructive example of the relationship between transaction volumes and future prices
Transaction volumes take a dip
This is useful when looking at the transaction volumes in Singapore in 2013 ndash and their likely effects going forward
In Hong Kong volumes declined significantly in mid-2013 Only some seven months later ndash in January 2014 ndash there was a double digit market price decline
Interestingly by the middle of 2013 journalists were already confident enough ndash based on the transaction data ndash to suggest that the drop in transaction volumes signalled significant price declines to follow
There are three relevant points for Singapore to note from this n The relationship between volume and pricing is a universal feature of property markets it is very likely that Singapore prices will be affected by the same relationships in 2014 n The relationship is solid enough for commentators to use it confidently as a price predictor n The lsquolag effectrsquo between volume and price changes is consistent and in a range typically of between five to nine months
PropertyGuru Market Outlook 2014 13
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HDB Resale Transaction Volumes in 2013
Looking first at HDB resales we see a distinct downward trend in volumes from Q3 2012 Over the course of 2013 transaction volumes continued to decline steadily
Again the relationship between transaction volume and price is clearly visible with prices peaking some nine months after volumes peaked Prices then begin to decline in response to the earlier falling transaction volumes The nine-month lag period is very evident
The significant transaction volume declines in 2013 of approximately 8 percent in Q4 2012 will continue to influence the prices of HDB properties at least well into Q3 of 2014
Condo Transaction Volumes in 2013
The chart below shows the total volume of transactions in the private market These are plotted against the Singapore property price index
Q1 2013 saw a decline in volumes from previous years Corresponding prices peaked in Q3 of 2013 ndash thus following the same pattern However the decline in volumes was not significant until the second half of 2013 As such the corresponding decline in prices was also only slight in the last quarter of the year
At the same time it is price that affects upgraders the most given the spate of cooling measures imposed on the market Therefore some upgraders may choose to play the waiting game and defer purchases until market forces dictate that prices drop even further - or when upcoming launches offer more attractive entry prices to offset the downside risks in property purchasing
The two weak quarters of Q3 and Q4 2013 strongly suggest renewed and much stronger downward pressure on prices in the first half of 2014
Transaction volumes take a dip
Source Housing Development Board (HDB)
PropertyGuru Market Outlook 2014 14
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Transactions have experienced a significant dip of about 58 percent since the middle of 2013 at least partly as a result of market sentiment turning cautious and the inability to actually borrow sufficient amounts to buy These effects have followed the announcement of tighter Monetary Authority of Singapore (MAS) financing regulations namely TDSR and MSR in late June and their earlier ABSD changes
Whatrsquos interesting is that not only have these measures resulted in consecutive quarters of decline in transactions in Q3 and Q4 but they have also caused total volume to return to 2008 levels in the condo market
Watch video Industry analysts share their inisghts into how the CCR RCR and OCR regions fared in 2013
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
PropertyGuru Market Outlook 2014 15
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Condo Transaction Volumes - By Area
Condo transaction volumes in 2013 did not match the record number of transactions seen in 2012 They declined some 386 percent ndash reflecting weakening buyer sentiments for private properties in part due to MAS regulations
However the drop in transactions differs from region to region The transactions in the Core Central Region (CCR) trended down the most severely registering an average of a 40 percent decrease quarter-on-quarter
Of particular note for the regions in 2013 n In Q2 2013 the Rest of Central Region (RCR) and Outside Central Region (OCR) regions grew transaction volumes by a healthy 44 percent and 18 percent respectively from the previous quarter ndash despite the introduction of the ABSD However the new TDSR and MSR in the second half of the year curtailed these volumes n In the RCR property seekers purchased a total of 2062 units in Q3 and Q4 2013 combined being half the level of a year prior While down significantly these volumes were a better result than those recorded by the CR and OCR n Despite most buying activity occurring in the OCR the area saw transactions decline from 4673 units to 3105 units between Q2
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
and Q3 2013 ndash and further drop to around 1430 by Q4 This made the volumes in Q4 just 30 percent (approximately) of the level they were six months prior n The CCR and the OCR regions recorded the largest percentage decline in volume from the peak in 2012 and through 2013 n Despite transaction volume ratios that would indicate that the OCR will experience the worst pricing pressures many analysts are expecting this effect to be offset largely by significant new demand in this area a
The FlucTuaTing nature of prices
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 17
Tab
le o
f Co
nte
nts
Share
T he declining transaction volumes of the last two quarters of 2013 finally drove down price levels in Q4 Until Q3 2013 prices continued to defy gravity as the gap between prices
and their supporting volumes grew larger
From the previous sections we recognise that this is a text book market response to declining volumes where prices can remain elevated for two or more quarters before plateauing and then declining
The predictable relationship between volume and price
Many factors influence the lsquotime laggedrsquo relationship between volumes and prices However one of the strongest is also one of the simplest It is also the most constant in any property marketplace in the world It is human behaviour
Humans have an entirely understandable and common tendency to hold on to their properties rather than to accept lower offers They typically do this for many months as the offers dry up before reluctantly accepting lower offers ndash and recognising in turn that the market has moved
The fluctuating nature of prices
This behaviour helps explain why during the period of declining transaction volumes the average time it takes to sell a property also increases
Expanding time on market and declining transaction volumes are forward indicators of coming softness in prices ndash and usually go hand in hand Significantly both were apparent in the Singapore market in the latter half of 2013
During 2013 the Singaporean market behaved very predictably in response to the financing restrictions and corresponding transaction declines This augers well for predicting trends in 2014
Reading the 2013 data we can confidently expect to see further downward pressure on prices into 2014 ndash providing other factors remain stable Despite the fact that many other micro and macro factors can influence prices these forces will need to be particularly strong now to offset the well-entrenched price decline process that has been set in play by the declining transaction volumes of late 2013
PropertyGuru Market Outlook 2014 18
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2013 Price Outcomes HDBs VS Condos
From the chart below both property types saw price declines in 2013 However HDBs led the way ahead of condos From earlier sections we also recognise that the earlier price declines of HDBs were preceded by earlier transaction volume declines
By Q3 the HDB market had begun to sag under the new cooling measures ndash aimed specifically at curtailing the availability of mortgage credit to the market and placing other restrictions on purchasers However it was not until Q4 led by the mild declines in volumes that were seen in Q1 2013 that the condo market began to correct
These pricing forces were accompanied by the first of the new supply coming online - and some mild reductions in the rates of population growth Additionally restrictions governing the purchase of HDB resale properties by Singapore PRs introduced in August played a role in reducing effective demand for HDBs ndash and also contributed to their faster price declines
The largest contributing factors in 2013 were the new purchasing restrictions and the implementation of the MSR TDSR and ABSD policy changes These effectively reduced both the eligibility of individuals for new mortgage debt and increased the purchasing costs at the same time
The fluctuating nature of prices
Source Urban Redevelopment Authority (URA) Housing Development Board (HDB)
Locality-based fluctuations in the Condo market
In 2013 the price changes and transaction volume of condos varied between regions Below we compare the CCR the OCR and RCR
The CCR registered a decline of 21 percent while prices in the RCR and OCR increased by 03 percent and 68 percent respectively
PropertyGuru Market Outlook 2014 19
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The fluctuating nature of prices
Source Urban Redevelopment Authority (URA)
Significantly the CCR registered a price fall across the last three quarters of 2013 This fall also coincided with the introduction of the ABSD in Q1 which saw higher taxes on second and subsequent properties imposed on a majority of potential buyers including high-net worth individuals and foreigners
The downward trend of luxury properties appeared to be further exacerbated with the TDSR changes introduced in late June These resulted in a price fall of 22 percent by Q4 2013 a rate of decline that was seven times larger than the 03 percent decline in the previous quarter
The RCR region also witnessed price declines for the first time since Q1 2012 This was after the TDSR came into effect However unlike the CCR the RCR maintained positive market activity throughout 2013 This was spurred by the launch of units that were competitively priced at the level of affordability that buyers were comfortable with
The OCR continued to be the fastest growing market segment which contributed much to the increase in the overall private property price index In spite of a decline of 09 percent in Q4 2013 the first after almost two years the rate of price growth for the OCR in 2013 was 20 percent higher than the levels in 2012 - which registered only a 54 percent rise a
why execuTiVe condos were highly sought after
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 21
Tab
le o
f Co
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Why executive condos were highly sought after
A report compiled by PropertyGuru found that the market value of fully and partially privatised ECs grew strongly in 2013
Examples from the report n Unit prices at Eastvale in Pasir Ris the first EC in Singapore increased from $454 per square foot (psf) in September 1996 to $909 psf by November 2013 This translates to a rise of 100 percent n Two partially privatised ECs also located in Pasir Ris - The Esparis and Whitewater - showed higher growth of 130 percent and 140 percent respectively In January 2002 the Esparis had a psf of $370 and reached $859 psf by November 2013 n Similarly prices at Whitewater which was completed in 2005 increased to $883 psf in December 2013 from an initial price of $362 psf in December 2002
These very strong 2013 price increases provide clear evidence to suggest why the government has elected to increase the supply of ECs in the market by an average of 330 percent over the next three years compared to 2013
Demand for ECs contributed strongly to rapid price growth
In 2013 the top ECs were concentrated in certain districts particularly in the developing areas of the west and the central areas of Ang Mo Kio and Bishan As detailed in the chart below we can see that for example in the case of Bishan Loft and Nuovo the values of these
specific properties are valued at approximately 150 percent of the average psf of private properties within the same district District 20
This chart indicates that some ECs in 2013 exhibited high psf growth and now command very high psfs
The scarcity of ECs in certain localities has enabled some to command higher psfs than the average private district psf However the age of the property psfs needs to be considered when making a determination A strong EC supply increased ndash and the policy changes that remove the EC-favoured status are expected to rectify some of the price inbalance going forward in 2014 a
Source Urban Redevelopment Authority (URA) PropertyGuru Analysis
The ViTalrole that interest rates played
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 23
Tab
le o
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E xamination of the 2013 market requires an investigation of the important role that interest rates and the cost of capital have on the property sector
The interest rate ndash and the outlook for interest rates ndash represents the effective and expected cost of servicing the mortgage debt In 2013 the cost of servicing a mortgage remained at near record lows
The Singapore Interbank Offered Rate or SIBOR is set by the Association of Banks in Singapore Mortgage rates are effectively set by the base SIBOR rate plus a bank margin
The majority of mortgage debt in Singapore is variable ndash and where fixed it is fixed for a maximum period of five years This is significant as other countries allow longer periods of fixed term mortgages The US for example typically has 30-year fixed loans
Combined with the high personal debt levels carried by property buyers in Singapore the very high percentage of Singaporeans on variable mortgage rates makes the property market highly susceptible to changes in interest rates
As at 2013 the interest rate environment remained very accommodative being directly influenced by the bond buying (QE) of the US Federal Reserve Singapore effectively has its ultra-low interest rate environment driven by the US
The vital role that interest rates played
Though ultra-low rates were a primary driver in the 2013 market they cannot necessarily be assumed to remain as positive for the market during 2014
The chart below looks in more detail at the most recent rate influences on the market in 2013
Source Monetary Authority of Singapore (MAS)
PropertyGuru Market Outlook 2014 24
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The three-month SIBOR rate has fallen from approximately 18 percent in Q3Q4 2008 to the historically low values at present This most recent behaviour is uncharacteristically stable given that SIBOR rates have displayed much volatility over the past 25 years
The ultra benign interest rate environment over the last five years has increased the capacity of consumers and investors to borrow large sums cheaply This has allowed Singaporersquos property markets to flourish after the global market correction in 2009 ndash and for the very strong market to continue into 2013
ACCESS TO fiNANCE iN 2013
In 2013 the access to finance or the amount that people could borrow was curtailed by cooling measures This was a simple and efficient effort by the government to reduce effective property demand
Property sectors that attract the highest proportion of mortgage debt to finance the purchase were hit hardest by the measures
The sector that was especially susceptible to the cooling measures and showed the biggest correction was the HDB resale market a
While PropertyGuru does not see an imminent
reversiontothehistoricalinterestratemeanof
around3percentitdoesseeaslowtightening
processoccurringduringthecourseof2014
Howeverowingtothenascentrecoveryofthe
USeconomyweexpectthatrateswillriseonly
at a slow pace over the coming years
While this will not provide an additional stimulus
tothemarketndashasitdidin2013-itwillalsonot
beasignificantdragonthemarketInsummary
theinterestrateenvironmentof2013isexpected
tocontinueinto2014withonlyagradualrisendash
andwithaveragemortgageratesfinishingthe
yearbeneath225percent
Howeverthereducedaccesstofinancethrough
cooling measures is expected to continue to
beadragonpricesThesegovernmentmacro-
prudential policy measures remain the only
effectivefinancialinstrumenttheSingapore
government has to alleviate rising property
pricesIntroductionoftheTDSRframeworkis
recognitionofthisItwasagame-changerinthe
marketin2013andunlikelytoberelaxedin2014
The vital role that interest rates played
housingsuPPlYset to increase
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 26
Tab
le o
f Co
nte
nts
Share
I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
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S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
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70
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PropertyGuru Market Outlook 2014 8
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Cooling measures and the reduction in property demand
n The double threat of Total Debt Servicing Ratio (TDSR) and reduction of maximum loan tenure Introduction of the TDSR framework would mean a
property buyerrsquos total repayment obligations cannot
exceed 60 percent of hisher income This coupled with a
shorter monthly repayment period of up to 30 years for
bank loans severely limits the upgraderrsquosinvestorrsquos access
to capital and the total amount that heshe is allowed
to borrow
n Reduction of MSR to 30 percent for HDB loans This measure reduces the debt leverage in the HDB
market which drives prices higher Hence this new
restriction reduces demand and subdues prices for HDBs
n Rise in ABSD by 7 percent for purchase of more than one property This is a larger tax on purchasing more property reducing
demand and price pressures However transaction
volumes remained high after its introduction indicating
that it was a relatively weak measure for cooling the
market
n 3-year bar period on the purchase of HDB resale flats This measure discourages a large portion of PRs from participating in the market for resale HDBs
thereby reducing demand and upward pressure on prices for that segment
n Rise in Additional Buyers Stamp Duty (ABSD) for PRs by 5-7 percent for purchase of first or subsequent properties Another measure to reduce demand and the pressure on prices by making purchases more
expensive for PRs who make up about 10 percent of the total population in Singapore
n PRs who own a flat are disallowed from subletting the whole flat This measure removes incentive for PRs to lsquobuy-for-rentrsquo thereby reducing overall demand and
upward pressure on prices
n PRs must sell their HDB flats within six months of purchasing a private property This puts more resale HDBs on the market for sale thereby increasing their supply providing more
choice for Singaporeans and placing downward pressure on prices
z upgraderslocal investor
n Reduction of maximum loan tenure to 25 years for Housing Development Board (HDB) flats Shorter time period means prospective first-time home buyers need to meet higher
repayments each month
n Reduction of the Mortgage Servicing Ratio (MSR) to 30 percent for HDB loans Restricting the maximum amount of mortgage debt reduces demand in the market and
creates a safety margin for the borrower should mortgage rates increase
z First-time home buyers
z permanent residents (prs) and Foreigners
PropertyGuru Market Outlook 2014 9
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T his section can be summarised in two words demand reduction
Through these measures the governmentrsquos objective was to deliberately slow the market and also manage the price growth of certain property types Combined they have reduced the total mortgage debt in the market ndash or the leverage in the industry ndash by
The measures have curtailed property demand by reducing the individualrsquos access to new finance to purchase property This in turn has reduced the demand for property where the measures have been targeted
One immediate effect of these measures was to extend the time taken to sell property in the market Effectively this helped turn a sellersrsquo market into a buyersrsquo market More choices were available to those buyers that remained in the market
There was also less time pressure on the purchase improving the negotiating position for the buyer who is prepared to wait for the right property at the right price
Later sections in this report look at reduced demand and what that means for the market in 2014 a
Cooling measures and the reduction in property demand
2013 was the year where the government made strategic decisions to reduce the price inflationofHDBsandECsandtolimitthepurchaseofcondosbyforeigners
n Measuring debt ratios across both mortgage servicing and the total debt carried
n Calculating ratios at a higher industry-wide standard interest rate of 35 percent
n Altering these rules depending on how many properties are owned
n Targeting some buyer groups such as PRs and foreigners more than others
n Targeting specifically the HDB and EC segments
PropertyGuru Market Outlook 2014 10
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Cooling measures and the reduction in property demand
Source PropertyGuru Consumer Sentiment Survey
TransacTionVolumestake a dip
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 12
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T ransaction volumes are critical but often overlooked when measuring and forecasting trends in a property market In 2013 the declining trend in transaction volumes provided
just such a lsquoforward indicatorrsquo with volumes serving as a key market driver for prices in 2014
Put simply transaction volume trends usually precede and drive price trends Typically there is also a lag of around six months for this to occur This happens in most property markets around the world
When all other factors are stable transaction volumes can be a very reliable predictor of price growth or fall ndash and so volume serves as a very simple and extremely powerful forward view of expected price trends for the coming year
Perhaps this relationship is best illustrated by example for instance Hong Kong - Singaporersquos sister economy
HONG KONG An example of the relationship between transaction volume and price
Hong Kong has provided an arguably extreme but instructive example of the relationship between transaction volumes and future prices
Transaction volumes take a dip
This is useful when looking at the transaction volumes in Singapore in 2013 ndash and their likely effects going forward
In Hong Kong volumes declined significantly in mid-2013 Only some seven months later ndash in January 2014 ndash there was a double digit market price decline
Interestingly by the middle of 2013 journalists were already confident enough ndash based on the transaction data ndash to suggest that the drop in transaction volumes signalled significant price declines to follow
There are three relevant points for Singapore to note from this n The relationship between volume and pricing is a universal feature of property markets it is very likely that Singapore prices will be affected by the same relationships in 2014 n The relationship is solid enough for commentators to use it confidently as a price predictor n The lsquolag effectrsquo between volume and price changes is consistent and in a range typically of between five to nine months
PropertyGuru Market Outlook 2014 13
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HDB Resale Transaction Volumes in 2013
Looking first at HDB resales we see a distinct downward trend in volumes from Q3 2012 Over the course of 2013 transaction volumes continued to decline steadily
Again the relationship between transaction volume and price is clearly visible with prices peaking some nine months after volumes peaked Prices then begin to decline in response to the earlier falling transaction volumes The nine-month lag period is very evident
The significant transaction volume declines in 2013 of approximately 8 percent in Q4 2012 will continue to influence the prices of HDB properties at least well into Q3 of 2014
Condo Transaction Volumes in 2013
The chart below shows the total volume of transactions in the private market These are plotted against the Singapore property price index
Q1 2013 saw a decline in volumes from previous years Corresponding prices peaked in Q3 of 2013 ndash thus following the same pattern However the decline in volumes was not significant until the second half of 2013 As such the corresponding decline in prices was also only slight in the last quarter of the year
At the same time it is price that affects upgraders the most given the spate of cooling measures imposed on the market Therefore some upgraders may choose to play the waiting game and defer purchases until market forces dictate that prices drop even further - or when upcoming launches offer more attractive entry prices to offset the downside risks in property purchasing
The two weak quarters of Q3 and Q4 2013 strongly suggest renewed and much stronger downward pressure on prices in the first half of 2014
Transaction volumes take a dip
Source Housing Development Board (HDB)
PropertyGuru Market Outlook 2014 14
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Transactions have experienced a significant dip of about 58 percent since the middle of 2013 at least partly as a result of market sentiment turning cautious and the inability to actually borrow sufficient amounts to buy These effects have followed the announcement of tighter Monetary Authority of Singapore (MAS) financing regulations namely TDSR and MSR in late June and their earlier ABSD changes
Whatrsquos interesting is that not only have these measures resulted in consecutive quarters of decline in transactions in Q3 and Q4 but they have also caused total volume to return to 2008 levels in the condo market
Watch video Industry analysts share their inisghts into how the CCR RCR and OCR regions fared in 2013
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
PropertyGuru Market Outlook 2014 15
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Condo Transaction Volumes - By Area
Condo transaction volumes in 2013 did not match the record number of transactions seen in 2012 They declined some 386 percent ndash reflecting weakening buyer sentiments for private properties in part due to MAS regulations
However the drop in transactions differs from region to region The transactions in the Core Central Region (CCR) trended down the most severely registering an average of a 40 percent decrease quarter-on-quarter
Of particular note for the regions in 2013 n In Q2 2013 the Rest of Central Region (RCR) and Outside Central Region (OCR) regions grew transaction volumes by a healthy 44 percent and 18 percent respectively from the previous quarter ndash despite the introduction of the ABSD However the new TDSR and MSR in the second half of the year curtailed these volumes n In the RCR property seekers purchased a total of 2062 units in Q3 and Q4 2013 combined being half the level of a year prior While down significantly these volumes were a better result than those recorded by the CR and OCR n Despite most buying activity occurring in the OCR the area saw transactions decline from 4673 units to 3105 units between Q2
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
and Q3 2013 ndash and further drop to around 1430 by Q4 This made the volumes in Q4 just 30 percent (approximately) of the level they were six months prior n The CCR and the OCR regions recorded the largest percentage decline in volume from the peak in 2012 and through 2013 n Despite transaction volume ratios that would indicate that the OCR will experience the worst pricing pressures many analysts are expecting this effect to be offset largely by significant new demand in this area a
The FlucTuaTing nature of prices
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 17
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le o
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T he declining transaction volumes of the last two quarters of 2013 finally drove down price levels in Q4 Until Q3 2013 prices continued to defy gravity as the gap between prices
and their supporting volumes grew larger
From the previous sections we recognise that this is a text book market response to declining volumes where prices can remain elevated for two or more quarters before plateauing and then declining
The predictable relationship between volume and price
Many factors influence the lsquotime laggedrsquo relationship between volumes and prices However one of the strongest is also one of the simplest It is also the most constant in any property marketplace in the world It is human behaviour
Humans have an entirely understandable and common tendency to hold on to their properties rather than to accept lower offers They typically do this for many months as the offers dry up before reluctantly accepting lower offers ndash and recognising in turn that the market has moved
The fluctuating nature of prices
This behaviour helps explain why during the period of declining transaction volumes the average time it takes to sell a property also increases
Expanding time on market and declining transaction volumes are forward indicators of coming softness in prices ndash and usually go hand in hand Significantly both were apparent in the Singapore market in the latter half of 2013
During 2013 the Singaporean market behaved very predictably in response to the financing restrictions and corresponding transaction declines This augers well for predicting trends in 2014
Reading the 2013 data we can confidently expect to see further downward pressure on prices into 2014 ndash providing other factors remain stable Despite the fact that many other micro and macro factors can influence prices these forces will need to be particularly strong now to offset the well-entrenched price decline process that has been set in play by the declining transaction volumes of late 2013
PropertyGuru Market Outlook 2014 18
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2013 Price Outcomes HDBs VS Condos
From the chart below both property types saw price declines in 2013 However HDBs led the way ahead of condos From earlier sections we also recognise that the earlier price declines of HDBs were preceded by earlier transaction volume declines
By Q3 the HDB market had begun to sag under the new cooling measures ndash aimed specifically at curtailing the availability of mortgage credit to the market and placing other restrictions on purchasers However it was not until Q4 led by the mild declines in volumes that were seen in Q1 2013 that the condo market began to correct
These pricing forces were accompanied by the first of the new supply coming online - and some mild reductions in the rates of population growth Additionally restrictions governing the purchase of HDB resale properties by Singapore PRs introduced in August played a role in reducing effective demand for HDBs ndash and also contributed to their faster price declines
The largest contributing factors in 2013 were the new purchasing restrictions and the implementation of the MSR TDSR and ABSD policy changes These effectively reduced both the eligibility of individuals for new mortgage debt and increased the purchasing costs at the same time
The fluctuating nature of prices
Source Urban Redevelopment Authority (URA) Housing Development Board (HDB)
Locality-based fluctuations in the Condo market
In 2013 the price changes and transaction volume of condos varied between regions Below we compare the CCR the OCR and RCR
The CCR registered a decline of 21 percent while prices in the RCR and OCR increased by 03 percent and 68 percent respectively
PropertyGuru Market Outlook 2014 19
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The fluctuating nature of prices
Source Urban Redevelopment Authority (URA)
Significantly the CCR registered a price fall across the last three quarters of 2013 This fall also coincided with the introduction of the ABSD in Q1 which saw higher taxes on second and subsequent properties imposed on a majority of potential buyers including high-net worth individuals and foreigners
The downward trend of luxury properties appeared to be further exacerbated with the TDSR changes introduced in late June These resulted in a price fall of 22 percent by Q4 2013 a rate of decline that was seven times larger than the 03 percent decline in the previous quarter
The RCR region also witnessed price declines for the first time since Q1 2012 This was after the TDSR came into effect However unlike the CCR the RCR maintained positive market activity throughout 2013 This was spurred by the launch of units that were competitively priced at the level of affordability that buyers were comfortable with
The OCR continued to be the fastest growing market segment which contributed much to the increase in the overall private property price index In spite of a decline of 09 percent in Q4 2013 the first after almost two years the rate of price growth for the OCR in 2013 was 20 percent higher than the levels in 2012 - which registered only a 54 percent rise a
why execuTiVe condos were highly sought after
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 21
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le o
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Why executive condos were highly sought after
A report compiled by PropertyGuru found that the market value of fully and partially privatised ECs grew strongly in 2013
Examples from the report n Unit prices at Eastvale in Pasir Ris the first EC in Singapore increased from $454 per square foot (psf) in September 1996 to $909 psf by November 2013 This translates to a rise of 100 percent n Two partially privatised ECs also located in Pasir Ris - The Esparis and Whitewater - showed higher growth of 130 percent and 140 percent respectively In January 2002 the Esparis had a psf of $370 and reached $859 psf by November 2013 n Similarly prices at Whitewater which was completed in 2005 increased to $883 psf in December 2013 from an initial price of $362 psf in December 2002
These very strong 2013 price increases provide clear evidence to suggest why the government has elected to increase the supply of ECs in the market by an average of 330 percent over the next three years compared to 2013
Demand for ECs contributed strongly to rapid price growth
In 2013 the top ECs were concentrated in certain districts particularly in the developing areas of the west and the central areas of Ang Mo Kio and Bishan As detailed in the chart below we can see that for example in the case of Bishan Loft and Nuovo the values of these
specific properties are valued at approximately 150 percent of the average psf of private properties within the same district District 20
This chart indicates that some ECs in 2013 exhibited high psf growth and now command very high psfs
The scarcity of ECs in certain localities has enabled some to command higher psfs than the average private district psf However the age of the property psfs needs to be considered when making a determination A strong EC supply increased ndash and the policy changes that remove the EC-favoured status are expected to rectify some of the price inbalance going forward in 2014 a
Source Urban Redevelopment Authority (URA) PropertyGuru Analysis
The ViTalrole that interest rates played
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 23
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E xamination of the 2013 market requires an investigation of the important role that interest rates and the cost of capital have on the property sector
The interest rate ndash and the outlook for interest rates ndash represents the effective and expected cost of servicing the mortgage debt In 2013 the cost of servicing a mortgage remained at near record lows
The Singapore Interbank Offered Rate or SIBOR is set by the Association of Banks in Singapore Mortgage rates are effectively set by the base SIBOR rate plus a bank margin
The majority of mortgage debt in Singapore is variable ndash and where fixed it is fixed for a maximum period of five years This is significant as other countries allow longer periods of fixed term mortgages The US for example typically has 30-year fixed loans
Combined with the high personal debt levels carried by property buyers in Singapore the very high percentage of Singaporeans on variable mortgage rates makes the property market highly susceptible to changes in interest rates
As at 2013 the interest rate environment remained very accommodative being directly influenced by the bond buying (QE) of the US Federal Reserve Singapore effectively has its ultra-low interest rate environment driven by the US
The vital role that interest rates played
Though ultra-low rates were a primary driver in the 2013 market they cannot necessarily be assumed to remain as positive for the market during 2014
The chart below looks in more detail at the most recent rate influences on the market in 2013
Source Monetary Authority of Singapore (MAS)
PropertyGuru Market Outlook 2014 24
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The three-month SIBOR rate has fallen from approximately 18 percent in Q3Q4 2008 to the historically low values at present This most recent behaviour is uncharacteristically stable given that SIBOR rates have displayed much volatility over the past 25 years
The ultra benign interest rate environment over the last five years has increased the capacity of consumers and investors to borrow large sums cheaply This has allowed Singaporersquos property markets to flourish after the global market correction in 2009 ndash and for the very strong market to continue into 2013
ACCESS TO fiNANCE iN 2013
In 2013 the access to finance or the amount that people could borrow was curtailed by cooling measures This was a simple and efficient effort by the government to reduce effective property demand
Property sectors that attract the highest proportion of mortgage debt to finance the purchase were hit hardest by the measures
The sector that was especially susceptible to the cooling measures and showed the biggest correction was the HDB resale market a
While PropertyGuru does not see an imminent
reversiontothehistoricalinterestratemeanof
around3percentitdoesseeaslowtightening
processoccurringduringthecourseof2014
Howeverowingtothenascentrecoveryofthe
USeconomyweexpectthatrateswillriseonly
at a slow pace over the coming years
While this will not provide an additional stimulus
tothemarketndashasitdidin2013-itwillalsonot
beasignificantdragonthemarketInsummary
theinterestrateenvironmentof2013isexpected
tocontinueinto2014withonlyagradualrisendash
andwithaveragemortgageratesfinishingthe
yearbeneath225percent
Howeverthereducedaccesstofinancethrough
cooling measures is expected to continue to
beadragonpricesThesegovernmentmacro-
prudential policy measures remain the only
effectivefinancialinstrumenttheSingapore
government has to alleviate rising property
pricesIntroductionoftheTDSRframeworkis
recognitionofthisItwasagame-changerinthe
marketin2013andunlikelytoberelaxedin2014
The vital role that interest rates played
housingsuPPlYset to increase
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 26
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le o
f Co
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I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
Tab
le o
f Co
nte
nts
Share
S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
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70
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- Button 57
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- Page 6 Off
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PropertyGuru Market Outlook 2014 9
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T his section can be summarised in two words demand reduction
Through these measures the governmentrsquos objective was to deliberately slow the market and also manage the price growth of certain property types Combined they have reduced the total mortgage debt in the market ndash or the leverage in the industry ndash by
The measures have curtailed property demand by reducing the individualrsquos access to new finance to purchase property This in turn has reduced the demand for property where the measures have been targeted
One immediate effect of these measures was to extend the time taken to sell property in the market Effectively this helped turn a sellersrsquo market into a buyersrsquo market More choices were available to those buyers that remained in the market
There was also less time pressure on the purchase improving the negotiating position for the buyer who is prepared to wait for the right property at the right price
Later sections in this report look at reduced demand and what that means for the market in 2014 a
Cooling measures and the reduction in property demand
2013 was the year where the government made strategic decisions to reduce the price inflationofHDBsandECsandtolimitthepurchaseofcondosbyforeigners
n Measuring debt ratios across both mortgage servicing and the total debt carried
n Calculating ratios at a higher industry-wide standard interest rate of 35 percent
n Altering these rules depending on how many properties are owned
n Targeting some buyer groups such as PRs and foreigners more than others
n Targeting specifically the HDB and EC segments
PropertyGuru Market Outlook 2014 10
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Cooling measures and the reduction in property demand
Source PropertyGuru Consumer Sentiment Survey
TransacTionVolumestake a dip
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 12
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T ransaction volumes are critical but often overlooked when measuring and forecasting trends in a property market In 2013 the declining trend in transaction volumes provided
just such a lsquoforward indicatorrsquo with volumes serving as a key market driver for prices in 2014
Put simply transaction volume trends usually precede and drive price trends Typically there is also a lag of around six months for this to occur This happens in most property markets around the world
When all other factors are stable transaction volumes can be a very reliable predictor of price growth or fall ndash and so volume serves as a very simple and extremely powerful forward view of expected price trends for the coming year
Perhaps this relationship is best illustrated by example for instance Hong Kong - Singaporersquos sister economy
HONG KONG An example of the relationship between transaction volume and price
Hong Kong has provided an arguably extreme but instructive example of the relationship between transaction volumes and future prices
Transaction volumes take a dip
This is useful when looking at the transaction volumes in Singapore in 2013 ndash and their likely effects going forward
In Hong Kong volumes declined significantly in mid-2013 Only some seven months later ndash in January 2014 ndash there was a double digit market price decline
Interestingly by the middle of 2013 journalists were already confident enough ndash based on the transaction data ndash to suggest that the drop in transaction volumes signalled significant price declines to follow
There are three relevant points for Singapore to note from this n The relationship between volume and pricing is a universal feature of property markets it is very likely that Singapore prices will be affected by the same relationships in 2014 n The relationship is solid enough for commentators to use it confidently as a price predictor n The lsquolag effectrsquo between volume and price changes is consistent and in a range typically of between five to nine months
PropertyGuru Market Outlook 2014 13
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HDB Resale Transaction Volumes in 2013
Looking first at HDB resales we see a distinct downward trend in volumes from Q3 2012 Over the course of 2013 transaction volumes continued to decline steadily
Again the relationship between transaction volume and price is clearly visible with prices peaking some nine months after volumes peaked Prices then begin to decline in response to the earlier falling transaction volumes The nine-month lag period is very evident
The significant transaction volume declines in 2013 of approximately 8 percent in Q4 2012 will continue to influence the prices of HDB properties at least well into Q3 of 2014
Condo Transaction Volumes in 2013
The chart below shows the total volume of transactions in the private market These are plotted against the Singapore property price index
Q1 2013 saw a decline in volumes from previous years Corresponding prices peaked in Q3 of 2013 ndash thus following the same pattern However the decline in volumes was not significant until the second half of 2013 As such the corresponding decline in prices was also only slight in the last quarter of the year
At the same time it is price that affects upgraders the most given the spate of cooling measures imposed on the market Therefore some upgraders may choose to play the waiting game and defer purchases until market forces dictate that prices drop even further - or when upcoming launches offer more attractive entry prices to offset the downside risks in property purchasing
The two weak quarters of Q3 and Q4 2013 strongly suggest renewed and much stronger downward pressure on prices in the first half of 2014
Transaction volumes take a dip
Source Housing Development Board (HDB)
PropertyGuru Market Outlook 2014 14
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Transactions have experienced a significant dip of about 58 percent since the middle of 2013 at least partly as a result of market sentiment turning cautious and the inability to actually borrow sufficient amounts to buy These effects have followed the announcement of tighter Monetary Authority of Singapore (MAS) financing regulations namely TDSR and MSR in late June and their earlier ABSD changes
Whatrsquos interesting is that not only have these measures resulted in consecutive quarters of decline in transactions in Q3 and Q4 but they have also caused total volume to return to 2008 levels in the condo market
Watch video Industry analysts share their inisghts into how the CCR RCR and OCR regions fared in 2013
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
PropertyGuru Market Outlook 2014 15
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Condo Transaction Volumes - By Area
Condo transaction volumes in 2013 did not match the record number of transactions seen in 2012 They declined some 386 percent ndash reflecting weakening buyer sentiments for private properties in part due to MAS regulations
However the drop in transactions differs from region to region The transactions in the Core Central Region (CCR) trended down the most severely registering an average of a 40 percent decrease quarter-on-quarter
Of particular note for the regions in 2013 n In Q2 2013 the Rest of Central Region (RCR) and Outside Central Region (OCR) regions grew transaction volumes by a healthy 44 percent and 18 percent respectively from the previous quarter ndash despite the introduction of the ABSD However the new TDSR and MSR in the second half of the year curtailed these volumes n In the RCR property seekers purchased a total of 2062 units in Q3 and Q4 2013 combined being half the level of a year prior While down significantly these volumes were a better result than those recorded by the CR and OCR n Despite most buying activity occurring in the OCR the area saw transactions decline from 4673 units to 3105 units between Q2
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
and Q3 2013 ndash and further drop to around 1430 by Q4 This made the volumes in Q4 just 30 percent (approximately) of the level they were six months prior n The CCR and the OCR regions recorded the largest percentage decline in volume from the peak in 2012 and through 2013 n Despite transaction volume ratios that would indicate that the OCR will experience the worst pricing pressures many analysts are expecting this effect to be offset largely by significant new demand in this area a
The FlucTuaTing nature of prices
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 17
Tab
le o
f Co
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T he declining transaction volumes of the last two quarters of 2013 finally drove down price levels in Q4 Until Q3 2013 prices continued to defy gravity as the gap between prices
and their supporting volumes grew larger
From the previous sections we recognise that this is a text book market response to declining volumes where prices can remain elevated for two or more quarters before plateauing and then declining
The predictable relationship between volume and price
Many factors influence the lsquotime laggedrsquo relationship between volumes and prices However one of the strongest is also one of the simplest It is also the most constant in any property marketplace in the world It is human behaviour
Humans have an entirely understandable and common tendency to hold on to their properties rather than to accept lower offers They typically do this for many months as the offers dry up before reluctantly accepting lower offers ndash and recognising in turn that the market has moved
The fluctuating nature of prices
This behaviour helps explain why during the period of declining transaction volumes the average time it takes to sell a property also increases
Expanding time on market and declining transaction volumes are forward indicators of coming softness in prices ndash and usually go hand in hand Significantly both were apparent in the Singapore market in the latter half of 2013
During 2013 the Singaporean market behaved very predictably in response to the financing restrictions and corresponding transaction declines This augers well for predicting trends in 2014
Reading the 2013 data we can confidently expect to see further downward pressure on prices into 2014 ndash providing other factors remain stable Despite the fact that many other micro and macro factors can influence prices these forces will need to be particularly strong now to offset the well-entrenched price decline process that has been set in play by the declining transaction volumes of late 2013
PropertyGuru Market Outlook 2014 18
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2013 Price Outcomes HDBs VS Condos
From the chart below both property types saw price declines in 2013 However HDBs led the way ahead of condos From earlier sections we also recognise that the earlier price declines of HDBs were preceded by earlier transaction volume declines
By Q3 the HDB market had begun to sag under the new cooling measures ndash aimed specifically at curtailing the availability of mortgage credit to the market and placing other restrictions on purchasers However it was not until Q4 led by the mild declines in volumes that were seen in Q1 2013 that the condo market began to correct
These pricing forces were accompanied by the first of the new supply coming online - and some mild reductions in the rates of population growth Additionally restrictions governing the purchase of HDB resale properties by Singapore PRs introduced in August played a role in reducing effective demand for HDBs ndash and also contributed to their faster price declines
The largest contributing factors in 2013 were the new purchasing restrictions and the implementation of the MSR TDSR and ABSD policy changes These effectively reduced both the eligibility of individuals for new mortgage debt and increased the purchasing costs at the same time
The fluctuating nature of prices
Source Urban Redevelopment Authority (URA) Housing Development Board (HDB)
Locality-based fluctuations in the Condo market
In 2013 the price changes and transaction volume of condos varied between regions Below we compare the CCR the OCR and RCR
The CCR registered a decline of 21 percent while prices in the RCR and OCR increased by 03 percent and 68 percent respectively
PropertyGuru Market Outlook 2014 19
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The fluctuating nature of prices
Source Urban Redevelopment Authority (URA)
Significantly the CCR registered a price fall across the last three quarters of 2013 This fall also coincided with the introduction of the ABSD in Q1 which saw higher taxes on second and subsequent properties imposed on a majority of potential buyers including high-net worth individuals and foreigners
The downward trend of luxury properties appeared to be further exacerbated with the TDSR changes introduced in late June These resulted in a price fall of 22 percent by Q4 2013 a rate of decline that was seven times larger than the 03 percent decline in the previous quarter
The RCR region also witnessed price declines for the first time since Q1 2012 This was after the TDSR came into effect However unlike the CCR the RCR maintained positive market activity throughout 2013 This was spurred by the launch of units that were competitively priced at the level of affordability that buyers were comfortable with
The OCR continued to be the fastest growing market segment which contributed much to the increase in the overall private property price index In spite of a decline of 09 percent in Q4 2013 the first after almost two years the rate of price growth for the OCR in 2013 was 20 percent higher than the levels in 2012 - which registered only a 54 percent rise a
why execuTiVe condos were highly sought after
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 21
Tab
le o
f Co
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Why executive condos were highly sought after
A report compiled by PropertyGuru found that the market value of fully and partially privatised ECs grew strongly in 2013
Examples from the report n Unit prices at Eastvale in Pasir Ris the first EC in Singapore increased from $454 per square foot (psf) in September 1996 to $909 psf by November 2013 This translates to a rise of 100 percent n Two partially privatised ECs also located in Pasir Ris - The Esparis and Whitewater - showed higher growth of 130 percent and 140 percent respectively In January 2002 the Esparis had a psf of $370 and reached $859 psf by November 2013 n Similarly prices at Whitewater which was completed in 2005 increased to $883 psf in December 2013 from an initial price of $362 psf in December 2002
These very strong 2013 price increases provide clear evidence to suggest why the government has elected to increase the supply of ECs in the market by an average of 330 percent over the next three years compared to 2013
Demand for ECs contributed strongly to rapid price growth
In 2013 the top ECs were concentrated in certain districts particularly in the developing areas of the west and the central areas of Ang Mo Kio and Bishan As detailed in the chart below we can see that for example in the case of Bishan Loft and Nuovo the values of these
specific properties are valued at approximately 150 percent of the average psf of private properties within the same district District 20
This chart indicates that some ECs in 2013 exhibited high psf growth and now command very high psfs
The scarcity of ECs in certain localities has enabled some to command higher psfs than the average private district psf However the age of the property psfs needs to be considered when making a determination A strong EC supply increased ndash and the policy changes that remove the EC-favoured status are expected to rectify some of the price inbalance going forward in 2014 a
Source Urban Redevelopment Authority (URA) PropertyGuru Analysis
The ViTalrole that interest rates played
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 23
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E xamination of the 2013 market requires an investigation of the important role that interest rates and the cost of capital have on the property sector
The interest rate ndash and the outlook for interest rates ndash represents the effective and expected cost of servicing the mortgage debt In 2013 the cost of servicing a mortgage remained at near record lows
The Singapore Interbank Offered Rate or SIBOR is set by the Association of Banks in Singapore Mortgage rates are effectively set by the base SIBOR rate plus a bank margin
The majority of mortgage debt in Singapore is variable ndash and where fixed it is fixed for a maximum period of five years This is significant as other countries allow longer periods of fixed term mortgages The US for example typically has 30-year fixed loans
Combined with the high personal debt levels carried by property buyers in Singapore the very high percentage of Singaporeans on variable mortgage rates makes the property market highly susceptible to changes in interest rates
As at 2013 the interest rate environment remained very accommodative being directly influenced by the bond buying (QE) of the US Federal Reserve Singapore effectively has its ultra-low interest rate environment driven by the US
The vital role that interest rates played
Though ultra-low rates were a primary driver in the 2013 market they cannot necessarily be assumed to remain as positive for the market during 2014
The chart below looks in more detail at the most recent rate influences on the market in 2013
Source Monetary Authority of Singapore (MAS)
PropertyGuru Market Outlook 2014 24
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The three-month SIBOR rate has fallen from approximately 18 percent in Q3Q4 2008 to the historically low values at present This most recent behaviour is uncharacteristically stable given that SIBOR rates have displayed much volatility over the past 25 years
The ultra benign interest rate environment over the last five years has increased the capacity of consumers and investors to borrow large sums cheaply This has allowed Singaporersquos property markets to flourish after the global market correction in 2009 ndash and for the very strong market to continue into 2013
ACCESS TO fiNANCE iN 2013
In 2013 the access to finance or the amount that people could borrow was curtailed by cooling measures This was a simple and efficient effort by the government to reduce effective property demand
Property sectors that attract the highest proportion of mortgage debt to finance the purchase were hit hardest by the measures
The sector that was especially susceptible to the cooling measures and showed the biggest correction was the HDB resale market a
While PropertyGuru does not see an imminent
reversiontothehistoricalinterestratemeanof
around3percentitdoesseeaslowtightening
processoccurringduringthecourseof2014
Howeverowingtothenascentrecoveryofthe
USeconomyweexpectthatrateswillriseonly
at a slow pace over the coming years
While this will not provide an additional stimulus
tothemarketndashasitdidin2013-itwillalsonot
beasignificantdragonthemarketInsummary
theinterestrateenvironmentof2013isexpected
tocontinueinto2014withonlyagradualrisendash
andwithaveragemortgageratesfinishingthe
yearbeneath225percent
Howeverthereducedaccesstofinancethrough
cooling measures is expected to continue to
beadragonpricesThesegovernmentmacro-
prudential policy measures remain the only
effectivefinancialinstrumenttheSingapore
government has to alleviate rising property
pricesIntroductionoftheTDSRframeworkis
recognitionofthisItwasagame-changerinthe
marketin2013andunlikelytoberelaxedin2014
The vital role that interest rates played
housingsuPPlYset to increase
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 26
Tab
le o
f Co
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nts
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I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
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S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
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70
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PropertyGuru Market Outlook 2014 10
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Cooling measures and the reduction in property demand
Source PropertyGuru Consumer Sentiment Survey
TransacTionVolumestake a dip
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 12
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T ransaction volumes are critical but often overlooked when measuring and forecasting trends in a property market In 2013 the declining trend in transaction volumes provided
just such a lsquoforward indicatorrsquo with volumes serving as a key market driver for prices in 2014
Put simply transaction volume trends usually precede and drive price trends Typically there is also a lag of around six months for this to occur This happens in most property markets around the world
When all other factors are stable transaction volumes can be a very reliable predictor of price growth or fall ndash and so volume serves as a very simple and extremely powerful forward view of expected price trends for the coming year
Perhaps this relationship is best illustrated by example for instance Hong Kong - Singaporersquos sister economy
HONG KONG An example of the relationship between transaction volume and price
Hong Kong has provided an arguably extreme but instructive example of the relationship between transaction volumes and future prices
Transaction volumes take a dip
This is useful when looking at the transaction volumes in Singapore in 2013 ndash and their likely effects going forward
In Hong Kong volumes declined significantly in mid-2013 Only some seven months later ndash in January 2014 ndash there was a double digit market price decline
Interestingly by the middle of 2013 journalists were already confident enough ndash based on the transaction data ndash to suggest that the drop in transaction volumes signalled significant price declines to follow
There are three relevant points for Singapore to note from this n The relationship between volume and pricing is a universal feature of property markets it is very likely that Singapore prices will be affected by the same relationships in 2014 n The relationship is solid enough for commentators to use it confidently as a price predictor n The lsquolag effectrsquo between volume and price changes is consistent and in a range typically of between five to nine months
PropertyGuru Market Outlook 2014 13
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HDB Resale Transaction Volumes in 2013
Looking first at HDB resales we see a distinct downward trend in volumes from Q3 2012 Over the course of 2013 transaction volumes continued to decline steadily
Again the relationship between transaction volume and price is clearly visible with prices peaking some nine months after volumes peaked Prices then begin to decline in response to the earlier falling transaction volumes The nine-month lag period is very evident
The significant transaction volume declines in 2013 of approximately 8 percent in Q4 2012 will continue to influence the prices of HDB properties at least well into Q3 of 2014
Condo Transaction Volumes in 2013
The chart below shows the total volume of transactions in the private market These are plotted against the Singapore property price index
Q1 2013 saw a decline in volumes from previous years Corresponding prices peaked in Q3 of 2013 ndash thus following the same pattern However the decline in volumes was not significant until the second half of 2013 As such the corresponding decline in prices was also only slight in the last quarter of the year
At the same time it is price that affects upgraders the most given the spate of cooling measures imposed on the market Therefore some upgraders may choose to play the waiting game and defer purchases until market forces dictate that prices drop even further - or when upcoming launches offer more attractive entry prices to offset the downside risks in property purchasing
The two weak quarters of Q3 and Q4 2013 strongly suggest renewed and much stronger downward pressure on prices in the first half of 2014
Transaction volumes take a dip
Source Housing Development Board (HDB)
PropertyGuru Market Outlook 2014 14
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Transactions have experienced a significant dip of about 58 percent since the middle of 2013 at least partly as a result of market sentiment turning cautious and the inability to actually borrow sufficient amounts to buy These effects have followed the announcement of tighter Monetary Authority of Singapore (MAS) financing regulations namely TDSR and MSR in late June and their earlier ABSD changes
Whatrsquos interesting is that not only have these measures resulted in consecutive quarters of decline in transactions in Q3 and Q4 but they have also caused total volume to return to 2008 levels in the condo market
Watch video Industry analysts share their inisghts into how the CCR RCR and OCR regions fared in 2013
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
PropertyGuru Market Outlook 2014 15
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Condo Transaction Volumes - By Area
Condo transaction volumes in 2013 did not match the record number of transactions seen in 2012 They declined some 386 percent ndash reflecting weakening buyer sentiments for private properties in part due to MAS regulations
However the drop in transactions differs from region to region The transactions in the Core Central Region (CCR) trended down the most severely registering an average of a 40 percent decrease quarter-on-quarter
Of particular note for the regions in 2013 n In Q2 2013 the Rest of Central Region (RCR) and Outside Central Region (OCR) regions grew transaction volumes by a healthy 44 percent and 18 percent respectively from the previous quarter ndash despite the introduction of the ABSD However the new TDSR and MSR in the second half of the year curtailed these volumes n In the RCR property seekers purchased a total of 2062 units in Q3 and Q4 2013 combined being half the level of a year prior While down significantly these volumes were a better result than those recorded by the CR and OCR n Despite most buying activity occurring in the OCR the area saw transactions decline from 4673 units to 3105 units between Q2
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
and Q3 2013 ndash and further drop to around 1430 by Q4 This made the volumes in Q4 just 30 percent (approximately) of the level they were six months prior n The CCR and the OCR regions recorded the largest percentage decline in volume from the peak in 2012 and through 2013 n Despite transaction volume ratios that would indicate that the OCR will experience the worst pricing pressures many analysts are expecting this effect to be offset largely by significant new demand in this area a
The FlucTuaTing nature of prices
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 17
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le o
f Co
nte
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T he declining transaction volumes of the last two quarters of 2013 finally drove down price levels in Q4 Until Q3 2013 prices continued to defy gravity as the gap between prices
and their supporting volumes grew larger
From the previous sections we recognise that this is a text book market response to declining volumes where prices can remain elevated for two or more quarters before plateauing and then declining
The predictable relationship between volume and price
Many factors influence the lsquotime laggedrsquo relationship between volumes and prices However one of the strongest is also one of the simplest It is also the most constant in any property marketplace in the world It is human behaviour
Humans have an entirely understandable and common tendency to hold on to their properties rather than to accept lower offers They typically do this for many months as the offers dry up before reluctantly accepting lower offers ndash and recognising in turn that the market has moved
The fluctuating nature of prices
This behaviour helps explain why during the period of declining transaction volumes the average time it takes to sell a property also increases
Expanding time on market and declining transaction volumes are forward indicators of coming softness in prices ndash and usually go hand in hand Significantly both were apparent in the Singapore market in the latter half of 2013
During 2013 the Singaporean market behaved very predictably in response to the financing restrictions and corresponding transaction declines This augers well for predicting trends in 2014
Reading the 2013 data we can confidently expect to see further downward pressure on prices into 2014 ndash providing other factors remain stable Despite the fact that many other micro and macro factors can influence prices these forces will need to be particularly strong now to offset the well-entrenched price decline process that has been set in play by the declining transaction volumes of late 2013
PropertyGuru Market Outlook 2014 18
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2013 Price Outcomes HDBs VS Condos
From the chart below both property types saw price declines in 2013 However HDBs led the way ahead of condos From earlier sections we also recognise that the earlier price declines of HDBs were preceded by earlier transaction volume declines
By Q3 the HDB market had begun to sag under the new cooling measures ndash aimed specifically at curtailing the availability of mortgage credit to the market and placing other restrictions on purchasers However it was not until Q4 led by the mild declines in volumes that were seen in Q1 2013 that the condo market began to correct
These pricing forces were accompanied by the first of the new supply coming online - and some mild reductions in the rates of population growth Additionally restrictions governing the purchase of HDB resale properties by Singapore PRs introduced in August played a role in reducing effective demand for HDBs ndash and also contributed to their faster price declines
The largest contributing factors in 2013 were the new purchasing restrictions and the implementation of the MSR TDSR and ABSD policy changes These effectively reduced both the eligibility of individuals for new mortgage debt and increased the purchasing costs at the same time
The fluctuating nature of prices
Source Urban Redevelopment Authority (URA) Housing Development Board (HDB)
Locality-based fluctuations in the Condo market
In 2013 the price changes and transaction volume of condos varied between regions Below we compare the CCR the OCR and RCR
The CCR registered a decline of 21 percent while prices in the RCR and OCR increased by 03 percent and 68 percent respectively
PropertyGuru Market Outlook 2014 19
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The fluctuating nature of prices
Source Urban Redevelopment Authority (URA)
Significantly the CCR registered a price fall across the last three quarters of 2013 This fall also coincided with the introduction of the ABSD in Q1 which saw higher taxes on second and subsequent properties imposed on a majority of potential buyers including high-net worth individuals and foreigners
The downward trend of luxury properties appeared to be further exacerbated with the TDSR changes introduced in late June These resulted in a price fall of 22 percent by Q4 2013 a rate of decline that was seven times larger than the 03 percent decline in the previous quarter
The RCR region also witnessed price declines for the first time since Q1 2012 This was after the TDSR came into effect However unlike the CCR the RCR maintained positive market activity throughout 2013 This was spurred by the launch of units that were competitively priced at the level of affordability that buyers were comfortable with
The OCR continued to be the fastest growing market segment which contributed much to the increase in the overall private property price index In spite of a decline of 09 percent in Q4 2013 the first after almost two years the rate of price growth for the OCR in 2013 was 20 percent higher than the levels in 2012 - which registered only a 54 percent rise a
why execuTiVe condos were highly sought after
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 21
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le o
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Why executive condos were highly sought after
A report compiled by PropertyGuru found that the market value of fully and partially privatised ECs grew strongly in 2013
Examples from the report n Unit prices at Eastvale in Pasir Ris the first EC in Singapore increased from $454 per square foot (psf) in September 1996 to $909 psf by November 2013 This translates to a rise of 100 percent n Two partially privatised ECs also located in Pasir Ris - The Esparis and Whitewater - showed higher growth of 130 percent and 140 percent respectively In January 2002 the Esparis had a psf of $370 and reached $859 psf by November 2013 n Similarly prices at Whitewater which was completed in 2005 increased to $883 psf in December 2013 from an initial price of $362 psf in December 2002
These very strong 2013 price increases provide clear evidence to suggest why the government has elected to increase the supply of ECs in the market by an average of 330 percent over the next three years compared to 2013
Demand for ECs contributed strongly to rapid price growth
In 2013 the top ECs were concentrated in certain districts particularly in the developing areas of the west and the central areas of Ang Mo Kio and Bishan As detailed in the chart below we can see that for example in the case of Bishan Loft and Nuovo the values of these
specific properties are valued at approximately 150 percent of the average psf of private properties within the same district District 20
This chart indicates that some ECs in 2013 exhibited high psf growth and now command very high psfs
The scarcity of ECs in certain localities has enabled some to command higher psfs than the average private district psf However the age of the property psfs needs to be considered when making a determination A strong EC supply increased ndash and the policy changes that remove the EC-favoured status are expected to rectify some of the price inbalance going forward in 2014 a
Source Urban Redevelopment Authority (URA) PropertyGuru Analysis
The ViTalrole that interest rates played
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 23
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le o
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E xamination of the 2013 market requires an investigation of the important role that interest rates and the cost of capital have on the property sector
The interest rate ndash and the outlook for interest rates ndash represents the effective and expected cost of servicing the mortgage debt In 2013 the cost of servicing a mortgage remained at near record lows
The Singapore Interbank Offered Rate or SIBOR is set by the Association of Banks in Singapore Mortgage rates are effectively set by the base SIBOR rate plus a bank margin
The majority of mortgage debt in Singapore is variable ndash and where fixed it is fixed for a maximum period of five years This is significant as other countries allow longer periods of fixed term mortgages The US for example typically has 30-year fixed loans
Combined with the high personal debt levels carried by property buyers in Singapore the very high percentage of Singaporeans on variable mortgage rates makes the property market highly susceptible to changes in interest rates
As at 2013 the interest rate environment remained very accommodative being directly influenced by the bond buying (QE) of the US Federal Reserve Singapore effectively has its ultra-low interest rate environment driven by the US
The vital role that interest rates played
Though ultra-low rates were a primary driver in the 2013 market they cannot necessarily be assumed to remain as positive for the market during 2014
The chart below looks in more detail at the most recent rate influences on the market in 2013
Source Monetary Authority of Singapore (MAS)
PropertyGuru Market Outlook 2014 24
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The three-month SIBOR rate has fallen from approximately 18 percent in Q3Q4 2008 to the historically low values at present This most recent behaviour is uncharacteristically stable given that SIBOR rates have displayed much volatility over the past 25 years
The ultra benign interest rate environment over the last five years has increased the capacity of consumers and investors to borrow large sums cheaply This has allowed Singaporersquos property markets to flourish after the global market correction in 2009 ndash and for the very strong market to continue into 2013
ACCESS TO fiNANCE iN 2013
In 2013 the access to finance or the amount that people could borrow was curtailed by cooling measures This was a simple and efficient effort by the government to reduce effective property demand
Property sectors that attract the highest proportion of mortgage debt to finance the purchase were hit hardest by the measures
The sector that was especially susceptible to the cooling measures and showed the biggest correction was the HDB resale market a
While PropertyGuru does not see an imminent
reversiontothehistoricalinterestratemeanof
around3percentitdoesseeaslowtightening
processoccurringduringthecourseof2014
Howeverowingtothenascentrecoveryofthe
USeconomyweexpectthatrateswillriseonly
at a slow pace over the coming years
While this will not provide an additional stimulus
tothemarketndashasitdidin2013-itwillalsonot
beasignificantdragonthemarketInsummary
theinterestrateenvironmentof2013isexpected
tocontinueinto2014withonlyagradualrisendash
andwithaveragemortgageratesfinishingthe
yearbeneath225percent
Howeverthereducedaccesstofinancethrough
cooling measures is expected to continue to
beadragonpricesThesegovernmentmacro-
prudential policy measures remain the only
effectivefinancialinstrumenttheSingapore
government has to alleviate rising property
pricesIntroductionoftheTDSRframeworkis
recognitionofthisItwasagame-changerinthe
marketin2013andunlikelytoberelaxedin2014
The vital role that interest rates played
housingsuPPlYset to increase
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 26
Tab
le o
f Co
nte
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I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
Tab
le o
f Co
nte
nts
Share
S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
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andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
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70
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TransacTionVolumestake a dip
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 12
Tab
le o
f Co
nte
nts
Share
T ransaction volumes are critical but often overlooked when measuring and forecasting trends in a property market In 2013 the declining trend in transaction volumes provided
just such a lsquoforward indicatorrsquo with volumes serving as a key market driver for prices in 2014
Put simply transaction volume trends usually precede and drive price trends Typically there is also a lag of around six months for this to occur This happens in most property markets around the world
When all other factors are stable transaction volumes can be a very reliable predictor of price growth or fall ndash and so volume serves as a very simple and extremely powerful forward view of expected price trends for the coming year
Perhaps this relationship is best illustrated by example for instance Hong Kong - Singaporersquos sister economy
HONG KONG An example of the relationship between transaction volume and price
Hong Kong has provided an arguably extreme but instructive example of the relationship between transaction volumes and future prices
Transaction volumes take a dip
This is useful when looking at the transaction volumes in Singapore in 2013 ndash and their likely effects going forward
In Hong Kong volumes declined significantly in mid-2013 Only some seven months later ndash in January 2014 ndash there was a double digit market price decline
Interestingly by the middle of 2013 journalists were already confident enough ndash based on the transaction data ndash to suggest that the drop in transaction volumes signalled significant price declines to follow
There are three relevant points for Singapore to note from this n The relationship between volume and pricing is a universal feature of property markets it is very likely that Singapore prices will be affected by the same relationships in 2014 n The relationship is solid enough for commentators to use it confidently as a price predictor n The lsquolag effectrsquo between volume and price changes is consistent and in a range typically of between five to nine months
PropertyGuru Market Outlook 2014 13
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HDB Resale Transaction Volumes in 2013
Looking first at HDB resales we see a distinct downward trend in volumes from Q3 2012 Over the course of 2013 transaction volumes continued to decline steadily
Again the relationship between transaction volume and price is clearly visible with prices peaking some nine months after volumes peaked Prices then begin to decline in response to the earlier falling transaction volumes The nine-month lag period is very evident
The significant transaction volume declines in 2013 of approximately 8 percent in Q4 2012 will continue to influence the prices of HDB properties at least well into Q3 of 2014
Condo Transaction Volumes in 2013
The chart below shows the total volume of transactions in the private market These are plotted against the Singapore property price index
Q1 2013 saw a decline in volumes from previous years Corresponding prices peaked in Q3 of 2013 ndash thus following the same pattern However the decline in volumes was not significant until the second half of 2013 As such the corresponding decline in prices was also only slight in the last quarter of the year
At the same time it is price that affects upgraders the most given the spate of cooling measures imposed on the market Therefore some upgraders may choose to play the waiting game and defer purchases until market forces dictate that prices drop even further - or when upcoming launches offer more attractive entry prices to offset the downside risks in property purchasing
The two weak quarters of Q3 and Q4 2013 strongly suggest renewed and much stronger downward pressure on prices in the first half of 2014
Transaction volumes take a dip
Source Housing Development Board (HDB)
PropertyGuru Market Outlook 2014 14
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Transactions have experienced a significant dip of about 58 percent since the middle of 2013 at least partly as a result of market sentiment turning cautious and the inability to actually borrow sufficient amounts to buy These effects have followed the announcement of tighter Monetary Authority of Singapore (MAS) financing regulations namely TDSR and MSR in late June and their earlier ABSD changes
Whatrsquos interesting is that not only have these measures resulted in consecutive quarters of decline in transactions in Q3 and Q4 but they have also caused total volume to return to 2008 levels in the condo market
Watch video Industry analysts share their inisghts into how the CCR RCR and OCR regions fared in 2013
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
PropertyGuru Market Outlook 2014 15
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Condo Transaction Volumes - By Area
Condo transaction volumes in 2013 did not match the record number of transactions seen in 2012 They declined some 386 percent ndash reflecting weakening buyer sentiments for private properties in part due to MAS regulations
However the drop in transactions differs from region to region The transactions in the Core Central Region (CCR) trended down the most severely registering an average of a 40 percent decrease quarter-on-quarter
Of particular note for the regions in 2013 n In Q2 2013 the Rest of Central Region (RCR) and Outside Central Region (OCR) regions grew transaction volumes by a healthy 44 percent and 18 percent respectively from the previous quarter ndash despite the introduction of the ABSD However the new TDSR and MSR in the second half of the year curtailed these volumes n In the RCR property seekers purchased a total of 2062 units in Q3 and Q4 2013 combined being half the level of a year prior While down significantly these volumes were a better result than those recorded by the CR and OCR n Despite most buying activity occurring in the OCR the area saw transactions decline from 4673 units to 3105 units between Q2
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
and Q3 2013 ndash and further drop to around 1430 by Q4 This made the volumes in Q4 just 30 percent (approximately) of the level they were six months prior n The CCR and the OCR regions recorded the largest percentage decline in volume from the peak in 2012 and through 2013 n Despite transaction volume ratios that would indicate that the OCR will experience the worst pricing pressures many analysts are expecting this effect to be offset largely by significant new demand in this area a
The FlucTuaTing nature of prices
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 17
Tab
le o
f Co
nte
nts
Share
T he declining transaction volumes of the last two quarters of 2013 finally drove down price levels in Q4 Until Q3 2013 prices continued to defy gravity as the gap between prices
and their supporting volumes grew larger
From the previous sections we recognise that this is a text book market response to declining volumes where prices can remain elevated for two or more quarters before plateauing and then declining
The predictable relationship between volume and price
Many factors influence the lsquotime laggedrsquo relationship between volumes and prices However one of the strongest is also one of the simplest It is also the most constant in any property marketplace in the world It is human behaviour
Humans have an entirely understandable and common tendency to hold on to their properties rather than to accept lower offers They typically do this for many months as the offers dry up before reluctantly accepting lower offers ndash and recognising in turn that the market has moved
The fluctuating nature of prices
This behaviour helps explain why during the period of declining transaction volumes the average time it takes to sell a property also increases
Expanding time on market and declining transaction volumes are forward indicators of coming softness in prices ndash and usually go hand in hand Significantly both were apparent in the Singapore market in the latter half of 2013
During 2013 the Singaporean market behaved very predictably in response to the financing restrictions and corresponding transaction declines This augers well for predicting trends in 2014
Reading the 2013 data we can confidently expect to see further downward pressure on prices into 2014 ndash providing other factors remain stable Despite the fact that many other micro and macro factors can influence prices these forces will need to be particularly strong now to offset the well-entrenched price decline process that has been set in play by the declining transaction volumes of late 2013
PropertyGuru Market Outlook 2014 18
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2013 Price Outcomes HDBs VS Condos
From the chart below both property types saw price declines in 2013 However HDBs led the way ahead of condos From earlier sections we also recognise that the earlier price declines of HDBs were preceded by earlier transaction volume declines
By Q3 the HDB market had begun to sag under the new cooling measures ndash aimed specifically at curtailing the availability of mortgage credit to the market and placing other restrictions on purchasers However it was not until Q4 led by the mild declines in volumes that were seen in Q1 2013 that the condo market began to correct
These pricing forces were accompanied by the first of the new supply coming online - and some mild reductions in the rates of population growth Additionally restrictions governing the purchase of HDB resale properties by Singapore PRs introduced in August played a role in reducing effective demand for HDBs ndash and also contributed to their faster price declines
The largest contributing factors in 2013 were the new purchasing restrictions and the implementation of the MSR TDSR and ABSD policy changes These effectively reduced both the eligibility of individuals for new mortgage debt and increased the purchasing costs at the same time
The fluctuating nature of prices
Source Urban Redevelopment Authority (URA) Housing Development Board (HDB)
Locality-based fluctuations in the Condo market
In 2013 the price changes and transaction volume of condos varied between regions Below we compare the CCR the OCR and RCR
The CCR registered a decline of 21 percent while prices in the RCR and OCR increased by 03 percent and 68 percent respectively
PropertyGuru Market Outlook 2014 19
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le o
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The fluctuating nature of prices
Source Urban Redevelopment Authority (URA)
Significantly the CCR registered a price fall across the last three quarters of 2013 This fall also coincided with the introduction of the ABSD in Q1 which saw higher taxes on second and subsequent properties imposed on a majority of potential buyers including high-net worth individuals and foreigners
The downward trend of luxury properties appeared to be further exacerbated with the TDSR changes introduced in late June These resulted in a price fall of 22 percent by Q4 2013 a rate of decline that was seven times larger than the 03 percent decline in the previous quarter
The RCR region also witnessed price declines for the first time since Q1 2012 This was after the TDSR came into effect However unlike the CCR the RCR maintained positive market activity throughout 2013 This was spurred by the launch of units that were competitively priced at the level of affordability that buyers were comfortable with
The OCR continued to be the fastest growing market segment which contributed much to the increase in the overall private property price index In spite of a decline of 09 percent in Q4 2013 the first after almost two years the rate of price growth for the OCR in 2013 was 20 percent higher than the levels in 2012 - which registered only a 54 percent rise a
why execuTiVe condos were highly sought after
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 21
Tab
le o
f Co
nte
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Share
Why executive condos were highly sought after
A report compiled by PropertyGuru found that the market value of fully and partially privatised ECs grew strongly in 2013
Examples from the report n Unit prices at Eastvale in Pasir Ris the first EC in Singapore increased from $454 per square foot (psf) in September 1996 to $909 psf by November 2013 This translates to a rise of 100 percent n Two partially privatised ECs also located in Pasir Ris - The Esparis and Whitewater - showed higher growth of 130 percent and 140 percent respectively In January 2002 the Esparis had a psf of $370 and reached $859 psf by November 2013 n Similarly prices at Whitewater which was completed in 2005 increased to $883 psf in December 2013 from an initial price of $362 psf in December 2002
These very strong 2013 price increases provide clear evidence to suggest why the government has elected to increase the supply of ECs in the market by an average of 330 percent over the next three years compared to 2013
Demand for ECs contributed strongly to rapid price growth
In 2013 the top ECs were concentrated in certain districts particularly in the developing areas of the west and the central areas of Ang Mo Kio and Bishan As detailed in the chart below we can see that for example in the case of Bishan Loft and Nuovo the values of these
specific properties are valued at approximately 150 percent of the average psf of private properties within the same district District 20
This chart indicates that some ECs in 2013 exhibited high psf growth and now command very high psfs
The scarcity of ECs in certain localities has enabled some to command higher psfs than the average private district psf However the age of the property psfs needs to be considered when making a determination A strong EC supply increased ndash and the policy changes that remove the EC-favoured status are expected to rectify some of the price inbalance going forward in 2014 a
Source Urban Redevelopment Authority (URA) PropertyGuru Analysis
The ViTalrole that interest rates played
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 23
Tab
le o
f Co
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Share
E xamination of the 2013 market requires an investigation of the important role that interest rates and the cost of capital have on the property sector
The interest rate ndash and the outlook for interest rates ndash represents the effective and expected cost of servicing the mortgage debt In 2013 the cost of servicing a mortgage remained at near record lows
The Singapore Interbank Offered Rate or SIBOR is set by the Association of Banks in Singapore Mortgage rates are effectively set by the base SIBOR rate plus a bank margin
The majority of mortgage debt in Singapore is variable ndash and where fixed it is fixed for a maximum period of five years This is significant as other countries allow longer periods of fixed term mortgages The US for example typically has 30-year fixed loans
Combined with the high personal debt levels carried by property buyers in Singapore the very high percentage of Singaporeans on variable mortgage rates makes the property market highly susceptible to changes in interest rates
As at 2013 the interest rate environment remained very accommodative being directly influenced by the bond buying (QE) of the US Federal Reserve Singapore effectively has its ultra-low interest rate environment driven by the US
The vital role that interest rates played
Though ultra-low rates were a primary driver in the 2013 market they cannot necessarily be assumed to remain as positive for the market during 2014
The chart below looks in more detail at the most recent rate influences on the market in 2013
Source Monetary Authority of Singapore (MAS)
PropertyGuru Market Outlook 2014 24
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The three-month SIBOR rate has fallen from approximately 18 percent in Q3Q4 2008 to the historically low values at present This most recent behaviour is uncharacteristically stable given that SIBOR rates have displayed much volatility over the past 25 years
The ultra benign interest rate environment over the last five years has increased the capacity of consumers and investors to borrow large sums cheaply This has allowed Singaporersquos property markets to flourish after the global market correction in 2009 ndash and for the very strong market to continue into 2013
ACCESS TO fiNANCE iN 2013
In 2013 the access to finance or the amount that people could borrow was curtailed by cooling measures This was a simple and efficient effort by the government to reduce effective property demand
Property sectors that attract the highest proportion of mortgage debt to finance the purchase were hit hardest by the measures
The sector that was especially susceptible to the cooling measures and showed the biggest correction was the HDB resale market a
While PropertyGuru does not see an imminent
reversiontothehistoricalinterestratemeanof
around3percentitdoesseeaslowtightening
processoccurringduringthecourseof2014
Howeverowingtothenascentrecoveryofthe
USeconomyweexpectthatrateswillriseonly
at a slow pace over the coming years
While this will not provide an additional stimulus
tothemarketndashasitdidin2013-itwillalsonot
beasignificantdragonthemarketInsummary
theinterestrateenvironmentof2013isexpected
tocontinueinto2014withonlyagradualrisendash
andwithaveragemortgageratesfinishingthe
yearbeneath225percent
Howeverthereducedaccesstofinancethrough
cooling measures is expected to continue to
beadragonpricesThesegovernmentmacro-
prudential policy measures remain the only
effectivefinancialinstrumenttheSingapore
government has to alleviate rising property
pricesIntroductionoftheTDSRframeworkis
recognitionofthisItwasagame-changerinthe
marketin2013andunlikelytoberelaxedin2014
The vital role that interest rates played
housingsuPPlYset to increase
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 26
Tab
le o
f Co
nte
nts
Share
I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
Tab
le o
f Co
nte
nts
Share
S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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- Page 6 Off
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- Page 6 Off
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PropertyGuru Market Outlook 2014 12
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T ransaction volumes are critical but often overlooked when measuring and forecasting trends in a property market In 2013 the declining trend in transaction volumes provided
just such a lsquoforward indicatorrsquo with volumes serving as a key market driver for prices in 2014
Put simply transaction volume trends usually precede and drive price trends Typically there is also a lag of around six months for this to occur This happens in most property markets around the world
When all other factors are stable transaction volumes can be a very reliable predictor of price growth or fall ndash and so volume serves as a very simple and extremely powerful forward view of expected price trends for the coming year
Perhaps this relationship is best illustrated by example for instance Hong Kong - Singaporersquos sister economy
HONG KONG An example of the relationship between transaction volume and price
Hong Kong has provided an arguably extreme but instructive example of the relationship between transaction volumes and future prices
Transaction volumes take a dip
This is useful when looking at the transaction volumes in Singapore in 2013 ndash and their likely effects going forward
In Hong Kong volumes declined significantly in mid-2013 Only some seven months later ndash in January 2014 ndash there was a double digit market price decline
Interestingly by the middle of 2013 journalists were already confident enough ndash based on the transaction data ndash to suggest that the drop in transaction volumes signalled significant price declines to follow
There are three relevant points for Singapore to note from this n The relationship between volume and pricing is a universal feature of property markets it is very likely that Singapore prices will be affected by the same relationships in 2014 n The relationship is solid enough for commentators to use it confidently as a price predictor n The lsquolag effectrsquo between volume and price changes is consistent and in a range typically of between five to nine months
PropertyGuru Market Outlook 2014 13
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HDB Resale Transaction Volumes in 2013
Looking first at HDB resales we see a distinct downward trend in volumes from Q3 2012 Over the course of 2013 transaction volumes continued to decline steadily
Again the relationship between transaction volume and price is clearly visible with prices peaking some nine months after volumes peaked Prices then begin to decline in response to the earlier falling transaction volumes The nine-month lag period is very evident
The significant transaction volume declines in 2013 of approximately 8 percent in Q4 2012 will continue to influence the prices of HDB properties at least well into Q3 of 2014
Condo Transaction Volumes in 2013
The chart below shows the total volume of transactions in the private market These are plotted against the Singapore property price index
Q1 2013 saw a decline in volumes from previous years Corresponding prices peaked in Q3 of 2013 ndash thus following the same pattern However the decline in volumes was not significant until the second half of 2013 As such the corresponding decline in prices was also only slight in the last quarter of the year
At the same time it is price that affects upgraders the most given the spate of cooling measures imposed on the market Therefore some upgraders may choose to play the waiting game and defer purchases until market forces dictate that prices drop even further - or when upcoming launches offer more attractive entry prices to offset the downside risks in property purchasing
The two weak quarters of Q3 and Q4 2013 strongly suggest renewed and much stronger downward pressure on prices in the first half of 2014
Transaction volumes take a dip
Source Housing Development Board (HDB)
PropertyGuru Market Outlook 2014 14
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Transactions have experienced a significant dip of about 58 percent since the middle of 2013 at least partly as a result of market sentiment turning cautious and the inability to actually borrow sufficient amounts to buy These effects have followed the announcement of tighter Monetary Authority of Singapore (MAS) financing regulations namely TDSR and MSR in late June and their earlier ABSD changes
Whatrsquos interesting is that not only have these measures resulted in consecutive quarters of decline in transactions in Q3 and Q4 but they have also caused total volume to return to 2008 levels in the condo market
Watch video Industry analysts share their inisghts into how the CCR RCR and OCR regions fared in 2013
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
PropertyGuru Market Outlook 2014 15
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Condo Transaction Volumes - By Area
Condo transaction volumes in 2013 did not match the record number of transactions seen in 2012 They declined some 386 percent ndash reflecting weakening buyer sentiments for private properties in part due to MAS regulations
However the drop in transactions differs from region to region The transactions in the Core Central Region (CCR) trended down the most severely registering an average of a 40 percent decrease quarter-on-quarter
Of particular note for the regions in 2013 n In Q2 2013 the Rest of Central Region (RCR) and Outside Central Region (OCR) regions grew transaction volumes by a healthy 44 percent and 18 percent respectively from the previous quarter ndash despite the introduction of the ABSD However the new TDSR and MSR in the second half of the year curtailed these volumes n In the RCR property seekers purchased a total of 2062 units in Q3 and Q4 2013 combined being half the level of a year prior While down significantly these volumes were a better result than those recorded by the CR and OCR n Despite most buying activity occurring in the OCR the area saw transactions decline from 4673 units to 3105 units between Q2
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
and Q3 2013 ndash and further drop to around 1430 by Q4 This made the volumes in Q4 just 30 percent (approximately) of the level they were six months prior n The CCR and the OCR regions recorded the largest percentage decline in volume from the peak in 2012 and through 2013 n Despite transaction volume ratios that would indicate that the OCR will experience the worst pricing pressures many analysts are expecting this effect to be offset largely by significant new demand in this area a
The FlucTuaTing nature of prices
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 17
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T he declining transaction volumes of the last two quarters of 2013 finally drove down price levels in Q4 Until Q3 2013 prices continued to defy gravity as the gap between prices
and their supporting volumes grew larger
From the previous sections we recognise that this is a text book market response to declining volumes where prices can remain elevated for two or more quarters before plateauing and then declining
The predictable relationship between volume and price
Many factors influence the lsquotime laggedrsquo relationship between volumes and prices However one of the strongest is also one of the simplest It is also the most constant in any property marketplace in the world It is human behaviour
Humans have an entirely understandable and common tendency to hold on to their properties rather than to accept lower offers They typically do this for many months as the offers dry up before reluctantly accepting lower offers ndash and recognising in turn that the market has moved
The fluctuating nature of prices
This behaviour helps explain why during the period of declining transaction volumes the average time it takes to sell a property also increases
Expanding time on market and declining transaction volumes are forward indicators of coming softness in prices ndash and usually go hand in hand Significantly both were apparent in the Singapore market in the latter half of 2013
During 2013 the Singaporean market behaved very predictably in response to the financing restrictions and corresponding transaction declines This augers well for predicting trends in 2014
Reading the 2013 data we can confidently expect to see further downward pressure on prices into 2014 ndash providing other factors remain stable Despite the fact that many other micro and macro factors can influence prices these forces will need to be particularly strong now to offset the well-entrenched price decline process that has been set in play by the declining transaction volumes of late 2013
PropertyGuru Market Outlook 2014 18
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2013 Price Outcomes HDBs VS Condos
From the chart below both property types saw price declines in 2013 However HDBs led the way ahead of condos From earlier sections we also recognise that the earlier price declines of HDBs were preceded by earlier transaction volume declines
By Q3 the HDB market had begun to sag under the new cooling measures ndash aimed specifically at curtailing the availability of mortgage credit to the market and placing other restrictions on purchasers However it was not until Q4 led by the mild declines in volumes that were seen in Q1 2013 that the condo market began to correct
These pricing forces were accompanied by the first of the new supply coming online - and some mild reductions in the rates of population growth Additionally restrictions governing the purchase of HDB resale properties by Singapore PRs introduced in August played a role in reducing effective demand for HDBs ndash and also contributed to their faster price declines
The largest contributing factors in 2013 were the new purchasing restrictions and the implementation of the MSR TDSR and ABSD policy changes These effectively reduced both the eligibility of individuals for new mortgage debt and increased the purchasing costs at the same time
The fluctuating nature of prices
Source Urban Redevelopment Authority (URA) Housing Development Board (HDB)
Locality-based fluctuations in the Condo market
In 2013 the price changes and transaction volume of condos varied between regions Below we compare the CCR the OCR and RCR
The CCR registered a decline of 21 percent while prices in the RCR and OCR increased by 03 percent and 68 percent respectively
PropertyGuru Market Outlook 2014 19
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The fluctuating nature of prices
Source Urban Redevelopment Authority (URA)
Significantly the CCR registered a price fall across the last three quarters of 2013 This fall also coincided with the introduction of the ABSD in Q1 which saw higher taxes on second and subsequent properties imposed on a majority of potential buyers including high-net worth individuals and foreigners
The downward trend of luxury properties appeared to be further exacerbated with the TDSR changes introduced in late June These resulted in a price fall of 22 percent by Q4 2013 a rate of decline that was seven times larger than the 03 percent decline in the previous quarter
The RCR region also witnessed price declines for the first time since Q1 2012 This was after the TDSR came into effect However unlike the CCR the RCR maintained positive market activity throughout 2013 This was spurred by the launch of units that were competitively priced at the level of affordability that buyers were comfortable with
The OCR continued to be the fastest growing market segment which contributed much to the increase in the overall private property price index In spite of a decline of 09 percent in Q4 2013 the first after almost two years the rate of price growth for the OCR in 2013 was 20 percent higher than the levels in 2012 - which registered only a 54 percent rise a
why execuTiVe condos were highly sought after
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 21
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Why executive condos were highly sought after
A report compiled by PropertyGuru found that the market value of fully and partially privatised ECs grew strongly in 2013
Examples from the report n Unit prices at Eastvale in Pasir Ris the first EC in Singapore increased from $454 per square foot (psf) in September 1996 to $909 psf by November 2013 This translates to a rise of 100 percent n Two partially privatised ECs also located in Pasir Ris - The Esparis and Whitewater - showed higher growth of 130 percent and 140 percent respectively In January 2002 the Esparis had a psf of $370 and reached $859 psf by November 2013 n Similarly prices at Whitewater which was completed in 2005 increased to $883 psf in December 2013 from an initial price of $362 psf in December 2002
These very strong 2013 price increases provide clear evidence to suggest why the government has elected to increase the supply of ECs in the market by an average of 330 percent over the next three years compared to 2013
Demand for ECs contributed strongly to rapid price growth
In 2013 the top ECs were concentrated in certain districts particularly in the developing areas of the west and the central areas of Ang Mo Kio and Bishan As detailed in the chart below we can see that for example in the case of Bishan Loft and Nuovo the values of these
specific properties are valued at approximately 150 percent of the average psf of private properties within the same district District 20
This chart indicates that some ECs in 2013 exhibited high psf growth and now command very high psfs
The scarcity of ECs in certain localities has enabled some to command higher psfs than the average private district psf However the age of the property psfs needs to be considered when making a determination A strong EC supply increased ndash and the policy changes that remove the EC-favoured status are expected to rectify some of the price inbalance going forward in 2014 a
Source Urban Redevelopment Authority (URA) PropertyGuru Analysis
The ViTalrole that interest rates played
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 23
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E xamination of the 2013 market requires an investigation of the important role that interest rates and the cost of capital have on the property sector
The interest rate ndash and the outlook for interest rates ndash represents the effective and expected cost of servicing the mortgage debt In 2013 the cost of servicing a mortgage remained at near record lows
The Singapore Interbank Offered Rate or SIBOR is set by the Association of Banks in Singapore Mortgage rates are effectively set by the base SIBOR rate plus a bank margin
The majority of mortgage debt in Singapore is variable ndash and where fixed it is fixed for a maximum period of five years This is significant as other countries allow longer periods of fixed term mortgages The US for example typically has 30-year fixed loans
Combined with the high personal debt levels carried by property buyers in Singapore the very high percentage of Singaporeans on variable mortgage rates makes the property market highly susceptible to changes in interest rates
As at 2013 the interest rate environment remained very accommodative being directly influenced by the bond buying (QE) of the US Federal Reserve Singapore effectively has its ultra-low interest rate environment driven by the US
The vital role that interest rates played
Though ultra-low rates were a primary driver in the 2013 market they cannot necessarily be assumed to remain as positive for the market during 2014
The chart below looks in more detail at the most recent rate influences on the market in 2013
Source Monetary Authority of Singapore (MAS)
PropertyGuru Market Outlook 2014 24
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The three-month SIBOR rate has fallen from approximately 18 percent in Q3Q4 2008 to the historically low values at present This most recent behaviour is uncharacteristically stable given that SIBOR rates have displayed much volatility over the past 25 years
The ultra benign interest rate environment over the last five years has increased the capacity of consumers and investors to borrow large sums cheaply This has allowed Singaporersquos property markets to flourish after the global market correction in 2009 ndash and for the very strong market to continue into 2013
ACCESS TO fiNANCE iN 2013
In 2013 the access to finance or the amount that people could borrow was curtailed by cooling measures This was a simple and efficient effort by the government to reduce effective property demand
Property sectors that attract the highest proportion of mortgage debt to finance the purchase were hit hardest by the measures
The sector that was especially susceptible to the cooling measures and showed the biggest correction was the HDB resale market a
While PropertyGuru does not see an imminent
reversiontothehistoricalinterestratemeanof
around3percentitdoesseeaslowtightening
processoccurringduringthecourseof2014
Howeverowingtothenascentrecoveryofthe
USeconomyweexpectthatrateswillriseonly
at a slow pace over the coming years
While this will not provide an additional stimulus
tothemarketndashasitdidin2013-itwillalsonot
beasignificantdragonthemarketInsummary
theinterestrateenvironmentof2013isexpected
tocontinueinto2014withonlyagradualrisendash
andwithaveragemortgageratesfinishingthe
yearbeneath225percent
Howeverthereducedaccesstofinancethrough
cooling measures is expected to continue to
beadragonpricesThesegovernmentmacro-
prudential policy measures remain the only
effectivefinancialinstrumenttheSingapore
government has to alleviate rising property
pricesIntroductionoftheTDSRframeworkis
recognitionofthisItwasagame-changerinthe
marketin2013andunlikelytoberelaxedin2014
The vital role that interest rates played
housingsuPPlYset to increase
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 26
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le o
f Co
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I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
Tab
le o
f Co
nte
nts
Share
S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
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makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
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TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
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toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
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Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
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PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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- Button 57
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- Page 6 Off
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PropertyGuru Market Outlook 2014 13
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HDB Resale Transaction Volumes in 2013
Looking first at HDB resales we see a distinct downward trend in volumes from Q3 2012 Over the course of 2013 transaction volumes continued to decline steadily
Again the relationship between transaction volume and price is clearly visible with prices peaking some nine months after volumes peaked Prices then begin to decline in response to the earlier falling transaction volumes The nine-month lag period is very evident
The significant transaction volume declines in 2013 of approximately 8 percent in Q4 2012 will continue to influence the prices of HDB properties at least well into Q3 of 2014
Condo Transaction Volumes in 2013
The chart below shows the total volume of transactions in the private market These are plotted against the Singapore property price index
Q1 2013 saw a decline in volumes from previous years Corresponding prices peaked in Q3 of 2013 ndash thus following the same pattern However the decline in volumes was not significant until the second half of 2013 As such the corresponding decline in prices was also only slight in the last quarter of the year
At the same time it is price that affects upgraders the most given the spate of cooling measures imposed on the market Therefore some upgraders may choose to play the waiting game and defer purchases until market forces dictate that prices drop even further - or when upcoming launches offer more attractive entry prices to offset the downside risks in property purchasing
The two weak quarters of Q3 and Q4 2013 strongly suggest renewed and much stronger downward pressure on prices in the first half of 2014
Transaction volumes take a dip
Source Housing Development Board (HDB)
PropertyGuru Market Outlook 2014 14
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Transactions have experienced a significant dip of about 58 percent since the middle of 2013 at least partly as a result of market sentiment turning cautious and the inability to actually borrow sufficient amounts to buy These effects have followed the announcement of tighter Monetary Authority of Singapore (MAS) financing regulations namely TDSR and MSR in late June and their earlier ABSD changes
Whatrsquos interesting is that not only have these measures resulted in consecutive quarters of decline in transactions in Q3 and Q4 but they have also caused total volume to return to 2008 levels in the condo market
Watch video Industry analysts share their inisghts into how the CCR RCR and OCR regions fared in 2013
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
PropertyGuru Market Outlook 2014 15
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Condo Transaction Volumes - By Area
Condo transaction volumes in 2013 did not match the record number of transactions seen in 2012 They declined some 386 percent ndash reflecting weakening buyer sentiments for private properties in part due to MAS regulations
However the drop in transactions differs from region to region The transactions in the Core Central Region (CCR) trended down the most severely registering an average of a 40 percent decrease quarter-on-quarter
Of particular note for the regions in 2013 n In Q2 2013 the Rest of Central Region (RCR) and Outside Central Region (OCR) regions grew transaction volumes by a healthy 44 percent and 18 percent respectively from the previous quarter ndash despite the introduction of the ABSD However the new TDSR and MSR in the second half of the year curtailed these volumes n In the RCR property seekers purchased a total of 2062 units in Q3 and Q4 2013 combined being half the level of a year prior While down significantly these volumes were a better result than those recorded by the CR and OCR n Despite most buying activity occurring in the OCR the area saw transactions decline from 4673 units to 3105 units between Q2
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
and Q3 2013 ndash and further drop to around 1430 by Q4 This made the volumes in Q4 just 30 percent (approximately) of the level they were six months prior n The CCR and the OCR regions recorded the largest percentage decline in volume from the peak in 2012 and through 2013 n Despite transaction volume ratios that would indicate that the OCR will experience the worst pricing pressures many analysts are expecting this effect to be offset largely by significant new demand in this area a
The FlucTuaTing nature of prices
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 17
Tab
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T he declining transaction volumes of the last two quarters of 2013 finally drove down price levels in Q4 Until Q3 2013 prices continued to defy gravity as the gap between prices
and their supporting volumes grew larger
From the previous sections we recognise that this is a text book market response to declining volumes where prices can remain elevated for two or more quarters before plateauing and then declining
The predictable relationship between volume and price
Many factors influence the lsquotime laggedrsquo relationship between volumes and prices However one of the strongest is also one of the simplest It is also the most constant in any property marketplace in the world It is human behaviour
Humans have an entirely understandable and common tendency to hold on to their properties rather than to accept lower offers They typically do this for many months as the offers dry up before reluctantly accepting lower offers ndash and recognising in turn that the market has moved
The fluctuating nature of prices
This behaviour helps explain why during the period of declining transaction volumes the average time it takes to sell a property also increases
Expanding time on market and declining transaction volumes are forward indicators of coming softness in prices ndash and usually go hand in hand Significantly both were apparent in the Singapore market in the latter half of 2013
During 2013 the Singaporean market behaved very predictably in response to the financing restrictions and corresponding transaction declines This augers well for predicting trends in 2014
Reading the 2013 data we can confidently expect to see further downward pressure on prices into 2014 ndash providing other factors remain stable Despite the fact that many other micro and macro factors can influence prices these forces will need to be particularly strong now to offset the well-entrenched price decline process that has been set in play by the declining transaction volumes of late 2013
PropertyGuru Market Outlook 2014 18
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2013 Price Outcomes HDBs VS Condos
From the chart below both property types saw price declines in 2013 However HDBs led the way ahead of condos From earlier sections we also recognise that the earlier price declines of HDBs were preceded by earlier transaction volume declines
By Q3 the HDB market had begun to sag under the new cooling measures ndash aimed specifically at curtailing the availability of mortgage credit to the market and placing other restrictions on purchasers However it was not until Q4 led by the mild declines in volumes that were seen in Q1 2013 that the condo market began to correct
These pricing forces were accompanied by the first of the new supply coming online - and some mild reductions in the rates of population growth Additionally restrictions governing the purchase of HDB resale properties by Singapore PRs introduced in August played a role in reducing effective demand for HDBs ndash and also contributed to their faster price declines
The largest contributing factors in 2013 were the new purchasing restrictions and the implementation of the MSR TDSR and ABSD policy changes These effectively reduced both the eligibility of individuals for new mortgage debt and increased the purchasing costs at the same time
The fluctuating nature of prices
Source Urban Redevelopment Authority (URA) Housing Development Board (HDB)
Locality-based fluctuations in the Condo market
In 2013 the price changes and transaction volume of condos varied between regions Below we compare the CCR the OCR and RCR
The CCR registered a decline of 21 percent while prices in the RCR and OCR increased by 03 percent and 68 percent respectively
PropertyGuru Market Outlook 2014 19
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The fluctuating nature of prices
Source Urban Redevelopment Authority (URA)
Significantly the CCR registered a price fall across the last three quarters of 2013 This fall also coincided with the introduction of the ABSD in Q1 which saw higher taxes on second and subsequent properties imposed on a majority of potential buyers including high-net worth individuals and foreigners
The downward trend of luxury properties appeared to be further exacerbated with the TDSR changes introduced in late June These resulted in a price fall of 22 percent by Q4 2013 a rate of decline that was seven times larger than the 03 percent decline in the previous quarter
The RCR region also witnessed price declines for the first time since Q1 2012 This was after the TDSR came into effect However unlike the CCR the RCR maintained positive market activity throughout 2013 This was spurred by the launch of units that were competitively priced at the level of affordability that buyers were comfortable with
The OCR continued to be the fastest growing market segment which contributed much to the increase in the overall private property price index In spite of a decline of 09 percent in Q4 2013 the first after almost two years the rate of price growth for the OCR in 2013 was 20 percent higher than the levels in 2012 - which registered only a 54 percent rise a
why execuTiVe condos were highly sought after
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 21
Tab
le o
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Why executive condos were highly sought after
A report compiled by PropertyGuru found that the market value of fully and partially privatised ECs grew strongly in 2013
Examples from the report n Unit prices at Eastvale in Pasir Ris the first EC in Singapore increased from $454 per square foot (psf) in September 1996 to $909 psf by November 2013 This translates to a rise of 100 percent n Two partially privatised ECs also located in Pasir Ris - The Esparis and Whitewater - showed higher growth of 130 percent and 140 percent respectively In January 2002 the Esparis had a psf of $370 and reached $859 psf by November 2013 n Similarly prices at Whitewater which was completed in 2005 increased to $883 psf in December 2013 from an initial price of $362 psf in December 2002
These very strong 2013 price increases provide clear evidence to suggest why the government has elected to increase the supply of ECs in the market by an average of 330 percent over the next three years compared to 2013
Demand for ECs contributed strongly to rapid price growth
In 2013 the top ECs were concentrated in certain districts particularly in the developing areas of the west and the central areas of Ang Mo Kio and Bishan As detailed in the chart below we can see that for example in the case of Bishan Loft and Nuovo the values of these
specific properties are valued at approximately 150 percent of the average psf of private properties within the same district District 20
This chart indicates that some ECs in 2013 exhibited high psf growth and now command very high psfs
The scarcity of ECs in certain localities has enabled some to command higher psfs than the average private district psf However the age of the property psfs needs to be considered when making a determination A strong EC supply increased ndash and the policy changes that remove the EC-favoured status are expected to rectify some of the price inbalance going forward in 2014 a
Source Urban Redevelopment Authority (URA) PropertyGuru Analysis
The ViTalrole that interest rates played
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 23
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E xamination of the 2013 market requires an investigation of the important role that interest rates and the cost of capital have on the property sector
The interest rate ndash and the outlook for interest rates ndash represents the effective and expected cost of servicing the mortgage debt In 2013 the cost of servicing a mortgage remained at near record lows
The Singapore Interbank Offered Rate or SIBOR is set by the Association of Banks in Singapore Mortgage rates are effectively set by the base SIBOR rate plus a bank margin
The majority of mortgage debt in Singapore is variable ndash and where fixed it is fixed for a maximum period of five years This is significant as other countries allow longer periods of fixed term mortgages The US for example typically has 30-year fixed loans
Combined with the high personal debt levels carried by property buyers in Singapore the very high percentage of Singaporeans on variable mortgage rates makes the property market highly susceptible to changes in interest rates
As at 2013 the interest rate environment remained very accommodative being directly influenced by the bond buying (QE) of the US Federal Reserve Singapore effectively has its ultra-low interest rate environment driven by the US
The vital role that interest rates played
Though ultra-low rates were a primary driver in the 2013 market they cannot necessarily be assumed to remain as positive for the market during 2014
The chart below looks in more detail at the most recent rate influences on the market in 2013
Source Monetary Authority of Singapore (MAS)
PropertyGuru Market Outlook 2014 24
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The three-month SIBOR rate has fallen from approximately 18 percent in Q3Q4 2008 to the historically low values at present This most recent behaviour is uncharacteristically stable given that SIBOR rates have displayed much volatility over the past 25 years
The ultra benign interest rate environment over the last five years has increased the capacity of consumers and investors to borrow large sums cheaply This has allowed Singaporersquos property markets to flourish after the global market correction in 2009 ndash and for the very strong market to continue into 2013
ACCESS TO fiNANCE iN 2013
In 2013 the access to finance or the amount that people could borrow was curtailed by cooling measures This was a simple and efficient effort by the government to reduce effective property demand
Property sectors that attract the highest proportion of mortgage debt to finance the purchase were hit hardest by the measures
The sector that was especially susceptible to the cooling measures and showed the biggest correction was the HDB resale market a
While PropertyGuru does not see an imminent
reversiontothehistoricalinterestratemeanof
around3percentitdoesseeaslowtightening
processoccurringduringthecourseof2014
Howeverowingtothenascentrecoveryofthe
USeconomyweexpectthatrateswillriseonly
at a slow pace over the coming years
While this will not provide an additional stimulus
tothemarketndashasitdidin2013-itwillalsonot
beasignificantdragonthemarketInsummary
theinterestrateenvironmentof2013isexpected
tocontinueinto2014withonlyagradualrisendash
andwithaveragemortgageratesfinishingthe
yearbeneath225percent
Howeverthereducedaccesstofinancethrough
cooling measures is expected to continue to
beadragonpricesThesegovernmentmacro-
prudential policy measures remain the only
effectivefinancialinstrumenttheSingapore
government has to alleviate rising property
pricesIntroductionoftheTDSRframeworkis
recognitionofthisItwasagame-changerinthe
marketin2013andunlikelytoberelaxedin2014
The vital role that interest rates played
housingsuPPlYset to increase
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 26
Tab
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I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
Tab
le o
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Share
S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
Tab
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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- Page 6 Off
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-
- Button 57
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- Page 6 Off
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PropertyGuru Market Outlook 2014 14
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Transactions have experienced a significant dip of about 58 percent since the middle of 2013 at least partly as a result of market sentiment turning cautious and the inability to actually borrow sufficient amounts to buy These effects have followed the announcement of tighter Monetary Authority of Singapore (MAS) financing regulations namely TDSR and MSR in late June and their earlier ABSD changes
Whatrsquos interesting is that not only have these measures resulted in consecutive quarters of decline in transactions in Q3 and Q4 but they have also caused total volume to return to 2008 levels in the condo market
Watch video Industry analysts share their inisghts into how the CCR RCR and OCR regions fared in 2013
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
PropertyGuru Market Outlook 2014 15
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Condo Transaction Volumes - By Area
Condo transaction volumes in 2013 did not match the record number of transactions seen in 2012 They declined some 386 percent ndash reflecting weakening buyer sentiments for private properties in part due to MAS regulations
However the drop in transactions differs from region to region The transactions in the Core Central Region (CCR) trended down the most severely registering an average of a 40 percent decrease quarter-on-quarter
Of particular note for the regions in 2013 n In Q2 2013 the Rest of Central Region (RCR) and Outside Central Region (OCR) regions grew transaction volumes by a healthy 44 percent and 18 percent respectively from the previous quarter ndash despite the introduction of the ABSD However the new TDSR and MSR in the second half of the year curtailed these volumes n In the RCR property seekers purchased a total of 2062 units in Q3 and Q4 2013 combined being half the level of a year prior While down significantly these volumes were a better result than those recorded by the CR and OCR n Despite most buying activity occurring in the OCR the area saw transactions decline from 4673 units to 3105 units between Q2
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
and Q3 2013 ndash and further drop to around 1430 by Q4 This made the volumes in Q4 just 30 percent (approximately) of the level they were six months prior n The CCR and the OCR regions recorded the largest percentage decline in volume from the peak in 2012 and through 2013 n Despite transaction volume ratios that would indicate that the OCR will experience the worst pricing pressures many analysts are expecting this effect to be offset largely by significant new demand in this area a
The FlucTuaTing nature of prices
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 17
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T he declining transaction volumes of the last two quarters of 2013 finally drove down price levels in Q4 Until Q3 2013 prices continued to defy gravity as the gap between prices
and their supporting volumes grew larger
From the previous sections we recognise that this is a text book market response to declining volumes where prices can remain elevated for two or more quarters before plateauing and then declining
The predictable relationship between volume and price
Many factors influence the lsquotime laggedrsquo relationship between volumes and prices However one of the strongest is also one of the simplest It is also the most constant in any property marketplace in the world It is human behaviour
Humans have an entirely understandable and common tendency to hold on to their properties rather than to accept lower offers They typically do this for many months as the offers dry up before reluctantly accepting lower offers ndash and recognising in turn that the market has moved
The fluctuating nature of prices
This behaviour helps explain why during the period of declining transaction volumes the average time it takes to sell a property also increases
Expanding time on market and declining transaction volumes are forward indicators of coming softness in prices ndash and usually go hand in hand Significantly both were apparent in the Singapore market in the latter half of 2013
During 2013 the Singaporean market behaved very predictably in response to the financing restrictions and corresponding transaction declines This augers well for predicting trends in 2014
Reading the 2013 data we can confidently expect to see further downward pressure on prices into 2014 ndash providing other factors remain stable Despite the fact that many other micro and macro factors can influence prices these forces will need to be particularly strong now to offset the well-entrenched price decline process that has been set in play by the declining transaction volumes of late 2013
PropertyGuru Market Outlook 2014 18
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2013 Price Outcomes HDBs VS Condos
From the chart below both property types saw price declines in 2013 However HDBs led the way ahead of condos From earlier sections we also recognise that the earlier price declines of HDBs were preceded by earlier transaction volume declines
By Q3 the HDB market had begun to sag under the new cooling measures ndash aimed specifically at curtailing the availability of mortgage credit to the market and placing other restrictions on purchasers However it was not until Q4 led by the mild declines in volumes that were seen in Q1 2013 that the condo market began to correct
These pricing forces were accompanied by the first of the new supply coming online - and some mild reductions in the rates of population growth Additionally restrictions governing the purchase of HDB resale properties by Singapore PRs introduced in August played a role in reducing effective demand for HDBs ndash and also contributed to their faster price declines
The largest contributing factors in 2013 were the new purchasing restrictions and the implementation of the MSR TDSR and ABSD policy changes These effectively reduced both the eligibility of individuals for new mortgage debt and increased the purchasing costs at the same time
The fluctuating nature of prices
Source Urban Redevelopment Authority (URA) Housing Development Board (HDB)
Locality-based fluctuations in the Condo market
In 2013 the price changes and transaction volume of condos varied between regions Below we compare the CCR the OCR and RCR
The CCR registered a decline of 21 percent while prices in the RCR and OCR increased by 03 percent and 68 percent respectively
PropertyGuru Market Outlook 2014 19
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The fluctuating nature of prices
Source Urban Redevelopment Authority (URA)
Significantly the CCR registered a price fall across the last three quarters of 2013 This fall also coincided with the introduction of the ABSD in Q1 which saw higher taxes on second and subsequent properties imposed on a majority of potential buyers including high-net worth individuals and foreigners
The downward trend of luxury properties appeared to be further exacerbated with the TDSR changes introduced in late June These resulted in a price fall of 22 percent by Q4 2013 a rate of decline that was seven times larger than the 03 percent decline in the previous quarter
The RCR region also witnessed price declines for the first time since Q1 2012 This was after the TDSR came into effect However unlike the CCR the RCR maintained positive market activity throughout 2013 This was spurred by the launch of units that were competitively priced at the level of affordability that buyers were comfortable with
The OCR continued to be the fastest growing market segment which contributed much to the increase in the overall private property price index In spite of a decline of 09 percent in Q4 2013 the first after almost two years the rate of price growth for the OCR in 2013 was 20 percent higher than the levels in 2012 - which registered only a 54 percent rise a
why execuTiVe condos were highly sought after
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 21
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Why executive condos were highly sought after
A report compiled by PropertyGuru found that the market value of fully and partially privatised ECs grew strongly in 2013
Examples from the report n Unit prices at Eastvale in Pasir Ris the first EC in Singapore increased from $454 per square foot (psf) in September 1996 to $909 psf by November 2013 This translates to a rise of 100 percent n Two partially privatised ECs also located in Pasir Ris - The Esparis and Whitewater - showed higher growth of 130 percent and 140 percent respectively In January 2002 the Esparis had a psf of $370 and reached $859 psf by November 2013 n Similarly prices at Whitewater which was completed in 2005 increased to $883 psf in December 2013 from an initial price of $362 psf in December 2002
These very strong 2013 price increases provide clear evidence to suggest why the government has elected to increase the supply of ECs in the market by an average of 330 percent over the next three years compared to 2013
Demand for ECs contributed strongly to rapid price growth
In 2013 the top ECs were concentrated in certain districts particularly in the developing areas of the west and the central areas of Ang Mo Kio and Bishan As detailed in the chart below we can see that for example in the case of Bishan Loft and Nuovo the values of these
specific properties are valued at approximately 150 percent of the average psf of private properties within the same district District 20
This chart indicates that some ECs in 2013 exhibited high psf growth and now command very high psfs
The scarcity of ECs in certain localities has enabled some to command higher psfs than the average private district psf However the age of the property psfs needs to be considered when making a determination A strong EC supply increased ndash and the policy changes that remove the EC-favoured status are expected to rectify some of the price inbalance going forward in 2014 a
Source Urban Redevelopment Authority (URA) PropertyGuru Analysis
The ViTalrole that interest rates played
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 23
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le o
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Share
E xamination of the 2013 market requires an investigation of the important role that interest rates and the cost of capital have on the property sector
The interest rate ndash and the outlook for interest rates ndash represents the effective and expected cost of servicing the mortgage debt In 2013 the cost of servicing a mortgage remained at near record lows
The Singapore Interbank Offered Rate or SIBOR is set by the Association of Banks in Singapore Mortgage rates are effectively set by the base SIBOR rate plus a bank margin
The majority of mortgage debt in Singapore is variable ndash and where fixed it is fixed for a maximum period of five years This is significant as other countries allow longer periods of fixed term mortgages The US for example typically has 30-year fixed loans
Combined with the high personal debt levels carried by property buyers in Singapore the very high percentage of Singaporeans on variable mortgage rates makes the property market highly susceptible to changes in interest rates
As at 2013 the interest rate environment remained very accommodative being directly influenced by the bond buying (QE) of the US Federal Reserve Singapore effectively has its ultra-low interest rate environment driven by the US
The vital role that interest rates played
Though ultra-low rates were a primary driver in the 2013 market they cannot necessarily be assumed to remain as positive for the market during 2014
The chart below looks in more detail at the most recent rate influences on the market in 2013
Source Monetary Authority of Singapore (MAS)
PropertyGuru Market Outlook 2014 24
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The three-month SIBOR rate has fallen from approximately 18 percent in Q3Q4 2008 to the historically low values at present This most recent behaviour is uncharacteristically stable given that SIBOR rates have displayed much volatility over the past 25 years
The ultra benign interest rate environment over the last five years has increased the capacity of consumers and investors to borrow large sums cheaply This has allowed Singaporersquos property markets to flourish after the global market correction in 2009 ndash and for the very strong market to continue into 2013
ACCESS TO fiNANCE iN 2013
In 2013 the access to finance or the amount that people could borrow was curtailed by cooling measures This was a simple and efficient effort by the government to reduce effective property demand
Property sectors that attract the highest proportion of mortgage debt to finance the purchase were hit hardest by the measures
The sector that was especially susceptible to the cooling measures and showed the biggest correction was the HDB resale market a
While PropertyGuru does not see an imminent
reversiontothehistoricalinterestratemeanof
around3percentitdoesseeaslowtightening
processoccurringduringthecourseof2014
Howeverowingtothenascentrecoveryofthe
USeconomyweexpectthatrateswillriseonly
at a slow pace over the coming years
While this will not provide an additional stimulus
tothemarketndashasitdidin2013-itwillalsonot
beasignificantdragonthemarketInsummary
theinterestrateenvironmentof2013isexpected
tocontinueinto2014withonlyagradualrisendash
andwithaveragemortgageratesfinishingthe
yearbeneath225percent
Howeverthereducedaccesstofinancethrough
cooling measures is expected to continue to
beadragonpricesThesegovernmentmacro-
prudential policy measures remain the only
effectivefinancialinstrumenttheSingapore
government has to alleviate rising property
pricesIntroductionoftheTDSRframeworkis
recognitionofthisItwasagame-changerinthe
marketin2013andunlikelytoberelaxedin2014
The vital role that interest rates played
housingsuPPlYset to increase
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 26
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I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
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le o
f Co
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S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
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70
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PropertyGuru Market Outlook 2014 15
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Condo Transaction Volumes - By Area
Condo transaction volumes in 2013 did not match the record number of transactions seen in 2012 They declined some 386 percent ndash reflecting weakening buyer sentiments for private properties in part due to MAS regulations
However the drop in transactions differs from region to region The transactions in the Core Central Region (CCR) trended down the most severely registering an average of a 40 percent decrease quarter-on-quarter
Of particular note for the regions in 2013 n In Q2 2013 the Rest of Central Region (RCR) and Outside Central Region (OCR) regions grew transaction volumes by a healthy 44 percent and 18 percent respectively from the previous quarter ndash despite the introduction of the ABSD However the new TDSR and MSR in the second half of the year curtailed these volumes n In the RCR property seekers purchased a total of 2062 units in Q3 and Q4 2013 combined being half the level of a year prior While down significantly these volumes were a better result than those recorded by the CR and OCR n Despite most buying activity occurring in the OCR the area saw transactions decline from 4673 units to 3105 units between Q2
Transaction volumes take a dip
Source Urban Redevelopment Authority (URA)
and Q3 2013 ndash and further drop to around 1430 by Q4 This made the volumes in Q4 just 30 percent (approximately) of the level they were six months prior n The CCR and the OCR regions recorded the largest percentage decline in volume from the peak in 2012 and through 2013 n Despite transaction volume ratios that would indicate that the OCR will experience the worst pricing pressures many analysts are expecting this effect to be offset largely by significant new demand in this area a
The FlucTuaTing nature of prices
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 17
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le o
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T he declining transaction volumes of the last two quarters of 2013 finally drove down price levels in Q4 Until Q3 2013 prices continued to defy gravity as the gap between prices
and their supporting volumes grew larger
From the previous sections we recognise that this is a text book market response to declining volumes where prices can remain elevated for two or more quarters before plateauing and then declining
The predictable relationship between volume and price
Many factors influence the lsquotime laggedrsquo relationship between volumes and prices However one of the strongest is also one of the simplest It is also the most constant in any property marketplace in the world It is human behaviour
Humans have an entirely understandable and common tendency to hold on to their properties rather than to accept lower offers They typically do this for many months as the offers dry up before reluctantly accepting lower offers ndash and recognising in turn that the market has moved
The fluctuating nature of prices
This behaviour helps explain why during the period of declining transaction volumes the average time it takes to sell a property also increases
Expanding time on market and declining transaction volumes are forward indicators of coming softness in prices ndash and usually go hand in hand Significantly both were apparent in the Singapore market in the latter half of 2013
During 2013 the Singaporean market behaved very predictably in response to the financing restrictions and corresponding transaction declines This augers well for predicting trends in 2014
Reading the 2013 data we can confidently expect to see further downward pressure on prices into 2014 ndash providing other factors remain stable Despite the fact that many other micro and macro factors can influence prices these forces will need to be particularly strong now to offset the well-entrenched price decline process that has been set in play by the declining transaction volumes of late 2013
PropertyGuru Market Outlook 2014 18
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2013 Price Outcomes HDBs VS Condos
From the chart below both property types saw price declines in 2013 However HDBs led the way ahead of condos From earlier sections we also recognise that the earlier price declines of HDBs were preceded by earlier transaction volume declines
By Q3 the HDB market had begun to sag under the new cooling measures ndash aimed specifically at curtailing the availability of mortgage credit to the market and placing other restrictions on purchasers However it was not until Q4 led by the mild declines in volumes that were seen in Q1 2013 that the condo market began to correct
These pricing forces were accompanied by the first of the new supply coming online - and some mild reductions in the rates of population growth Additionally restrictions governing the purchase of HDB resale properties by Singapore PRs introduced in August played a role in reducing effective demand for HDBs ndash and also contributed to their faster price declines
The largest contributing factors in 2013 were the new purchasing restrictions and the implementation of the MSR TDSR and ABSD policy changes These effectively reduced both the eligibility of individuals for new mortgage debt and increased the purchasing costs at the same time
The fluctuating nature of prices
Source Urban Redevelopment Authority (URA) Housing Development Board (HDB)
Locality-based fluctuations in the Condo market
In 2013 the price changes and transaction volume of condos varied between regions Below we compare the CCR the OCR and RCR
The CCR registered a decline of 21 percent while prices in the RCR and OCR increased by 03 percent and 68 percent respectively
PropertyGuru Market Outlook 2014 19
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The fluctuating nature of prices
Source Urban Redevelopment Authority (URA)
Significantly the CCR registered a price fall across the last three quarters of 2013 This fall also coincided with the introduction of the ABSD in Q1 which saw higher taxes on second and subsequent properties imposed on a majority of potential buyers including high-net worth individuals and foreigners
The downward trend of luxury properties appeared to be further exacerbated with the TDSR changes introduced in late June These resulted in a price fall of 22 percent by Q4 2013 a rate of decline that was seven times larger than the 03 percent decline in the previous quarter
The RCR region also witnessed price declines for the first time since Q1 2012 This was after the TDSR came into effect However unlike the CCR the RCR maintained positive market activity throughout 2013 This was spurred by the launch of units that were competitively priced at the level of affordability that buyers were comfortable with
The OCR continued to be the fastest growing market segment which contributed much to the increase in the overall private property price index In spite of a decline of 09 percent in Q4 2013 the first after almost two years the rate of price growth for the OCR in 2013 was 20 percent higher than the levels in 2012 - which registered only a 54 percent rise a
why execuTiVe condos were highly sought after
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 21
Tab
le o
f Co
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Why executive condos were highly sought after
A report compiled by PropertyGuru found that the market value of fully and partially privatised ECs grew strongly in 2013
Examples from the report n Unit prices at Eastvale in Pasir Ris the first EC in Singapore increased from $454 per square foot (psf) in September 1996 to $909 psf by November 2013 This translates to a rise of 100 percent n Two partially privatised ECs also located in Pasir Ris - The Esparis and Whitewater - showed higher growth of 130 percent and 140 percent respectively In January 2002 the Esparis had a psf of $370 and reached $859 psf by November 2013 n Similarly prices at Whitewater which was completed in 2005 increased to $883 psf in December 2013 from an initial price of $362 psf in December 2002
These very strong 2013 price increases provide clear evidence to suggest why the government has elected to increase the supply of ECs in the market by an average of 330 percent over the next three years compared to 2013
Demand for ECs contributed strongly to rapid price growth
In 2013 the top ECs were concentrated in certain districts particularly in the developing areas of the west and the central areas of Ang Mo Kio and Bishan As detailed in the chart below we can see that for example in the case of Bishan Loft and Nuovo the values of these
specific properties are valued at approximately 150 percent of the average psf of private properties within the same district District 20
This chart indicates that some ECs in 2013 exhibited high psf growth and now command very high psfs
The scarcity of ECs in certain localities has enabled some to command higher psfs than the average private district psf However the age of the property psfs needs to be considered when making a determination A strong EC supply increased ndash and the policy changes that remove the EC-favoured status are expected to rectify some of the price inbalance going forward in 2014 a
Source Urban Redevelopment Authority (URA) PropertyGuru Analysis
The ViTalrole that interest rates played
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 23
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le o
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Share
E xamination of the 2013 market requires an investigation of the important role that interest rates and the cost of capital have on the property sector
The interest rate ndash and the outlook for interest rates ndash represents the effective and expected cost of servicing the mortgage debt In 2013 the cost of servicing a mortgage remained at near record lows
The Singapore Interbank Offered Rate or SIBOR is set by the Association of Banks in Singapore Mortgage rates are effectively set by the base SIBOR rate plus a bank margin
The majority of mortgage debt in Singapore is variable ndash and where fixed it is fixed for a maximum period of five years This is significant as other countries allow longer periods of fixed term mortgages The US for example typically has 30-year fixed loans
Combined with the high personal debt levels carried by property buyers in Singapore the very high percentage of Singaporeans on variable mortgage rates makes the property market highly susceptible to changes in interest rates
As at 2013 the interest rate environment remained very accommodative being directly influenced by the bond buying (QE) of the US Federal Reserve Singapore effectively has its ultra-low interest rate environment driven by the US
The vital role that interest rates played
Though ultra-low rates were a primary driver in the 2013 market they cannot necessarily be assumed to remain as positive for the market during 2014
The chart below looks in more detail at the most recent rate influences on the market in 2013
Source Monetary Authority of Singapore (MAS)
PropertyGuru Market Outlook 2014 24
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The three-month SIBOR rate has fallen from approximately 18 percent in Q3Q4 2008 to the historically low values at present This most recent behaviour is uncharacteristically stable given that SIBOR rates have displayed much volatility over the past 25 years
The ultra benign interest rate environment over the last five years has increased the capacity of consumers and investors to borrow large sums cheaply This has allowed Singaporersquos property markets to flourish after the global market correction in 2009 ndash and for the very strong market to continue into 2013
ACCESS TO fiNANCE iN 2013
In 2013 the access to finance or the amount that people could borrow was curtailed by cooling measures This was a simple and efficient effort by the government to reduce effective property demand
Property sectors that attract the highest proportion of mortgage debt to finance the purchase were hit hardest by the measures
The sector that was especially susceptible to the cooling measures and showed the biggest correction was the HDB resale market a
While PropertyGuru does not see an imminent
reversiontothehistoricalinterestratemeanof
around3percentitdoesseeaslowtightening
processoccurringduringthecourseof2014
Howeverowingtothenascentrecoveryofthe
USeconomyweexpectthatrateswillriseonly
at a slow pace over the coming years
While this will not provide an additional stimulus
tothemarketndashasitdidin2013-itwillalsonot
beasignificantdragonthemarketInsummary
theinterestrateenvironmentof2013isexpected
tocontinueinto2014withonlyagradualrisendash
andwithaveragemortgageratesfinishingthe
yearbeneath225percent
Howeverthereducedaccesstofinancethrough
cooling measures is expected to continue to
beadragonpricesThesegovernmentmacro-
prudential policy measures remain the only
effectivefinancialinstrumenttheSingapore
government has to alleviate rising property
pricesIntroductionoftheTDSRframeworkis
recognitionofthisItwasagame-changerinthe
marketin2013andunlikelytoberelaxedin2014
The vital role that interest rates played
housingsuPPlYset to increase
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 26
Tab
le o
f Co
nte
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Share
I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
Tab
le o
f Co
nte
nts
Share
S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
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toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
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anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
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arisingtherefrom
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All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
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PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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The FlucTuaTing nature of prices
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 17
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T he declining transaction volumes of the last two quarters of 2013 finally drove down price levels in Q4 Until Q3 2013 prices continued to defy gravity as the gap between prices
and their supporting volumes grew larger
From the previous sections we recognise that this is a text book market response to declining volumes where prices can remain elevated for two or more quarters before plateauing and then declining
The predictable relationship between volume and price
Many factors influence the lsquotime laggedrsquo relationship between volumes and prices However one of the strongest is also one of the simplest It is also the most constant in any property marketplace in the world It is human behaviour
Humans have an entirely understandable and common tendency to hold on to their properties rather than to accept lower offers They typically do this for many months as the offers dry up before reluctantly accepting lower offers ndash and recognising in turn that the market has moved
The fluctuating nature of prices
This behaviour helps explain why during the period of declining transaction volumes the average time it takes to sell a property also increases
Expanding time on market and declining transaction volumes are forward indicators of coming softness in prices ndash and usually go hand in hand Significantly both were apparent in the Singapore market in the latter half of 2013
During 2013 the Singaporean market behaved very predictably in response to the financing restrictions and corresponding transaction declines This augers well for predicting trends in 2014
Reading the 2013 data we can confidently expect to see further downward pressure on prices into 2014 ndash providing other factors remain stable Despite the fact that many other micro and macro factors can influence prices these forces will need to be particularly strong now to offset the well-entrenched price decline process that has been set in play by the declining transaction volumes of late 2013
PropertyGuru Market Outlook 2014 18
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2013 Price Outcomes HDBs VS Condos
From the chart below both property types saw price declines in 2013 However HDBs led the way ahead of condos From earlier sections we also recognise that the earlier price declines of HDBs were preceded by earlier transaction volume declines
By Q3 the HDB market had begun to sag under the new cooling measures ndash aimed specifically at curtailing the availability of mortgage credit to the market and placing other restrictions on purchasers However it was not until Q4 led by the mild declines in volumes that were seen in Q1 2013 that the condo market began to correct
These pricing forces were accompanied by the first of the new supply coming online - and some mild reductions in the rates of population growth Additionally restrictions governing the purchase of HDB resale properties by Singapore PRs introduced in August played a role in reducing effective demand for HDBs ndash and also contributed to their faster price declines
The largest contributing factors in 2013 were the new purchasing restrictions and the implementation of the MSR TDSR and ABSD policy changes These effectively reduced both the eligibility of individuals for new mortgage debt and increased the purchasing costs at the same time
The fluctuating nature of prices
Source Urban Redevelopment Authority (URA) Housing Development Board (HDB)
Locality-based fluctuations in the Condo market
In 2013 the price changes and transaction volume of condos varied between regions Below we compare the CCR the OCR and RCR
The CCR registered a decline of 21 percent while prices in the RCR and OCR increased by 03 percent and 68 percent respectively
PropertyGuru Market Outlook 2014 19
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The fluctuating nature of prices
Source Urban Redevelopment Authority (URA)
Significantly the CCR registered a price fall across the last three quarters of 2013 This fall also coincided with the introduction of the ABSD in Q1 which saw higher taxes on second and subsequent properties imposed on a majority of potential buyers including high-net worth individuals and foreigners
The downward trend of luxury properties appeared to be further exacerbated with the TDSR changes introduced in late June These resulted in a price fall of 22 percent by Q4 2013 a rate of decline that was seven times larger than the 03 percent decline in the previous quarter
The RCR region also witnessed price declines for the first time since Q1 2012 This was after the TDSR came into effect However unlike the CCR the RCR maintained positive market activity throughout 2013 This was spurred by the launch of units that were competitively priced at the level of affordability that buyers were comfortable with
The OCR continued to be the fastest growing market segment which contributed much to the increase in the overall private property price index In spite of a decline of 09 percent in Q4 2013 the first after almost two years the rate of price growth for the OCR in 2013 was 20 percent higher than the levels in 2012 - which registered only a 54 percent rise a
why execuTiVe condos were highly sought after
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 21
Tab
le o
f Co
nte
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Share
Why executive condos were highly sought after
A report compiled by PropertyGuru found that the market value of fully and partially privatised ECs grew strongly in 2013
Examples from the report n Unit prices at Eastvale in Pasir Ris the first EC in Singapore increased from $454 per square foot (psf) in September 1996 to $909 psf by November 2013 This translates to a rise of 100 percent n Two partially privatised ECs also located in Pasir Ris - The Esparis and Whitewater - showed higher growth of 130 percent and 140 percent respectively In January 2002 the Esparis had a psf of $370 and reached $859 psf by November 2013 n Similarly prices at Whitewater which was completed in 2005 increased to $883 psf in December 2013 from an initial price of $362 psf in December 2002
These very strong 2013 price increases provide clear evidence to suggest why the government has elected to increase the supply of ECs in the market by an average of 330 percent over the next three years compared to 2013
Demand for ECs contributed strongly to rapid price growth
In 2013 the top ECs were concentrated in certain districts particularly in the developing areas of the west and the central areas of Ang Mo Kio and Bishan As detailed in the chart below we can see that for example in the case of Bishan Loft and Nuovo the values of these
specific properties are valued at approximately 150 percent of the average psf of private properties within the same district District 20
This chart indicates that some ECs in 2013 exhibited high psf growth and now command very high psfs
The scarcity of ECs in certain localities has enabled some to command higher psfs than the average private district psf However the age of the property psfs needs to be considered when making a determination A strong EC supply increased ndash and the policy changes that remove the EC-favoured status are expected to rectify some of the price inbalance going forward in 2014 a
Source Urban Redevelopment Authority (URA) PropertyGuru Analysis
The ViTalrole that interest rates played
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 23
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Share
E xamination of the 2013 market requires an investigation of the important role that interest rates and the cost of capital have on the property sector
The interest rate ndash and the outlook for interest rates ndash represents the effective and expected cost of servicing the mortgage debt In 2013 the cost of servicing a mortgage remained at near record lows
The Singapore Interbank Offered Rate or SIBOR is set by the Association of Banks in Singapore Mortgage rates are effectively set by the base SIBOR rate plus a bank margin
The majority of mortgage debt in Singapore is variable ndash and where fixed it is fixed for a maximum period of five years This is significant as other countries allow longer periods of fixed term mortgages The US for example typically has 30-year fixed loans
Combined with the high personal debt levels carried by property buyers in Singapore the very high percentage of Singaporeans on variable mortgage rates makes the property market highly susceptible to changes in interest rates
As at 2013 the interest rate environment remained very accommodative being directly influenced by the bond buying (QE) of the US Federal Reserve Singapore effectively has its ultra-low interest rate environment driven by the US
The vital role that interest rates played
Though ultra-low rates were a primary driver in the 2013 market they cannot necessarily be assumed to remain as positive for the market during 2014
The chart below looks in more detail at the most recent rate influences on the market in 2013
Source Monetary Authority of Singapore (MAS)
PropertyGuru Market Outlook 2014 24
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The three-month SIBOR rate has fallen from approximately 18 percent in Q3Q4 2008 to the historically low values at present This most recent behaviour is uncharacteristically stable given that SIBOR rates have displayed much volatility over the past 25 years
The ultra benign interest rate environment over the last five years has increased the capacity of consumers and investors to borrow large sums cheaply This has allowed Singaporersquos property markets to flourish after the global market correction in 2009 ndash and for the very strong market to continue into 2013
ACCESS TO fiNANCE iN 2013
In 2013 the access to finance or the amount that people could borrow was curtailed by cooling measures This was a simple and efficient effort by the government to reduce effective property demand
Property sectors that attract the highest proportion of mortgage debt to finance the purchase were hit hardest by the measures
The sector that was especially susceptible to the cooling measures and showed the biggest correction was the HDB resale market a
While PropertyGuru does not see an imminent
reversiontothehistoricalinterestratemeanof
around3percentitdoesseeaslowtightening
processoccurringduringthecourseof2014
Howeverowingtothenascentrecoveryofthe
USeconomyweexpectthatrateswillriseonly
at a slow pace over the coming years
While this will not provide an additional stimulus
tothemarketndashasitdidin2013-itwillalsonot
beasignificantdragonthemarketInsummary
theinterestrateenvironmentof2013isexpected
tocontinueinto2014withonlyagradualrisendash
andwithaveragemortgageratesfinishingthe
yearbeneath225percent
Howeverthereducedaccesstofinancethrough
cooling measures is expected to continue to
beadragonpricesThesegovernmentmacro-
prudential policy measures remain the only
effectivefinancialinstrumenttheSingapore
government has to alleviate rising property
pricesIntroductionoftheTDSRframeworkis
recognitionofthisItwasagame-changerinthe
marketin2013andunlikelytoberelaxedin2014
The vital role that interest rates played
housingsuPPlYset to increase
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 26
Tab
le o
f Co
nte
nts
Share
I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
Tab
le o
f Co
nte
nts
Share
S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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f Co
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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- Button 59
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- Page 6 Off
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-
- Button 57
-
- Page 6 Off
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- Page 146 Off
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- Page 178 Off
- Page 189 Off
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PropertyGuru Market Outlook 2014 17
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T he declining transaction volumes of the last two quarters of 2013 finally drove down price levels in Q4 Until Q3 2013 prices continued to defy gravity as the gap between prices
and their supporting volumes grew larger
From the previous sections we recognise that this is a text book market response to declining volumes where prices can remain elevated for two or more quarters before plateauing and then declining
The predictable relationship between volume and price
Many factors influence the lsquotime laggedrsquo relationship between volumes and prices However one of the strongest is also one of the simplest It is also the most constant in any property marketplace in the world It is human behaviour
Humans have an entirely understandable and common tendency to hold on to their properties rather than to accept lower offers They typically do this for many months as the offers dry up before reluctantly accepting lower offers ndash and recognising in turn that the market has moved
The fluctuating nature of prices
This behaviour helps explain why during the period of declining transaction volumes the average time it takes to sell a property also increases
Expanding time on market and declining transaction volumes are forward indicators of coming softness in prices ndash and usually go hand in hand Significantly both were apparent in the Singapore market in the latter half of 2013
During 2013 the Singaporean market behaved very predictably in response to the financing restrictions and corresponding transaction declines This augers well for predicting trends in 2014
Reading the 2013 data we can confidently expect to see further downward pressure on prices into 2014 ndash providing other factors remain stable Despite the fact that many other micro and macro factors can influence prices these forces will need to be particularly strong now to offset the well-entrenched price decline process that has been set in play by the declining transaction volumes of late 2013
PropertyGuru Market Outlook 2014 18
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2013 Price Outcomes HDBs VS Condos
From the chart below both property types saw price declines in 2013 However HDBs led the way ahead of condos From earlier sections we also recognise that the earlier price declines of HDBs were preceded by earlier transaction volume declines
By Q3 the HDB market had begun to sag under the new cooling measures ndash aimed specifically at curtailing the availability of mortgage credit to the market and placing other restrictions on purchasers However it was not until Q4 led by the mild declines in volumes that were seen in Q1 2013 that the condo market began to correct
These pricing forces were accompanied by the first of the new supply coming online - and some mild reductions in the rates of population growth Additionally restrictions governing the purchase of HDB resale properties by Singapore PRs introduced in August played a role in reducing effective demand for HDBs ndash and also contributed to their faster price declines
The largest contributing factors in 2013 were the new purchasing restrictions and the implementation of the MSR TDSR and ABSD policy changes These effectively reduced both the eligibility of individuals for new mortgage debt and increased the purchasing costs at the same time
The fluctuating nature of prices
Source Urban Redevelopment Authority (URA) Housing Development Board (HDB)
Locality-based fluctuations in the Condo market
In 2013 the price changes and transaction volume of condos varied between regions Below we compare the CCR the OCR and RCR
The CCR registered a decline of 21 percent while prices in the RCR and OCR increased by 03 percent and 68 percent respectively
PropertyGuru Market Outlook 2014 19
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The fluctuating nature of prices
Source Urban Redevelopment Authority (URA)
Significantly the CCR registered a price fall across the last three quarters of 2013 This fall also coincided with the introduction of the ABSD in Q1 which saw higher taxes on second and subsequent properties imposed on a majority of potential buyers including high-net worth individuals and foreigners
The downward trend of luxury properties appeared to be further exacerbated with the TDSR changes introduced in late June These resulted in a price fall of 22 percent by Q4 2013 a rate of decline that was seven times larger than the 03 percent decline in the previous quarter
The RCR region also witnessed price declines for the first time since Q1 2012 This was after the TDSR came into effect However unlike the CCR the RCR maintained positive market activity throughout 2013 This was spurred by the launch of units that were competitively priced at the level of affordability that buyers were comfortable with
The OCR continued to be the fastest growing market segment which contributed much to the increase in the overall private property price index In spite of a decline of 09 percent in Q4 2013 the first after almost two years the rate of price growth for the OCR in 2013 was 20 percent higher than the levels in 2012 - which registered only a 54 percent rise a
why execuTiVe condos were highly sought after
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 21
Tab
le o
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Why executive condos were highly sought after
A report compiled by PropertyGuru found that the market value of fully and partially privatised ECs grew strongly in 2013
Examples from the report n Unit prices at Eastvale in Pasir Ris the first EC in Singapore increased from $454 per square foot (psf) in September 1996 to $909 psf by November 2013 This translates to a rise of 100 percent n Two partially privatised ECs also located in Pasir Ris - The Esparis and Whitewater - showed higher growth of 130 percent and 140 percent respectively In January 2002 the Esparis had a psf of $370 and reached $859 psf by November 2013 n Similarly prices at Whitewater which was completed in 2005 increased to $883 psf in December 2013 from an initial price of $362 psf in December 2002
These very strong 2013 price increases provide clear evidence to suggest why the government has elected to increase the supply of ECs in the market by an average of 330 percent over the next three years compared to 2013
Demand for ECs contributed strongly to rapid price growth
In 2013 the top ECs were concentrated in certain districts particularly in the developing areas of the west and the central areas of Ang Mo Kio and Bishan As detailed in the chart below we can see that for example in the case of Bishan Loft and Nuovo the values of these
specific properties are valued at approximately 150 percent of the average psf of private properties within the same district District 20
This chart indicates that some ECs in 2013 exhibited high psf growth and now command very high psfs
The scarcity of ECs in certain localities has enabled some to command higher psfs than the average private district psf However the age of the property psfs needs to be considered when making a determination A strong EC supply increased ndash and the policy changes that remove the EC-favoured status are expected to rectify some of the price inbalance going forward in 2014 a
Source Urban Redevelopment Authority (URA) PropertyGuru Analysis
The ViTalrole that interest rates played
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 23
Tab
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Share
E xamination of the 2013 market requires an investigation of the important role that interest rates and the cost of capital have on the property sector
The interest rate ndash and the outlook for interest rates ndash represents the effective and expected cost of servicing the mortgage debt In 2013 the cost of servicing a mortgage remained at near record lows
The Singapore Interbank Offered Rate or SIBOR is set by the Association of Banks in Singapore Mortgage rates are effectively set by the base SIBOR rate plus a bank margin
The majority of mortgage debt in Singapore is variable ndash and where fixed it is fixed for a maximum period of five years This is significant as other countries allow longer periods of fixed term mortgages The US for example typically has 30-year fixed loans
Combined with the high personal debt levels carried by property buyers in Singapore the very high percentage of Singaporeans on variable mortgage rates makes the property market highly susceptible to changes in interest rates
As at 2013 the interest rate environment remained very accommodative being directly influenced by the bond buying (QE) of the US Federal Reserve Singapore effectively has its ultra-low interest rate environment driven by the US
The vital role that interest rates played
Though ultra-low rates were a primary driver in the 2013 market they cannot necessarily be assumed to remain as positive for the market during 2014
The chart below looks in more detail at the most recent rate influences on the market in 2013
Source Monetary Authority of Singapore (MAS)
PropertyGuru Market Outlook 2014 24
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The three-month SIBOR rate has fallen from approximately 18 percent in Q3Q4 2008 to the historically low values at present This most recent behaviour is uncharacteristically stable given that SIBOR rates have displayed much volatility over the past 25 years
The ultra benign interest rate environment over the last five years has increased the capacity of consumers and investors to borrow large sums cheaply This has allowed Singaporersquos property markets to flourish after the global market correction in 2009 ndash and for the very strong market to continue into 2013
ACCESS TO fiNANCE iN 2013
In 2013 the access to finance or the amount that people could borrow was curtailed by cooling measures This was a simple and efficient effort by the government to reduce effective property demand
Property sectors that attract the highest proportion of mortgage debt to finance the purchase were hit hardest by the measures
The sector that was especially susceptible to the cooling measures and showed the biggest correction was the HDB resale market a
While PropertyGuru does not see an imminent
reversiontothehistoricalinterestratemeanof
around3percentitdoesseeaslowtightening
processoccurringduringthecourseof2014
Howeverowingtothenascentrecoveryofthe
USeconomyweexpectthatrateswillriseonly
at a slow pace over the coming years
While this will not provide an additional stimulus
tothemarketndashasitdidin2013-itwillalsonot
beasignificantdragonthemarketInsummary
theinterestrateenvironmentof2013isexpected
tocontinueinto2014withonlyagradualrisendash
andwithaveragemortgageratesfinishingthe
yearbeneath225percent
Howeverthereducedaccesstofinancethrough
cooling measures is expected to continue to
beadragonpricesThesegovernmentmacro-
prudential policy measures remain the only
effectivefinancialinstrumenttheSingapore
government has to alleviate rising property
pricesIntroductionoftheTDSRframeworkis
recognitionofthisItwasagame-changerinthe
marketin2013andunlikelytoberelaxedin2014
The vital role that interest rates played
housingsuPPlYset to increase
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 26
Tab
le o
f Co
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nts
Share
I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
Tab
le o
f Co
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nts
Share
S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
Tab
le o
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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- Page 6 Off
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- Button 57
-
- Page 6 Off
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PropertyGuru Market Outlook 2014 18
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2013 Price Outcomes HDBs VS Condos
From the chart below both property types saw price declines in 2013 However HDBs led the way ahead of condos From earlier sections we also recognise that the earlier price declines of HDBs were preceded by earlier transaction volume declines
By Q3 the HDB market had begun to sag under the new cooling measures ndash aimed specifically at curtailing the availability of mortgage credit to the market and placing other restrictions on purchasers However it was not until Q4 led by the mild declines in volumes that were seen in Q1 2013 that the condo market began to correct
These pricing forces were accompanied by the first of the new supply coming online - and some mild reductions in the rates of population growth Additionally restrictions governing the purchase of HDB resale properties by Singapore PRs introduced in August played a role in reducing effective demand for HDBs ndash and also contributed to their faster price declines
The largest contributing factors in 2013 were the new purchasing restrictions and the implementation of the MSR TDSR and ABSD policy changes These effectively reduced both the eligibility of individuals for new mortgage debt and increased the purchasing costs at the same time
The fluctuating nature of prices
Source Urban Redevelopment Authority (URA) Housing Development Board (HDB)
Locality-based fluctuations in the Condo market
In 2013 the price changes and transaction volume of condos varied between regions Below we compare the CCR the OCR and RCR
The CCR registered a decline of 21 percent while prices in the RCR and OCR increased by 03 percent and 68 percent respectively
PropertyGuru Market Outlook 2014 19
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The fluctuating nature of prices
Source Urban Redevelopment Authority (URA)
Significantly the CCR registered a price fall across the last three quarters of 2013 This fall also coincided with the introduction of the ABSD in Q1 which saw higher taxes on second and subsequent properties imposed on a majority of potential buyers including high-net worth individuals and foreigners
The downward trend of luxury properties appeared to be further exacerbated with the TDSR changes introduced in late June These resulted in a price fall of 22 percent by Q4 2013 a rate of decline that was seven times larger than the 03 percent decline in the previous quarter
The RCR region also witnessed price declines for the first time since Q1 2012 This was after the TDSR came into effect However unlike the CCR the RCR maintained positive market activity throughout 2013 This was spurred by the launch of units that were competitively priced at the level of affordability that buyers were comfortable with
The OCR continued to be the fastest growing market segment which contributed much to the increase in the overall private property price index In spite of a decline of 09 percent in Q4 2013 the first after almost two years the rate of price growth for the OCR in 2013 was 20 percent higher than the levels in 2012 - which registered only a 54 percent rise a
why execuTiVe condos were highly sought after
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 21
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Why executive condos were highly sought after
A report compiled by PropertyGuru found that the market value of fully and partially privatised ECs grew strongly in 2013
Examples from the report n Unit prices at Eastvale in Pasir Ris the first EC in Singapore increased from $454 per square foot (psf) in September 1996 to $909 psf by November 2013 This translates to a rise of 100 percent n Two partially privatised ECs also located in Pasir Ris - The Esparis and Whitewater - showed higher growth of 130 percent and 140 percent respectively In January 2002 the Esparis had a psf of $370 and reached $859 psf by November 2013 n Similarly prices at Whitewater which was completed in 2005 increased to $883 psf in December 2013 from an initial price of $362 psf in December 2002
These very strong 2013 price increases provide clear evidence to suggest why the government has elected to increase the supply of ECs in the market by an average of 330 percent over the next three years compared to 2013
Demand for ECs contributed strongly to rapid price growth
In 2013 the top ECs were concentrated in certain districts particularly in the developing areas of the west and the central areas of Ang Mo Kio and Bishan As detailed in the chart below we can see that for example in the case of Bishan Loft and Nuovo the values of these
specific properties are valued at approximately 150 percent of the average psf of private properties within the same district District 20
This chart indicates that some ECs in 2013 exhibited high psf growth and now command very high psfs
The scarcity of ECs in certain localities has enabled some to command higher psfs than the average private district psf However the age of the property psfs needs to be considered when making a determination A strong EC supply increased ndash and the policy changes that remove the EC-favoured status are expected to rectify some of the price inbalance going forward in 2014 a
Source Urban Redevelopment Authority (URA) PropertyGuru Analysis
The ViTalrole that interest rates played
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 23
Tab
le o
f Co
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Share
E xamination of the 2013 market requires an investigation of the important role that interest rates and the cost of capital have on the property sector
The interest rate ndash and the outlook for interest rates ndash represents the effective and expected cost of servicing the mortgage debt In 2013 the cost of servicing a mortgage remained at near record lows
The Singapore Interbank Offered Rate or SIBOR is set by the Association of Banks in Singapore Mortgage rates are effectively set by the base SIBOR rate plus a bank margin
The majority of mortgage debt in Singapore is variable ndash and where fixed it is fixed for a maximum period of five years This is significant as other countries allow longer periods of fixed term mortgages The US for example typically has 30-year fixed loans
Combined with the high personal debt levels carried by property buyers in Singapore the very high percentage of Singaporeans on variable mortgage rates makes the property market highly susceptible to changes in interest rates
As at 2013 the interest rate environment remained very accommodative being directly influenced by the bond buying (QE) of the US Federal Reserve Singapore effectively has its ultra-low interest rate environment driven by the US
The vital role that interest rates played
Though ultra-low rates were a primary driver in the 2013 market they cannot necessarily be assumed to remain as positive for the market during 2014
The chart below looks in more detail at the most recent rate influences on the market in 2013
Source Monetary Authority of Singapore (MAS)
PropertyGuru Market Outlook 2014 24
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The three-month SIBOR rate has fallen from approximately 18 percent in Q3Q4 2008 to the historically low values at present This most recent behaviour is uncharacteristically stable given that SIBOR rates have displayed much volatility over the past 25 years
The ultra benign interest rate environment over the last five years has increased the capacity of consumers and investors to borrow large sums cheaply This has allowed Singaporersquos property markets to flourish after the global market correction in 2009 ndash and for the very strong market to continue into 2013
ACCESS TO fiNANCE iN 2013
In 2013 the access to finance or the amount that people could borrow was curtailed by cooling measures This was a simple and efficient effort by the government to reduce effective property demand
Property sectors that attract the highest proportion of mortgage debt to finance the purchase were hit hardest by the measures
The sector that was especially susceptible to the cooling measures and showed the biggest correction was the HDB resale market a
While PropertyGuru does not see an imminent
reversiontothehistoricalinterestratemeanof
around3percentitdoesseeaslowtightening
processoccurringduringthecourseof2014
Howeverowingtothenascentrecoveryofthe
USeconomyweexpectthatrateswillriseonly
at a slow pace over the coming years
While this will not provide an additional stimulus
tothemarketndashasitdidin2013-itwillalsonot
beasignificantdragonthemarketInsummary
theinterestrateenvironmentof2013isexpected
tocontinueinto2014withonlyagradualrisendash
andwithaveragemortgageratesfinishingthe
yearbeneath225percent
Howeverthereducedaccesstofinancethrough
cooling measures is expected to continue to
beadragonpricesThesegovernmentmacro-
prudential policy measures remain the only
effectivefinancialinstrumenttheSingapore
government has to alleviate rising property
pricesIntroductionoftheTDSRframeworkis
recognitionofthisItwasagame-changerinthe
marketin2013andunlikelytoberelaxedin2014
The vital role that interest rates played
housingsuPPlYset to increase
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 26
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I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
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le o
f Co
nte
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S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
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70
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PropertyGuru Market Outlook 2014 19
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The fluctuating nature of prices
Source Urban Redevelopment Authority (URA)
Significantly the CCR registered a price fall across the last three quarters of 2013 This fall also coincided with the introduction of the ABSD in Q1 which saw higher taxes on second and subsequent properties imposed on a majority of potential buyers including high-net worth individuals and foreigners
The downward trend of luxury properties appeared to be further exacerbated with the TDSR changes introduced in late June These resulted in a price fall of 22 percent by Q4 2013 a rate of decline that was seven times larger than the 03 percent decline in the previous quarter
The RCR region also witnessed price declines for the first time since Q1 2012 This was after the TDSR came into effect However unlike the CCR the RCR maintained positive market activity throughout 2013 This was spurred by the launch of units that were competitively priced at the level of affordability that buyers were comfortable with
The OCR continued to be the fastest growing market segment which contributed much to the increase in the overall private property price index In spite of a decline of 09 percent in Q4 2013 the first after almost two years the rate of price growth for the OCR in 2013 was 20 percent higher than the levels in 2012 - which registered only a 54 percent rise a
why execuTiVe condos were highly sought after
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 21
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Why executive condos were highly sought after
A report compiled by PropertyGuru found that the market value of fully and partially privatised ECs grew strongly in 2013
Examples from the report n Unit prices at Eastvale in Pasir Ris the first EC in Singapore increased from $454 per square foot (psf) in September 1996 to $909 psf by November 2013 This translates to a rise of 100 percent n Two partially privatised ECs also located in Pasir Ris - The Esparis and Whitewater - showed higher growth of 130 percent and 140 percent respectively In January 2002 the Esparis had a psf of $370 and reached $859 psf by November 2013 n Similarly prices at Whitewater which was completed in 2005 increased to $883 psf in December 2013 from an initial price of $362 psf in December 2002
These very strong 2013 price increases provide clear evidence to suggest why the government has elected to increase the supply of ECs in the market by an average of 330 percent over the next three years compared to 2013
Demand for ECs contributed strongly to rapid price growth
In 2013 the top ECs were concentrated in certain districts particularly in the developing areas of the west and the central areas of Ang Mo Kio and Bishan As detailed in the chart below we can see that for example in the case of Bishan Loft and Nuovo the values of these
specific properties are valued at approximately 150 percent of the average psf of private properties within the same district District 20
This chart indicates that some ECs in 2013 exhibited high psf growth and now command very high psfs
The scarcity of ECs in certain localities has enabled some to command higher psfs than the average private district psf However the age of the property psfs needs to be considered when making a determination A strong EC supply increased ndash and the policy changes that remove the EC-favoured status are expected to rectify some of the price inbalance going forward in 2014 a
Source Urban Redevelopment Authority (URA) PropertyGuru Analysis
The ViTalrole that interest rates played
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 23
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E xamination of the 2013 market requires an investigation of the important role that interest rates and the cost of capital have on the property sector
The interest rate ndash and the outlook for interest rates ndash represents the effective and expected cost of servicing the mortgage debt In 2013 the cost of servicing a mortgage remained at near record lows
The Singapore Interbank Offered Rate or SIBOR is set by the Association of Banks in Singapore Mortgage rates are effectively set by the base SIBOR rate plus a bank margin
The majority of mortgage debt in Singapore is variable ndash and where fixed it is fixed for a maximum period of five years This is significant as other countries allow longer periods of fixed term mortgages The US for example typically has 30-year fixed loans
Combined with the high personal debt levels carried by property buyers in Singapore the very high percentage of Singaporeans on variable mortgage rates makes the property market highly susceptible to changes in interest rates
As at 2013 the interest rate environment remained very accommodative being directly influenced by the bond buying (QE) of the US Federal Reserve Singapore effectively has its ultra-low interest rate environment driven by the US
The vital role that interest rates played
Though ultra-low rates were a primary driver in the 2013 market they cannot necessarily be assumed to remain as positive for the market during 2014
The chart below looks in more detail at the most recent rate influences on the market in 2013
Source Monetary Authority of Singapore (MAS)
PropertyGuru Market Outlook 2014 24
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The three-month SIBOR rate has fallen from approximately 18 percent in Q3Q4 2008 to the historically low values at present This most recent behaviour is uncharacteristically stable given that SIBOR rates have displayed much volatility over the past 25 years
The ultra benign interest rate environment over the last five years has increased the capacity of consumers and investors to borrow large sums cheaply This has allowed Singaporersquos property markets to flourish after the global market correction in 2009 ndash and for the very strong market to continue into 2013
ACCESS TO fiNANCE iN 2013
In 2013 the access to finance or the amount that people could borrow was curtailed by cooling measures This was a simple and efficient effort by the government to reduce effective property demand
Property sectors that attract the highest proportion of mortgage debt to finance the purchase were hit hardest by the measures
The sector that was especially susceptible to the cooling measures and showed the biggest correction was the HDB resale market a
While PropertyGuru does not see an imminent
reversiontothehistoricalinterestratemeanof
around3percentitdoesseeaslowtightening
processoccurringduringthecourseof2014
Howeverowingtothenascentrecoveryofthe
USeconomyweexpectthatrateswillriseonly
at a slow pace over the coming years
While this will not provide an additional stimulus
tothemarketndashasitdidin2013-itwillalsonot
beasignificantdragonthemarketInsummary
theinterestrateenvironmentof2013isexpected
tocontinueinto2014withonlyagradualrisendash
andwithaveragemortgageratesfinishingthe
yearbeneath225percent
Howeverthereducedaccesstofinancethrough
cooling measures is expected to continue to
beadragonpricesThesegovernmentmacro-
prudential policy measures remain the only
effectivefinancialinstrumenttheSingapore
government has to alleviate rising property
pricesIntroductionoftheTDSRframeworkis
recognitionofthisItwasagame-changerinthe
marketin2013andunlikelytoberelaxedin2014
The vital role that interest rates played
housingsuPPlYset to increase
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 26
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le o
f Co
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Share
I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
Tab
le o
f Co
nte
nts
Share
S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
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Singapore 308900Tel (65) 6238-5971
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70
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why execuTiVe condos were highly sought after
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 21
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Why executive condos were highly sought after
A report compiled by PropertyGuru found that the market value of fully and partially privatised ECs grew strongly in 2013
Examples from the report n Unit prices at Eastvale in Pasir Ris the first EC in Singapore increased from $454 per square foot (psf) in September 1996 to $909 psf by November 2013 This translates to a rise of 100 percent n Two partially privatised ECs also located in Pasir Ris - The Esparis and Whitewater - showed higher growth of 130 percent and 140 percent respectively In January 2002 the Esparis had a psf of $370 and reached $859 psf by November 2013 n Similarly prices at Whitewater which was completed in 2005 increased to $883 psf in December 2013 from an initial price of $362 psf in December 2002
These very strong 2013 price increases provide clear evidence to suggest why the government has elected to increase the supply of ECs in the market by an average of 330 percent over the next three years compared to 2013
Demand for ECs contributed strongly to rapid price growth
In 2013 the top ECs were concentrated in certain districts particularly in the developing areas of the west and the central areas of Ang Mo Kio and Bishan As detailed in the chart below we can see that for example in the case of Bishan Loft and Nuovo the values of these
specific properties are valued at approximately 150 percent of the average psf of private properties within the same district District 20
This chart indicates that some ECs in 2013 exhibited high psf growth and now command very high psfs
The scarcity of ECs in certain localities has enabled some to command higher psfs than the average private district psf However the age of the property psfs needs to be considered when making a determination A strong EC supply increased ndash and the policy changes that remove the EC-favoured status are expected to rectify some of the price inbalance going forward in 2014 a
Source Urban Redevelopment Authority (URA) PropertyGuru Analysis
The ViTalrole that interest rates played
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 23
Tab
le o
f Co
nte
nts
Share
E xamination of the 2013 market requires an investigation of the important role that interest rates and the cost of capital have on the property sector
The interest rate ndash and the outlook for interest rates ndash represents the effective and expected cost of servicing the mortgage debt In 2013 the cost of servicing a mortgage remained at near record lows
The Singapore Interbank Offered Rate or SIBOR is set by the Association of Banks in Singapore Mortgage rates are effectively set by the base SIBOR rate plus a bank margin
The majority of mortgage debt in Singapore is variable ndash and where fixed it is fixed for a maximum period of five years This is significant as other countries allow longer periods of fixed term mortgages The US for example typically has 30-year fixed loans
Combined with the high personal debt levels carried by property buyers in Singapore the very high percentage of Singaporeans on variable mortgage rates makes the property market highly susceptible to changes in interest rates
As at 2013 the interest rate environment remained very accommodative being directly influenced by the bond buying (QE) of the US Federal Reserve Singapore effectively has its ultra-low interest rate environment driven by the US
The vital role that interest rates played
Though ultra-low rates were a primary driver in the 2013 market they cannot necessarily be assumed to remain as positive for the market during 2014
The chart below looks in more detail at the most recent rate influences on the market in 2013
Source Monetary Authority of Singapore (MAS)
PropertyGuru Market Outlook 2014 24
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The three-month SIBOR rate has fallen from approximately 18 percent in Q3Q4 2008 to the historically low values at present This most recent behaviour is uncharacteristically stable given that SIBOR rates have displayed much volatility over the past 25 years
The ultra benign interest rate environment over the last five years has increased the capacity of consumers and investors to borrow large sums cheaply This has allowed Singaporersquos property markets to flourish after the global market correction in 2009 ndash and for the very strong market to continue into 2013
ACCESS TO fiNANCE iN 2013
In 2013 the access to finance or the amount that people could borrow was curtailed by cooling measures This was a simple and efficient effort by the government to reduce effective property demand
Property sectors that attract the highest proportion of mortgage debt to finance the purchase were hit hardest by the measures
The sector that was especially susceptible to the cooling measures and showed the biggest correction was the HDB resale market a
While PropertyGuru does not see an imminent
reversiontothehistoricalinterestratemeanof
around3percentitdoesseeaslowtightening
processoccurringduringthecourseof2014
Howeverowingtothenascentrecoveryofthe
USeconomyweexpectthatrateswillriseonly
at a slow pace over the coming years
While this will not provide an additional stimulus
tothemarketndashasitdidin2013-itwillalsonot
beasignificantdragonthemarketInsummary
theinterestrateenvironmentof2013isexpected
tocontinueinto2014withonlyagradualrisendash
andwithaveragemortgageratesfinishingthe
yearbeneath225percent
Howeverthereducedaccesstofinancethrough
cooling measures is expected to continue to
beadragonpricesThesegovernmentmacro-
prudential policy measures remain the only
effectivefinancialinstrumenttheSingapore
government has to alleviate rising property
pricesIntroductionoftheTDSRframeworkis
recognitionofthisItwasagame-changerinthe
marketin2013andunlikelytoberelaxedin2014
The vital role that interest rates played
housingsuPPlYset to increase
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 26
Tab
le o
f Co
nte
nts
Share
I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
Tab
le o
f Co
nte
nts
Share
S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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Share
CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
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warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
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70
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PropertyGuru Market Outlook 2014 21
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Why executive condos were highly sought after
A report compiled by PropertyGuru found that the market value of fully and partially privatised ECs grew strongly in 2013
Examples from the report n Unit prices at Eastvale in Pasir Ris the first EC in Singapore increased from $454 per square foot (psf) in September 1996 to $909 psf by November 2013 This translates to a rise of 100 percent n Two partially privatised ECs also located in Pasir Ris - The Esparis and Whitewater - showed higher growth of 130 percent and 140 percent respectively In January 2002 the Esparis had a psf of $370 and reached $859 psf by November 2013 n Similarly prices at Whitewater which was completed in 2005 increased to $883 psf in December 2013 from an initial price of $362 psf in December 2002
These very strong 2013 price increases provide clear evidence to suggest why the government has elected to increase the supply of ECs in the market by an average of 330 percent over the next three years compared to 2013
Demand for ECs contributed strongly to rapid price growth
In 2013 the top ECs were concentrated in certain districts particularly in the developing areas of the west and the central areas of Ang Mo Kio and Bishan As detailed in the chart below we can see that for example in the case of Bishan Loft and Nuovo the values of these
specific properties are valued at approximately 150 percent of the average psf of private properties within the same district District 20
This chart indicates that some ECs in 2013 exhibited high psf growth and now command very high psfs
The scarcity of ECs in certain localities has enabled some to command higher psfs than the average private district psf However the age of the property psfs needs to be considered when making a determination A strong EC supply increased ndash and the policy changes that remove the EC-favoured status are expected to rectify some of the price inbalance going forward in 2014 a
Source Urban Redevelopment Authority (URA) PropertyGuru Analysis
The ViTalrole that interest rates played
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 23
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Share
E xamination of the 2013 market requires an investigation of the important role that interest rates and the cost of capital have on the property sector
The interest rate ndash and the outlook for interest rates ndash represents the effective and expected cost of servicing the mortgage debt In 2013 the cost of servicing a mortgage remained at near record lows
The Singapore Interbank Offered Rate or SIBOR is set by the Association of Banks in Singapore Mortgage rates are effectively set by the base SIBOR rate plus a bank margin
The majority of mortgage debt in Singapore is variable ndash and where fixed it is fixed for a maximum period of five years This is significant as other countries allow longer periods of fixed term mortgages The US for example typically has 30-year fixed loans
Combined with the high personal debt levels carried by property buyers in Singapore the very high percentage of Singaporeans on variable mortgage rates makes the property market highly susceptible to changes in interest rates
As at 2013 the interest rate environment remained very accommodative being directly influenced by the bond buying (QE) of the US Federal Reserve Singapore effectively has its ultra-low interest rate environment driven by the US
The vital role that interest rates played
Though ultra-low rates were a primary driver in the 2013 market they cannot necessarily be assumed to remain as positive for the market during 2014
The chart below looks in more detail at the most recent rate influences on the market in 2013
Source Monetary Authority of Singapore (MAS)
PropertyGuru Market Outlook 2014 24
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The three-month SIBOR rate has fallen from approximately 18 percent in Q3Q4 2008 to the historically low values at present This most recent behaviour is uncharacteristically stable given that SIBOR rates have displayed much volatility over the past 25 years
The ultra benign interest rate environment over the last five years has increased the capacity of consumers and investors to borrow large sums cheaply This has allowed Singaporersquos property markets to flourish after the global market correction in 2009 ndash and for the very strong market to continue into 2013
ACCESS TO fiNANCE iN 2013
In 2013 the access to finance or the amount that people could borrow was curtailed by cooling measures This was a simple and efficient effort by the government to reduce effective property demand
Property sectors that attract the highest proportion of mortgage debt to finance the purchase were hit hardest by the measures
The sector that was especially susceptible to the cooling measures and showed the biggest correction was the HDB resale market a
While PropertyGuru does not see an imminent
reversiontothehistoricalinterestratemeanof
around3percentitdoesseeaslowtightening
processoccurringduringthecourseof2014
Howeverowingtothenascentrecoveryofthe
USeconomyweexpectthatrateswillriseonly
at a slow pace over the coming years
While this will not provide an additional stimulus
tothemarketndashasitdidin2013-itwillalsonot
beasignificantdragonthemarketInsummary
theinterestrateenvironmentof2013isexpected
tocontinueinto2014withonlyagradualrisendash
andwithaveragemortgageratesfinishingthe
yearbeneath225percent
Howeverthereducedaccesstofinancethrough
cooling measures is expected to continue to
beadragonpricesThesegovernmentmacro-
prudential policy measures remain the only
effectivefinancialinstrumenttheSingapore
government has to alleviate rising property
pricesIntroductionoftheTDSRframeworkis
recognitionofthisItwasagame-changerinthe
marketin2013andunlikelytoberelaxedin2014
The vital role that interest rates played
housingsuPPlYset to increase
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 26
Tab
le o
f Co
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nts
Share
I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
Tab
le o
f Co
nte
nts
Share
S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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le o
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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Share
M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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The ViTalrole that interest rates played
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 23
Tab
le o
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Share
E xamination of the 2013 market requires an investigation of the important role that interest rates and the cost of capital have on the property sector
The interest rate ndash and the outlook for interest rates ndash represents the effective and expected cost of servicing the mortgage debt In 2013 the cost of servicing a mortgage remained at near record lows
The Singapore Interbank Offered Rate or SIBOR is set by the Association of Banks in Singapore Mortgage rates are effectively set by the base SIBOR rate plus a bank margin
The majority of mortgage debt in Singapore is variable ndash and where fixed it is fixed for a maximum period of five years This is significant as other countries allow longer periods of fixed term mortgages The US for example typically has 30-year fixed loans
Combined with the high personal debt levels carried by property buyers in Singapore the very high percentage of Singaporeans on variable mortgage rates makes the property market highly susceptible to changes in interest rates
As at 2013 the interest rate environment remained very accommodative being directly influenced by the bond buying (QE) of the US Federal Reserve Singapore effectively has its ultra-low interest rate environment driven by the US
The vital role that interest rates played
Though ultra-low rates were a primary driver in the 2013 market they cannot necessarily be assumed to remain as positive for the market during 2014
The chart below looks in more detail at the most recent rate influences on the market in 2013
Source Monetary Authority of Singapore (MAS)
PropertyGuru Market Outlook 2014 24
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Share
The three-month SIBOR rate has fallen from approximately 18 percent in Q3Q4 2008 to the historically low values at present This most recent behaviour is uncharacteristically stable given that SIBOR rates have displayed much volatility over the past 25 years
The ultra benign interest rate environment over the last five years has increased the capacity of consumers and investors to borrow large sums cheaply This has allowed Singaporersquos property markets to flourish after the global market correction in 2009 ndash and for the very strong market to continue into 2013
ACCESS TO fiNANCE iN 2013
In 2013 the access to finance or the amount that people could borrow was curtailed by cooling measures This was a simple and efficient effort by the government to reduce effective property demand
Property sectors that attract the highest proportion of mortgage debt to finance the purchase were hit hardest by the measures
The sector that was especially susceptible to the cooling measures and showed the biggest correction was the HDB resale market a
While PropertyGuru does not see an imminent
reversiontothehistoricalinterestratemeanof
around3percentitdoesseeaslowtightening
processoccurringduringthecourseof2014
Howeverowingtothenascentrecoveryofthe
USeconomyweexpectthatrateswillriseonly
at a slow pace over the coming years
While this will not provide an additional stimulus
tothemarketndashasitdidin2013-itwillalsonot
beasignificantdragonthemarketInsummary
theinterestrateenvironmentof2013isexpected
tocontinueinto2014withonlyagradualrisendash
andwithaveragemortgageratesfinishingthe
yearbeneath225percent
Howeverthereducedaccesstofinancethrough
cooling measures is expected to continue to
beadragonpricesThesegovernmentmacro-
prudential policy measures remain the only
effectivefinancialinstrumenttheSingapore
government has to alleviate rising property
pricesIntroductionoftheTDSRframeworkis
recognitionofthisItwasagame-changerinthe
marketin2013andunlikelytoberelaxedin2014
The vital role that interest rates played
housingsuPPlYset to increase
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 26
Tab
le o
f Co
nte
nts
Share
I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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Share
This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
Tab
le o
f Co
nte
nts
Share
S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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Share
CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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Share
PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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le o
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Share
2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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Share
T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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Share
MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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Share
M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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- Page 6 Off
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- Button 57
-
- Page 6 Off
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PropertyGuru Market Outlook 2014 23
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E xamination of the 2013 market requires an investigation of the important role that interest rates and the cost of capital have on the property sector
The interest rate ndash and the outlook for interest rates ndash represents the effective and expected cost of servicing the mortgage debt In 2013 the cost of servicing a mortgage remained at near record lows
The Singapore Interbank Offered Rate or SIBOR is set by the Association of Banks in Singapore Mortgage rates are effectively set by the base SIBOR rate plus a bank margin
The majority of mortgage debt in Singapore is variable ndash and where fixed it is fixed for a maximum period of five years This is significant as other countries allow longer periods of fixed term mortgages The US for example typically has 30-year fixed loans
Combined with the high personal debt levels carried by property buyers in Singapore the very high percentage of Singaporeans on variable mortgage rates makes the property market highly susceptible to changes in interest rates
As at 2013 the interest rate environment remained very accommodative being directly influenced by the bond buying (QE) of the US Federal Reserve Singapore effectively has its ultra-low interest rate environment driven by the US
The vital role that interest rates played
Though ultra-low rates were a primary driver in the 2013 market they cannot necessarily be assumed to remain as positive for the market during 2014
The chart below looks in more detail at the most recent rate influences on the market in 2013
Source Monetary Authority of Singapore (MAS)
PropertyGuru Market Outlook 2014 24
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The three-month SIBOR rate has fallen from approximately 18 percent in Q3Q4 2008 to the historically low values at present This most recent behaviour is uncharacteristically stable given that SIBOR rates have displayed much volatility over the past 25 years
The ultra benign interest rate environment over the last five years has increased the capacity of consumers and investors to borrow large sums cheaply This has allowed Singaporersquos property markets to flourish after the global market correction in 2009 ndash and for the very strong market to continue into 2013
ACCESS TO fiNANCE iN 2013
In 2013 the access to finance or the amount that people could borrow was curtailed by cooling measures This was a simple and efficient effort by the government to reduce effective property demand
Property sectors that attract the highest proportion of mortgage debt to finance the purchase were hit hardest by the measures
The sector that was especially susceptible to the cooling measures and showed the biggest correction was the HDB resale market a
While PropertyGuru does not see an imminent
reversiontothehistoricalinterestratemeanof
around3percentitdoesseeaslowtightening
processoccurringduringthecourseof2014
Howeverowingtothenascentrecoveryofthe
USeconomyweexpectthatrateswillriseonly
at a slow pace over the coming years
While this will not provide an additional stimulus
tothemarketndashasitdidin2013-itwillalsonot
beasignificantdragonthemarketInsummary
theinterestrateenvironmentof2013isexpected
tocontinueinto2014withonlyagradualrisendash
andwithaveragemortgageratesfinishingthe
yearbeneath225percent
Howeverthereducedaccesstofinancethrough
cooling measures is expected to continue to
beadragonpricesThesegovernmentmacro-
prudential policy measures remain the only
effectivefinancialinstrumenttheSingapore
government has to alleviate rising property
pricesIntroductionoftheTDSRframeworkis
recognitionofthisItwasagame-changerinthe
marketin2013andunlikelytoberelaxedin2014
The vital role that interest rates played
housingsuPPlYset to increase
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 26
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I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
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f Co
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Share
S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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- Button 59
-
- Page 6 Off
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-
- Button 57
-
- Page 6 Off
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PropertyGuru Market Outlook 2014 24
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The three-month SIBOR rate has fallen from approximately 18 percent in Q3Q4 2008 to the historically low values at present This most recent behaviour is uncharacteristically stable given that SIBOR rates have displayed much volatility over the past 25 years
The ultra benign interest rate environment over the last five years has increased the capacity of consumers and investors to borrow large sums cheaply This has allowed Singaporersquos property markets to flourish after the global market correction in 2009 ndash and for the very strong market to continue into 2013
ACCESS TO fiNANCE iN 2013
In 2013 the access to finance or the amount that people could borrow was curtailed by cooling measures This was a simple and efficient effort by the government to reduce effective property demand
Property sectors that attract the highest proportion of mortgage debt to finance the purchase were hit hardest by the measures
The sector that was especially susceptible to the cooling measures and showed the biggest correction was the HDB resale market a
While PropertyGuru does not see an imminent
reversiontothehistoricalinterestratemeanof
around3percentitdoesseeaslowtightening
processoccurringduringthecourseof2014
Howeverowingtothenascentrecoveryofthe
USeconomyweexpectthatrateswillriseonly
at a slow pace over the coming years
While this will not provide an additional stimulus
tothemarketndashasitdidin2013-itwillalsonot
beasignificantdragonthemarketInsummary
theinterestrateenvironmentof2013isexpected
tocontinueinto2014withonlyagradualrisendash
andwithaveragemortgageratesfinishingthe
yearbeneath225percent
Howeverthereducedaccesstofinancethrough
cooling measures is expected to continue to
beadragonpricesThesegovernmentmacro-
prudential policy measures remain the only
effectivefinancialinstrumenttheSingapore
government has to alleviate rising property
pricesIntroductionoftheTDSRframeworkis
recognitionofthisItwasagame-changerinthe
marketin2013andunlikelytoberelaxedin2014
The vital role that interest rates played
housingsuPPlYset to increase
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 26
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Share
I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
Tab
le o
f Co
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Share
S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
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70
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housingsuPPlYset to increase
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 26
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I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
Tab
le o
f Co
nte
nts
Share
S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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- Page 6 Off
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-
- Button 57
-
- Page 6 Off
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PropertyGuru Market Outlook 2014 26
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I n a recent government report Singaporersquos population is said to have risen by 16 percent between 2012 and 2013 the slowest growth rate in the past nine years This brings sev-
eral implications for public policy one of them being the supply of sufficient housing
Looking at the charts below we can see how the demographic composition of Singaporersquos population has changed in the last five years What it tells us is that while the overall population has increased to 54 million since 2008 some groups ndash Singapore Citizens PRs and non-residents ndash have grown at different rates
Between 2008 and 2013 the Singaporean citizen population climbed by 44 percent to more than 331 million much slower as compared to the growth rate in the number of PRs and non-residents which grew 8 percent and 284 percent respectively In total this illustrates that over time the pool of Singapore Citizens has declined as a proportion of the total population dropping from initially 68 percent to 61 percent now On the other hand PR figures remained stable at 10 percent and non-residents rose slightly to 29 percent by 2013
Non-residents typically rent so their increasing proportion has driven increased demand for rental properties This in turn has created demand for the investor segment with yields of between 3 to 35 percent
Housing supply set to increase
Concurrently borrowing costs have remained typically around 15 percent to 2 percent This has created a yield spread of around 15 percent ndash being the difference between the two Therefore an investor could typically borrow at 16 percent acquire a property and then rent it out for up to 35 percent ndash creating an obvious incentive to invest in property
Source Department of Statistics Singapore
PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
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S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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- Button 59
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- Button 57
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PropertyGuru Market Outlook 2014 27
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This has fuelled increased demand for property in 2013 which was not curtailed until the second half of the year when cooling measures fully impacted the market
Based on the assumption that all population sub-groups continue to follow their growth trajectories closely we can well expect more than 129000 more non-residents and PRs to enter the market by 2015
On a side note what also needs to be stressed is that although Singapore Citizens will exhibit slower growth when compared to the other two groups there will still be sufficient demand in absolute terms for places to stay in 2015 especially for HDB Built-to-order units (BTOs)
iNCREASED PROPERTy SuPPLy
To cope with these population changes the Singapore government through the Ministry of National Development has outlined plans to launch more than 200000 new properties by 2016 with a mix of HDBs ECs and private condominiums
What is key here is the composition of that new supply As illustrated in the graph below the Singapore governmentrsquos focus is centred on redressing the imbalance away from private property and towards providing affordable public housing
Increasing the supply of any property type will if all other factors are stable lead to downward pressure on prices The majority of
this new supply will come over the next three years New supply in 2013 alleviated some upward pricing pressures in the private condo market ndash a sector which saw supply increase from 9000 units to more than 15000 units ndash over the course of the year This was a 75 percent increase in supply over the previous year and so contributed to the decline in prices in the latter half of 2013
While the absolute number of all property types will continue to rise they are going to increase at different rates ndash with the biggest supply effects felt in the HDB and EC markets a
Housing supply set to increase
Source Ministry of National Development (MND)
ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
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S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
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propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
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Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
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69
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andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
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70
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ProPerTY seekersweigh in
2013R E V I E W
e 2013 can otherwise be known
as the ldquoYear of New Regulationsrdquo for the local
property market New regulations were introduced
with the aim to reduce demand and rising prices in
key property segments Herersquos a look back at how
the newly introduced government measures have
affected property seekers and the market overall
PropertyGuru Market Outlook 2014 29
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S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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Share
B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
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70
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- Button 59
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- Page 6 Off
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PropertyGuru Market Outlook 2014 29
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S ince the property boom in 2012 there have been widespread questions raised about the affordability of housing as fervent buying activity drove prices across all property types Moving
into 2014 lingering concerns surrounding overpriced properties con-tinued to weigh down public sentiments
This can be seen from the Property Affordability Index the quarterly benchmark for property affordability in Singapore The chart below takes into account survey measurements for overall satisfaction future
price perceptions and intention to purchase property as well as per-ceived government effort
We can see that public opinion deteriorated sharply at the height of the property cycle from Q2 2012 to Q1 2013 with the index dipping from 112 to 80
A reading below 100 the baseline index indicates a less affordable outlook for property
Government intervention was thus inevitable with successive rounds of cooling measures being implemented in an attempt to mitigate the sustained increase in transaction numbers Singaporeans were and still are generally supportive of the governmentrsquos actions in influencing real estate demand and supply
This is indicated by the upswing in the index for the first time in nine months from mid-2013 onwards By the end of Q4 2013 property seekers were becoming more optimistic about affordability in the property market with the index hitting a record high of 120 - a stark contrast to a year ago when sentiments were at their lowest ebb
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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PropertyGuru Market Outlook 2014 30
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CERTAiNTy OVER NO iNCREASES iN PROPERTy PRiCES
Further indicative of the public being bullish about the property market is the expectation that prices will not experience a rise in the next six months Data from the survey suggests that there is a strong inverse correlation between affordability and price increases perceptions of property affordability will dip as more people anticipate prices to continue to climb and vice versa
Following this logic we see from the graph below that the drop in perceived affordability of property mentioned earlier ndash from Q3 2012 to Q1 2013 ndash corresponds with the increase in respondents foreseeing
a prolonged rise in prices during the same period This is illustrated in a decrease in the percentage of respondents from 54 percent to 30 percent who felt that there will be no growth in property prices
A precursor for more measures to temper the active market ABSD set the stage for a reversal in expectations of price increase trends More respondents slowly began to feel that little or no further price rise would occur from Q2 2013 onwards
What is most startling is the significant jump of 17 percent between Q3 and Q4 2013 This highlighted stronger public confidence that prices would not continue to increase in the months ahead and into the start of 2014
A casual explanation for this occurrence points towards the strength of the TDSR framework After coming into effect late-June 2013 it slashed the quantum of private property units sold - particularly in the CCR and RCR
On the HDB resale front TDSR together with the contraction of the MSR on HDB loans to 30 percent also helped to control this market segment by softening and shifting demand from larger to smaller flats As price estimates for both non-landed private property and HDB resale units began to trend downwards so too did overall perceptions on price stability
Property seekers weigh in
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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- Button 59
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- Page 6 Off
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-
- Button 57
-
- Page 6 Off
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PropertyGuru Market Outlook 2014 31
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PRuDENCE BEfORE PuRCHASiNG PROPERTy
While the respondents polled painted a rosier outlook for the local property market in 2014 - as compared to 2013 - home buyers are still staying on the sidelines to assess and evaluate how the market is going to fare as we move forward into 2014
Despite prices coming down and property affordability gaining ground as many as three out of five respondents highlighted that they would not be keen on purchasing a new or another residential unit within the next six months
In fact as seen in the chart below property purchase intent has been declining over time with only 14 percent showing interest in purchasing property at the end of 2013 Of respondents who indicated that they are willing to buy a new property half are upgraders who wish to buy non-landed private property
What are the reasons behind more home buyers adopting a more selective approach towards property purchasing
On the one hand it can be said that TDSR has limited the purchasing power of upgraders to finance further investment in private property thereby curtailing their demand temporarily
Property seekers weigh in
On the other hand it is the behavioural nature of home buyers ndash sitting on the fence and studying the market before diving into a costly decision ndash which may affect them in the long term a
Source PropertyGuru Consumer Sentiment Survey
PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
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toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
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arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
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70
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- Button 57
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PropertyGuru Market Outlook 2014 32
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2014And now to
WithsomuchuncertaintyintheSingaporepropertymarketmanypeopleareasking
uWhethernowistherighttimetobuyortherighttimetosell
uWhereisthemarketheadingandwhatkindofpricecorrectionifanycanbeexpected
uAreHDBresalesagoodoptionorshouldIbeconsideringECs
uOverseaspropertylooksverytemptingbutwhereshouldIbelooking
PropertyGuruwillanswertheseandotherquestionsandalsorevealplacesndashbothlocaland
overseasndashthatyoumightwanttoconsiderforyournextpropertypurchase
e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
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70
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- Page 6 Off
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e The decision to raise the release of new
BTO units at an average of more than 32000 units
per year until 2016 have some predicting a looming
public housing oversupply Should this be a cause for
concern
more hdB BTos Too much of a good thing
At a glance
v Based on our projections of slowdown in population growth and lower number of BTO applicants a potential oversupply issue might occur in 2016
v Analysts believe this may not be the case as the government will monitor the situation closely while rolling out new supply
2014FORECAST
PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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- Page 6 Off
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- Button 57
-
- Page 6 Off
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PropertyGuru Market Outlook 2014 34
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T he Singapore government has been determined to ensure that first-home buyers are able to realise their dream of pro-curing an HDB unit to call their own - at an affordable price
To a large extent they have succeeded in doing so
In an effort to address the issue the government has been committed to constructing over 90000 HDB BTOs till 2016 This injection of new supply is an increase of 50 percent - as compared to the number of units which were released for sale in the last three years However in spite of the good intentions behind the announcement there is a real risk of oversupply in the HDB BTO residential market - as a consequence of the slow population growth of Singapore Citizens Currently the Singapore Citizen population increased at its slowest pace in nine years reaching more than 33 million in 2013 up 065 percent from 329 million the year before
If we were to plot the population growth rate against the proposed number of HDB BTOs planned to be built we will see from the chart below that by 2016 there is a possibility that the supply of housing will outstrip the total number of Singapore Citizens as a whole This slowdown in population growth could lead to higher vacancy rates placing a strain on public resources
Application rates from first-time buyers for new BTO flats taking a tumble - from 24 in January 2013 to 13 in November - also suggest that demand itself is already slowly being rectified Does this coupled with more than 28000 HDB units planned for completion in 2014 alone signal that there is a real danger that the HDB market is heading for a supply glut
More HDB BTOs Too much of a good thing
According to analysts this scenario is unlikely to occur
Getty Goh Director of real estate research firm Ascendant Assets said ldquoEven though 28000+ flats due to be completed in 2014 may seem like a large number if we take a long-term view the demand for housing will be spread out - given the fact that the government is trying to increase the overall population figure to 69 million by 2030rdquo
Alan Cheong Head of Research for Savills added ldquoNew BTO flats are likely to be almost all taken up in the next few years to cover the backlog of demand Most of these will go towards newly-formed families therefore the seemingly large number of BTO flats expected for completion in 2014 and the near future is not a worrying issuerdquo
Source Ministry of National Development Department of Statistics Singapore PropertyGuru Analysis
PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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PropertyGuru Market Outlook 2014 35
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Citing alternative measures the government can take to alleviate concerns of oversupply Christine Li Head of Research and Consultancy for Orange Tee mentioned ldquoThe government can simply accelerate the Selective En-bloc Redevelopment Scheme (e-SERS) and demolish more flats in the event that there is a riskrdquo
ldquoAs public housing is mainly for owner occupation it comes with a Minimum Occupation Period (MOP) to prohibit its sale until the buyer occupies it over a certain number of years The government can have the option to extend the MOP further if an oversupply is imminentrdquo she said
SHOuLD wE BE wORRiED
The government will pay close attention to both the demand and supply of public housing implementing strategies to tackle the delicate act of balancing the two By virtue of their commitment towards building more BTOs we have seen that the government has begun taking steps to address the short-term deficit of residential units over the course of the next few years
In the same vein should these additional units prove to be more than the market needs the government can always recalculate the total supply to provide or tweak a variety of HDB measures to stabilise the market This is already evident from Minister Khaw Boon Wanrsquos recent mention of cutting back on the construction of larger three- or more bedroom HDB units by about 18 percent in response to fewer applicants
More HDB BTOs Too much of a good thing
- Getty Goh Director of Real Estate Research Ascendant Assets
Unlike private properties
it is always the governmentrsquos
intent that HDB flats are for
accommodation as well as long-term
asset accumulation This means that
prices and supply of HDB flats will
be appropriately managed to remain
steady in the long run
PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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PropertyGuru Market Outlook 2014 36
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MORE fOR SiNGLES iN THE CiTy Together with plans to reduce the supply of BTO units for newly married couples and families the government looks set to ramp up the number of two-room flats in non-mature estates from previous estimates of 2600 to 5000 units in 2014 This will aim to re-distribute the allocation of resources from where demand is comparatively weaker (young families) towards a demographic with a higher number of applications which will likely remain in the double digits in 2014
Goh said ldquoThis is a political decision made by the government to cater to another demographic of Singaporeans who wish to own a home In the bigger scheme of things this policy is not going to have any significant impact on the HDB market as there are more than 900000 HDB units in total and 2500 units make up less than 05 percent of the overall HDB stockrdquo
ldquoWhile singles could consider buying resale HDB units in the past prices of resale flats have gone up significantly in the last few years and many singles are presently finding it a challenge to afford something from the resale market Hence allowing them to buy directly from HDB is a timely move as it addresses the housing aspirations of this specific group of peoplerdquo he quipped
Li added ldquoThe new ruling allowing singles to purchase two-room (BTO) flats provides those who cannot afford a resale flat a chance to purchase a home While the intention is to look after the needs of those who have been previously side-lined the government might also want to strike a balance between providing singles with more housing and encouraging Singaporeans to start a familyrdquo a
More HDB BTOs Too much of a good thing
e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
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70
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e Transaction and price falls in 2013 set the
stage for a soft landing in the HDB resale market
We investigate why this is the case
hdB resale markeT What goes up must come down
At a glance
2014FORECAST
v The government has managed to subdue the HDB resale market with transactions Cash over valuations (COVs) and prices of resale flats appearing to continue on a downward trend
v Key factors that contributed to this decline include the restrictions placed on purchase by PRs and their ownership of resale units as well as the new TDSR and MSR policies
PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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Share
District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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PropertyGuru Market Outlook 2014 38
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M illion-dollar HDB units are now relatively rare with resale prices taking a tumble following the introduction of cooling measures particularly the cap of 30 percent for
MSR and a 25-year limit for HDB mortgage loans
In addition the government reiterated its stance on providing affordable housing to all by ramping up the supply of BTO flats With low or even no COVs becoming a common occurrence now a soft landing for the HDB resale market appears imminent
PREDiCTiONS Of fuRTHER DECLiNES
On the back of HDB estimates indicating resale prices falling 13 percent in Q4 2013 the major news story in 2014 is likely to be an even quieter year for the resale market with prices expected to spiral downwards even further
ldquoAlthough overall the resale price index dipped by 04 percent the large dip in prices in Q4 sets the stage for prices in this segment to drop by between 5 to 8 percent in 2014rdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
Transaction volume figures will follow a similar trend to 2013 which saw one of the lowest in years at around 17200 to 18500 resale transactions ndash compared to more than 24000 to 37000 over the last five years
On one hand this is due to more home buyers adopting a cautious approach in the market However it can also be attributed to new regulations stipulating that newly-minted PRs will have to wait three years before they can purchase a resale flat As a result purchasing of resale units by PR households fell by half at an average of 176 units per month in contrast to an average of 323 units per month prior to the introduction of the new ruling
Commenting on the effects of the restrictions Nicholas Mak Research Head at SLP International Property Consultants said ldquoBased on preliminary figures from HDB the drop in demand from PRs will continue to affect the resale market by reducing overall demand by about 10 percent during 2014rdquo
However while activity is expected to be muted in the first half of 2014 both demand and buying activity might pick up in the latter part of the year - a reaction to falling prices as more buyers are enticed by more affordable choices in the market a
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
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70
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- Button 57
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PropertyGuru Market Outlook 2014 39
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places oF interest Areas home buyers should consider
In lieu of falling HDB resale prices and COVs we have pinpointed several areas that may be attractive options for a first time home buyer or upgrader wishing to purchase a four- or five-room resale flat in 2014
On the whole COVs will continue to fall across all HDB areas in 2014 Punggol currently comes out top in terms of lowest COVs for the more popular four- and five-room units This is a result of drastic falls in both quarter-on-quarter and yearly prices
TOWNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $10000 -5918 -7674
Sengkang $15000 -5000 -6104
Woodlands
Bukit Panjang$13000 -4800
-5667 (Woodlands)
-4800 (Pasir Panjang)
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV 4-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
TOwNCURRENT
MEDIAN COV
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Punggol $8000 -7333 -7538
Sembawang $11500 -5208 -6515
Woodlands $15000 -4444 --5575
TOp 3 AREAs WITH THE lOWEsT MEDIAN COV
5-ROOM flATs (As Of Q3 2013)
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
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70
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- Button 57
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- Page 6 Off
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PropertyGuru Market Outlook 2014 40
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In this regard Punggol will be attractive to price-conscious buyers in 2014 However in the longer term it will prove to be even more sought-after with the development of the area into a Waterfront Town for the 21st Century under the Punggol 21 initiative
The Northern areas of Woodlands and Sembawang also offer a similar story
At a median COV of $13000 for a four-room flat as well as $15000 and $11500 respectively for a five-room flat Woodlands and Sembawang are good buys - especially for upgraders who are strapped for cash due to TDSR These areas also show a lot of potential for capital appreciation in the next 10-12 years following the development of the Woodlands Regional Centre
Interestingly the top three locations with the lowest median prices for resale flats all belong in the northern part of Singapore ranging from $404000 to $426000 for a four-room flat and $473000 to $515000 for a five-room flat
One reason for Yishun Sembawang and Woodlands to be consistently demonstrating lower demand and hence lower transaction prices is the longer travel distances to the city However if we were to look at the bigger picture these areas present great opportunities for first-time home buyers and upgraders to consider in 2014 When new amenities transportation networks and recreational facilities are constructed in the near future high returns on investment can be expected a
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE
4-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last quarter)
CHANGE (compared to start of year)
Yishun $404000 -300 -170
Woodlands $415000 -178 -119
Sembawang $426000 -340 -448
Source Housing Development Board (HDB)
TOp 3 AREAs WITH THE lOWEsT MEDIAN REsAlE pRICE 5-ROOM flATs (As Of Q3 2013)
TOWNCURRENT MEDIAN
REsAlE pRICE
CHANGE (compared to last
quarter)
CHANGE (compared to start of year)
Woodlands $473000 0 -146
Sembawang $490000 -171 -200
Yishun $515000 0 -134
Source Housing Development Board (HDB)
HDB resale market What goes up must come down
e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
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70
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e The recent EC measures have put a damper on
market sentiments that may last well into 2014
where are demand and prices in the EC Market headed
At a glance
2014FORECAST
v A 30 percent cap on the MSR will largely influence buying patterns of the upgrader segment potentially causing demand and transaction volumes to decline
v Taking into account the prospect of lower buyer activity developers are expected to respond with greater prudence in their pricing strategies
PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
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arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
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70
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- Button 57
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- Page 6 Off
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PropertyGuru Market Outlook 2014 43
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E xecutive condominiums are a public-private housing hybrid designed to meet the housing needs of the lsquosandwich classesrsquo This group of home buyers aspire to live in private homes but
cannot afford such property due to skyrocketing prices They are also unable to buy HDB flats due to their above average income
ECs bridge this gap by granting the prospect of luxury living made affordable through financial assistance from government schemes It is therefore not surprising that ECs have become increasingly popular over the last two years subsequently causing prices to rise strongly
uPGRADERS fEELiNG THE HEAT
With ECs showing much promise in 2013 does it mean that we will see demand further escalating for this type of property in 2014
Some analysts expect this is not likely given the recent EC cooling measures imposed
According to Thomas Tan Principal Trainer at Real Centre Network ldquoAs everyone knows ECs are generally priced lower than private condominiums hence they are attractive options and a good step forward for upgraders to realise that goal
Where are demand and prices in the EC Marcket headed
ldquoIn my view the EC market might remain an active one in 2014 because of this difference in price however potential buyers will take stronger note of the MSR of 30 percent - which will severely affect affordability and could prevent them from purchasing their desired units rdquo he said
Upgraders ndash those who wish to sell their pre-existing HDB units for an EC ndash will be the most severely affected especially so if they have existing debt payments This is because in addition to the TDSR this buyer segment will need to factor in the 30 percent cap on MSR for mortgage loans which previously applied only to buyers of resale and BTO flats
What this means for upgraders with lower incomes is that they either have to fork out more cash upfront for their purchase or simply search for cheaper alternatives in the market potentially lowering the number of purchases and therefore transaction volumes for ECs
ldquoThe new EC measures will mean that there could potentially be a drastic drop of 50 percent in purchasing power which will severely dent an upgraderrsquos aspirations Upgraders may find that some EC units currently available for sale above $1 million will be beyond their budget as the loan quantum required from them is much higherrdquo said Mohamed Ismail Chief Executive Officer of Singapore real estate agency PropNex Realty
PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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- Button 57
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PropertyGuru Market Outlook 2014 44
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Developers paying closer attention to the EC market
Ismail suggested that developers will remain cautious as they are already reeling from the effects of inflation a tight labour market and rising construction costs
That together with increasing competition in the market and the reduced purchasing power of the upgrader segment means that there could be more aggressive bidding wars for upcoming EC tenders By the same token developers with existing land sites for such projects may be severely affected if they submitted high bids
ldquoThe aim of the EC cooling measures is to equalise the playing field between public housing and ECs mdash prompting developers to adjust their land bid prices accordingly by taking into account the potential buyersrsquo purchasing ability The likelihood is that developers may build smaller units so that overall quantum remains affordable for buyers This will result in a compromise between price and size of living spacerdquo Ismail added
ldquoSubsequent EC land bids will be keenly watched to see if the new measures will bring down the number of bids per site andor affect the quantum of the winning bids ndash given the strong offers for recent state tenders and the continued healthy take-up rate for ECsrdquo
ldquoAlso 2014 may see more developers including foreign players eyeing and possibly entering the EC segment given that mid- to high-end private properties are now also seeing a slowdown after the impact of successive rounds of cooling measuresrdquo he noted
- Mohamed Ismail CEO of PropNex Realty
With the new Cooling Measures EC developers must adjust their land bid prices accordingly to take into account the potential buyerrsquos purchasing ability
Watch video Insights into how the EC market will fare in 2014
(Thomas Tan Principal Trainer Real Centre Network)
Where are demand and prices in the EC Marcket headed
PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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- Page 6 Off
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PropertyGuru Market Outlook 2014 45
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HDB upgraders should expect the next batch of EC supply to hit the market only in August 2014 at the earliest
No more than five EC launches are slated for release in 2014 to keep in line with the governmentrsquos aim of maintaining supply for this unique property segment
Three projects to be launched will be located in the North-Eastern region of Sengkang and Punggol followed by one each in Woodlands and Jurong West
It will be interesting to see how the two ECs launched in Sengkang and Punggol will fare District 19 shows much promise because of major developments such as the Punggol 21 initiative However much prudence should be exercised when deciding whether investing in an EC in this area will be a wise choice Given that there are already six ECs slated for construction in Punggol and three in Sengkang the addition of three more in the area might bring fierce competition for capital gains in the long term a
Which areas should we look at in 2014
Watch video Why do ECs in Punggol continue to be popular options
(Keith Cheong Head of Research and Analytics PropertyGuru Group)
Where are demand and prices in the EC Marcket headed
The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
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70
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The PriVaTe ProPerTY roller coaster continuese Buying activity for non-landed private residential
properties is expected to be muted in 2014 with cooling
measures continuing to scale down the robust growth
seen in recent years We examine why this is the case
and analyse which areas will still attract demand over the
coming months
At a glance
2014FORECAST
v All regions will see a decline in demand for private property with the OCR seeing the majority of sales transactions due to the lower price quantum for properties there
v Buyers are influenced by attractive pricing and location before determining their private property choices
v In 2014 developers will most likely move towards the construction of smaller units to cater to the shrinking purchasing power of home buyers
PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
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70
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PropertyGuru Market Outlook 2014 48
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B uying patterns in 2014 are set to echo those of 2013 with capital values of new luxury homes in the CCR continuing to soften due to the effects of the ABSD TDSR and MSR inhib-
iting transaction volumes The number of local and overseas high net worth buyers entering the high-end market will still remain low with some opting to look elsewhere in the region for more affordable op-tions
Based on the news of 23 sites announced on confirmed and reserved lists of the 1H 2014 Government Land Sales programme 21 are earmarked for future development into private residential units with the OCR accounting for more than 62 percent followed by 31 percent allocated to the RCR Only one site is gazetted as a white site in the CCR
A LuKEwARM RESPONSE fROM PROPERTy BuyERS
With the majority of the sites allocated for development located in the OCR (mass market) we can anticipate more supply of affordable pri-vate homes to be built in these areas However in light of the restric-tions to secure more loans prospective upgraders and investors will remain selective in their purchases - at least until mid-2014
There will still be domestic demand though but as always pricing is key
Moving forward into 2014 Mohamed Ismail the Chief Executive Officer of Singapore Real Estate agency PropNex Realty said ldquoIt was the attractive pricing that set the tone for the sale of recent new launches and it gives the strongest signal for developers to sensitively price their new launches to attain high take-upsrdquo
The private property roller coaster continues
Watch video Industry analysts share their thoughts on the factors that buyers take into consideration before making a property purchase
(Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee)
PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
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Fax (65) 6534-9544
70
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PropertyGuru Market Outlook 2014 49
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His sentiments were shared by other analysts such as Alice Tan Associate Director and Head of Consultancy and Research Knight Frank who added ldquoPrice is the biggest consideration for property seekers right now as they are constrained by the amount of loans they can take under the TDSR frameworkrdquo
ldquoProjects which are value for money and have price points that potential home buyers are comfortable with will likely be a good draw To be well-received an ideal price range that developers should price a private residential unit at will have to be between $1 million and $13 million especially if they want to attract the interest of middle- to upper middle-income buyersrdquo she added
But thatrsquos not all Location also plays an important role in determining success
Alan Cheong Senior Director at Savills said ldquoThere is an observation that buyers traditionally come from or live within areas near the vicinity of a new project launch and I believe that this behaviour will continue well into 2014 and even into 2015rdquo
Tan added ldquoHome buyers will be searching for projects in locations which have positive attributes such as being fairly well-connected via public transport and close to retail amenities or up-and-coming growth areas They would then weigh these factors with their launch prices before making a decisive choicerdquo
DEVELOPERS BECOMiNG MORE CAuTiOuS
Savvy developers keen to tap into opportunities will only build what they know they can sell and ultimately appropriate pricing strategies in the weeks prior to any launch will drive sales volumes
Watch video Industry analysts give their opinions on trends which we will see happening in the property market in 2014
(Alan Cheong Senior Director Savills Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
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withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
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languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
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PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
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island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
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toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
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ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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PropertyGuru Market Outlook 2014 50
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As such developers will be careful when bidding for the new GLS sites in view of the reduced purchasing power of property seekers
At the same time in lieu of the projected lacklustre demand in 2014 developers will have to be prudent in their judgement when marketing their new launches to gain public favour That said they will have to work harder to maintain the tight balancing act of managing profit margins with costs incurred from constructing sufficient units within a limited land space
One way developers will be aiming to meet these objectives is through the creation of smaller units Working within the land area available developers have the opportunity to build more small units that can be competitively priced to potential upgraders
ldquoA definite trend that we will see more often in 2014 is the launch of smaller units typically compact three-bedroom units priced slightly below $1 million This will become a norm going forwardrdquo said Christine Li Head of Research and Consultancy for OrangeTee
ldquoSmall units comprising three bedrooms with an average of 800-1000 sq ft in size will still see a steady demand because of price quantum considerationsrdquo she added
Watch video Hear which districts analysts think will shine in 2014
(Christine Li Head Research amp Consultancy OrangeTee Alice Tan Associate Director amp Head of Consultancy and Research Knight Frank Alan Cheong Senior Director Savills)
The private property roller coaster continues
PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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PropertyGuru Market Outlook 2014 51
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District 25 woodlands Admiralty
Woodlands and Admiralty are expected to attract much interest in the next few years In line with the Urban Redevelopment Authorityrsquos (URA) draft Master Plan the district will house the creation of the Woodlands Regional Centre as well as provide an integral transport hub not only within the island but also between the mainland and Malaysia
z Key upcoming developments
n North Coast Innovation Corridor catering for small and medium enterprise (SME) business linked with Seletar Regional Centres and the
Learning CorridorCreative Clusters at Punggol
n More than 100ha of land around Woodlands MRT dedicated for commercial and residential use
n Better connectivity between Woodlands North MRT station in Singapore and Tanjung Puteri station in Johor Bahru with the Rapid Transit
System (RTS) by 201819 Transport to Kuala LumpurPenang via the High-Speed Rail (HSR) is expected to cut travel time to Malaysian cities
to a mere 90 minutes
n Woodlands MRT station will serve as an interchange connecting the North-South Line with the new Thomson Line
n Completion of the North-South Expressway (NSE) by 2020 slicing travel time to the city centre by 30 percent
PRiVATE PROPERTy HOTSPOTS iN THE OCR Blazing the trail in 2014
If you are thinking of purchasing a private property in 2014 here are some suggestions in the OCR that you might want to consider ndash based on their greater capital appreciation potential in the future
The private property roller coaster continues
PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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le o
f Co
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Share
T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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le o
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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le o
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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le o
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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le o
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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PropertyGuru Market Outlook 2014 52
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District 19 Punggol Sengkang Hougang
Punggol is earmarked to become Singaporersquos largest housing estate twice the size of Ang Mo Kio today and estimated to have its population grow to 100000 households by 2030 Punggol together with Sengkang holds prospect for increased buyer activity as these areas continue to develop into a vibrant new town
District 22 Jurong Lake District
A major regional centre in the west Jurong Lake district promises to become even livelier with the decision to transform the area into a hub incorporating a mix of commercial leisure and residential spaces for work and play a
z Key upcoming developments
n Extension of The North-East Line extending into the New Punggol Downtown represented by seven distinctive districts that are connected by lsquorsquogreen fingersrsquorsquo linking residents to the waterfrontn Seletar Aerospace Park located nearby provides employment opportunities to residents in the neighbouring regions of Sengkang amp Punggol
z Key upcoming developments
n Dubbed as Singaporersquos biggest lakeside destination for business and pleasure the district will bring new opportunities for amenities such as office buildings hospitals hotels and moren The creation of Jurong Gateway or what will otherwise be known as the next commercial hub for doing business - the biggest outside of the Central Business Districtn Lakeside area to undergo a facelift to offer a waterfront playground with retail and entertainment amenities close to nature
The private property roller coaster continues
The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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le o
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T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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le o
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In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
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70
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The guru Viewfor 2014
At a glance
2014FORECAST
v HDBs are expected to see an 8-11 percent decline in prices and a drop in the number of properties transacted by 15-20 percent
v Private non-landed properties are forecast to drop by a lesser 6-8 percent and will also see reduced transaction volumes
v ECs will experience a large (330 percent) increase in supply from 2013 levels in the next three years Much of this will be in 2015 and 2016 however 2014 is expected to see alleviated psf price pressure ndash due also to the removal of the favoured policy status of ECs
PropertyGuru Market Outlook 2014 54
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le o
f Co
nte
nts
Share
T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
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PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
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iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
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f Co
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Share
In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
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Share
Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
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The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
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For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
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The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
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Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
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Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
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If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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- Button 57
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- Page 6 Off
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PropertyGuru Market Outlook 2014 54
Tab
le o
f Co
nte
nts
Share
T he combination of 2013 market and trend data customer sentiment data overseas market comparisons the views and data of our industry partners - and micro and macro
market forces has allowed PropertyGuru to confidently project what the 2014 property market is likely to have in store
HDB 2014 TRANSACTiON VOLuME amp PRiCE fORECAST
The Guru View of HDBs in 2014 is formed on the basis of several assumptions These are n That the cooling measures will be maintained throughout 2014 n That the cooling measures target the HDB segment particularly n That the declining transaction volume trend is likely to trend lower before finding a floor n That supply of HDB new housing in 2014 will be double that of 2013 n That mortgage rates will rise only marginally by 025 percent but as the market is particularly interest rate-sensitive this small change will have an effect n That there will not be any new strong sources of indigenous HDB demand and that the number of Singapore Citizens as a percentage of the total population will continue to slowly decline
Basedontheseassumptionsfor2014theGuru View is nAn8-11percentdeclineinpricesofHDB nA15-20percentdeclineintransactionvolumesfollowingonfromtheexistingtrendthatbeganinQ3of2013
The Guru View for 2014
Source Housing Development Board (HDB) PropertyGuru Analysis
PropertyGuru Market Outlook 2014 55
Tab
le o
f Co
nte
nts
Share
PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
Tab
le o
f Co
nte
nts
Share
iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
Tab
le o
f Co
nte
nts
Share
In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
Tab
le o
f Co
nte
nts
Share
Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
Tab
le o
f Co
nte
nts
Share
The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
Tab
le o
f Co
nte
nts
Share
For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
Tab
le o
f Co
nte
nts
Share
The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
Tab
le o
f Co
nte
nts
Share
Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
Tab
le o
f Co
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Share
ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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le o
f Co
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Share
With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
Tab
le o
f Co
nte
nts
Share
Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
Tab
le o
f Co
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Share
If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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- Button 57
-
- Page 6 Off
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- Page 189 Off
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PropertyGuru Market Outlook 2014 55
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le o
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Share
PRiVATE 2014 TRANSACTiON VOLuME AND PRiCE fORECAST
The Guru View on private transaction volumes is that they are likely to continue to correct down to approximately 3000 per quarter in the first half of the year before recovering moderately at the end the year to approximately 4000 transactions per quarter
The primary factors that are considered to drive this are n Cooling measures that are likely to remain in place limiting the ability to gain finance n A slight forecasted increase in interest rates (approximately 025 percent) driven primarily out of the trend in the US 30-year bond market which has doubled its yield in the last six months
n A near 20000 increase in private property supply compared to 2013 equal to a 33 percent increase n An increasing recognition of alternative markets in the region representing value
This represents an initial decline of some 33 percent on the Q4 volumes of 2013 ndash but ending the year just 11 percent down on the last quarter of 2014 - with the anticipation of some bargain hunting and buying in Q4
The Guru View for 2014
Source Urban Redevelopment Authority (URA) PropertyGuru AnalysisIntheprivatesectorpricingtrendtheGuruViewisthattherewillbeafurtherdeteriora-tionofsome6-8percentbyyearendfromQ4in2013
Thisisexpectedtobedrivenprimarilyby n Thecontinuedsoftnessinvolumetransactionsasabove nTheincreasedchoiceandavailabilityofnewunitsfroma33percentsupply increase nAslightworseninginfinanceavailabilityandthecostoffinancewitha25percent rate increase nThemaintenanceofthecoolingmeasuresndashandexpectationthattheywillremainfor2014 nExternalmacroeconomicfactorslikelytoshiftcapitaloutofAsianmarketsand Asian investments
PropertyGuru Market Outlook 2014 56
Tab
le o
f Co
nte
nts
Share
iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
Tab
le o
f Co
nte
nts
Share
In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
Tab
le o
f Co
nte
nts
Share
Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
Tab
le o
f Co
nte
nts
Share
The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
Tab
le o
f Co
nte
nts
Share
For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
Tab
le o
f Co
nte
nts
Share
The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
Tab
le o
f Co
nte
nts
Share
Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
Tab
le o
f Co
nte
nts
Share
ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
Tab
le o
f Co
nte
nts
Share
With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
Tab
le o
f Co
nte
nts
Share
Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
Tab
le o
f Co
nte
nts
Share
If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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- Button 57
-
- Page 6 Off
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PropertyGuru Market Outlook 2014 56
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le o
f Co
nte
nts
Share
iNTEREST RATES 2014 fORECAST
As noted earlier Singaporean rates are largely inherited from overseas ndash specifically the US Therefore to estimate the future path of Singapore mortgage rates one must look to the likely scenario for rates in the US
The expected scenario for average mortgage rates in Singapore in 2014 is that they increase marginally by 025 percent
This assessment is made on the following factors n The US 30-year bond yield is trending up ndash and has doubled in the last six months n There has recently been an increased and stated commitment by the US Federal Reserve to wind back or taper their extraordinary bond purchase programme (QE) within the first six months of 2014 ndash and that this programme has artificially suppressed some bond yields to date n Local banks are expected to increase their mortgage margins - as a recent downgrading by an international ratings agency in 2013 high lighted their low margins as a risk factor a
The Guru View for 2014
PropertyGuru Market Outlook 2014 57
Tab
le o
f Co
nte
nts
Share
In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
Tab
le o
f Co
nte
nts
Share
Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
Tab
le o
f Co
nte
nts
Share
The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
Tab
le o
f Co
nte
nts
Share
For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
Tab
le o
f Co
nte
nts
Share
The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
Tab
le o
f Co
nte
nts
Share
Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
Tab
le o
f Co
nte
nts
Share
ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
Tab
le o
f Co
nte
nts
Share
With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
Tab
le o
f Co
nte
nts
Share
Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
Tab
le o
f Co
nte
nts
Share
If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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PropertyGuru Market Outlook 2014 57
Tab
le o
f Co
nte
nts
Share
In its Emerging Trends in Real Estate Asia Pacific 2014 report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute Tokyo re-emerged as the number one choice for more than 250 industry professionals working in developer private equity and real estate firms around the region
Choo Eng Beng Partner and Real Estate Leader PwC Singapore said ldquoThe generally positive outlook for many markets throughout the Asia Pacific region is highlighted by the re-emergence of Japan After a five-year absence from dominating the financial league tables Japan is rebounding as a favoured market for investment and development
The country is one of the largest beneficiaries of capital flows from other regions within Asia notes the report Its increasing popularity is attributed to the governmentrsquos massive economic stimulus plan which
Review of 2013Overseas
Japan Follow the big boys
Review of 2013Overseas
has resulted in a flurry of property purchases in anticipation of rapidly rising prices
In addition to Tokyo being singled out as Top Investment Market for 2014 after the introduction of economic reforms secondary cities including Osaka Fukuoka and Sapporo are fast gaining investor appeal as well Transaction volumes picked up significantly in 2013 with buying expecting to continue in 2014
With the Japanese economy on the fast track for recovery and growth demand for residential properties among Singapore investors has grown
This is partially driven by Japanrsquos attractive terms of rental yields and price
PropertyGuru Market Outlook 2014 58
Tab
le o
f Co
nte
nts
Share
Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
Tab
le o
f Co
nte
nts
Share
The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
Tab
le o
f Co
nte
nts
Share
For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
Tab
le o
f Co
nte
nts
Share
The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
Tab
le o
f Co
nte
nts
Share
Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
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le o
f Co
nte
nts
Share
ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
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le o
f Co
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Share
With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
Tab
le o
f Co
nte
nts
Share
Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
Tab
le o
f Co
nte
nts
Share
If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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PropertyGuru Market Outlook 2014 58
Tab
le o
f Co
nte
nts
Share
Private property units in Singapore of around 1000 sq ft and smaller garner an estimated 3 ndash 35 percent rental yield In comparison popular apartments in Japan have the potential to obtain above 5 percent yield
Singapore home buyers and investors will have more opportunities to view Japanese real estate as the number of Japan-themed property exhibitions in the city-state is set to increase this year
Sophia Leung Senior Sales and Marketing Manager for ECG said ldquoThe Tokyo market is picking up and many buyers are looking to transact ahead of the planned consumption tax increase Whilst many Singaporeans purchase Tokyo property for capital gains there are those who buy to house their children studying in Tokyordquo
Leung added that her company plans to hold 30 Japanese property exhibitions in Singapore this year and is confident that the stability of the country together with the forthcoming 2020 Olympics will play a big part in influencing buying decisions a
Japan Follow the big boys
PropertyGuru Market Outlook 2014 59
Tab
le o
f Co
nte
nts
Share
The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
Tab
le o
f Co
nte
nts
Share
For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
Tab
le o
f Co
nte
nts
Share
The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
Tab
le o
f Co
nte
nts
Share
Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
Tab
le o
f Co
nte
nts
Share
ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
Tab
le o
f Co
nte
nts
Share
With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
Tab
le o
f Co
nte
nts
Share
Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
Tab
le o
f Co
nte
nts
Share
If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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- Page 178 Off
- Page 189 Off
- Page 1910 Off
- Page 2111 Off
- Page 2312 Off
- Page 2413 Off
- Page 2614 Off
- Page 2715 Off
- Page 2916 Off
- Page 3017 Off
- Page 3118 Off
- Page 3219 Off
- Page 3420 Off
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- Page 3823 Off
- Page 3924 Off
- Page 4025 Off
- Page 4326 Off
- Page 4427 Off
- Page 4528 Off
- Page 4829 Off
- Page 4930 Off
- Page 5031 Off
- Page 5132 Off
- Page 5233 Off
- Page 5434 Off
- Page 5535 Off
- Page 5636 Off
- Page 5737 Off
- Page 5838 Off
- Page 5939 Off
- Page 6040 Off
- Page 6141 Off
- Page 6242 Off
- Page 6343 Off
- Page 6444 Off
- Page 6545 Off
- Page 6646 Off
-
- Button 59
-
- Page 6 Off
- Page 81 Off
- Page 92 Off
- Page 103 Off
- Page 124 Off
- Page 135 Off
- Page 146 Off
- Page 157 Off
- Page 178 Off
- Page 189 Off
- Page 1910 Off
- Page 2111 Off
- Page 2312 Off
- Page 2413 Off
- Page 2614 Off
- Page 2715 Off
- Page 2916 Off
- Page 3017 Off
- Page 3118 Off
- Page 3219 Off
- Page 3420 Off
- Page 3521 Off
- Page 3622 Off
- Page 3823 Off
- Page 3924 Off
- Page 4025 Off
- Page 4326 Off
- Page 4427 Off
- Page 4528 Off
- Page 4829 Off
- Page 4930 Off
- Page 5031 Off
- Page 5132 Off
- Page 5233 Off
- Page 5434 Off
- Page 5535 Off
- Page 5636 Off
- Page 5737 Off
- Page 5838 Off
- Page 5939 Off
- Page 6040 Off
- Page 6141 Off
- Page 6242 Off
- Page 6343 Off
- Page 6444 Off
- Page 6545 Off
- Page 6646 Off
-
- Button 57
-
- Page 6 Off
- Page 81 Off
- Page 92 Off
- Page 103 Off
- Page 124 Off
- Page 135 Off
- Page 146 Off
- Page 157 Off
- Page 178 Off
- Page 189 Off
- Page 1910 Off
- Page 2111 Off
- Page 2312 Off
- Page 2413 Off
- Page 2614 Off
- Page 2715 Off
- Page 2916 Off
- Page 3017 Off
- Page 3118 Off
- Page 3219 Off
- Page 3420 Off
- Page 3521 Off
- Page 3622 Off
- Page 3823 Off
- Page 3924 Off
- Page 4025 Off
- Page 4326 Off
- Page 4427 Off
- Page 4528 Off
- Page 4829 Off
- Page 4930 Off
- Page 5031 Off
- Page 5132 Off
- Page 5233 Off
- Page 5434 Off
- Page 5535 Off
- Page 5636 Off
- Page 5737 Off
- Page 5838 Off
- Page 5939 Off
- Page 6040 Off
- Page 6141 Off
- Page 6242 Off
- Page 6343 Off
- Page 6444 Off
- Page 6545 Off
- Page 6646 Off
PropertyGuru Market Outlook 2014 59
Tab
le o
f Co
nte
nts
Share
The turbulent street protests in Bangkok that were flashed around the world on the front pages of newspapers will do little to boost confidence in the kingdomrsquos property markets ndash at least from an overseas buying perspective
In December Thailand was named one of the top ten most-searched countries by one of Europersquos top property portals While the protests have been largely good natured and free from significant violence anyone looking at investing in the country will certainly be having second thoughts
Many unseasoned Thailand observers may assume that periods of political instability will see a drop in the value of property Certainly therersquos no evidence that will happen as surprisingly prices actually continued to rise significantly during the street violence of 2008 and 2010
Review of 2013Overseas
Why Thailand deserves a second look
Source Bank of Thailand
PropertyGuru Market Outlook 2014 60
Tab
le o
f Co
nte
nts
Share
For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
Tab
le o
f Co
nte
nts
Share
The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
Tab
le o
f Co
nte
nts
Share
Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
Tab
le o
f Co
nte
nts
Share
ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
Tab
le o
f Co
nte
nts
Share
With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
Tab
le o
f Co
nte
nts
Share
Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
Tab
le o
f Co
nte
nts
Share
If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
- Bookmark 1
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PropertyGuru Market Outlook 2014 60
Tab
le o
f Co
nte
nts
Share
For many itrsquos also been business as usual contrary to what many in the media would have you believe
Suphin Mechuchep Managing Director of Jones Lang LaSalle (Thailand) said ldquoIn terms of our business operations JLL hasnrsquot seen much impact from the situation Our head office on Sathorn Road remains open as normalrdquo
ldquoOur residential selling and buying enquiries have remained normal The only thing we have seen is that most project owners are postponing their high-cost marketing campaigns until the situation has been resolvedrdquo
The reason why property prices in Thailand will not be impacted by any short- or even medium-term period of political instability is that Thais ndash who make up at least 90 percent of property buyers in Thailand ndash will continue to buy The foreign-buying market will suffer ndash it did in the past and it will again ndash but itrsquos just a small although until recently growing part of Thailandrsquos property sector Many developers especially those listed on the Stock Exchange of Thailand have already announced a reduction in new projects for the forthcoming year so any decline in buyers may well already be factored into the equation
For those who understand Thailand they will know that this is the way that Thais do things Many will not be put off investing in property in Thailand ndash even given the uncertain short-term future
Ultimately the kingdom offers great value for property investors and is a genuinely nice place to live With prices generally 20 percent of those in Singapore on a like-for-like basis the kingdom is still worthy of close attention from overseas property buyers and investors a
Why Thailand deserves a second look
PropertyGuru Market Outlook 2014 61
Tab
le o
f Co
nte
nts
Share
The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
Tab
le o
f Co
nte
nts
Share
Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
Tab
le o
f Co
nte
nts
Share
ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
Tab
le o
f Co
nte
nts
Share
With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
Tab
le o
f Co
nte
nts
Share
Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
Tab
le o
f Co
nte
nts
Share
If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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PropertyGuru Market Outlook 2014 61
Tab
le o
f Co
nte
nts
Share
The United Kingdom has been a perennial favourite with Singaporeans so much so that in 2012 they were joint leading overseas buyers of off-plan projects in central London Whilst the latest data has yet to be published therersquos no doubt that there has been little decline in Singaporeansrsquo love of London
What wersquore likely to see in 2014 and to a certain extent itrsquos already started is a move away from zones one and two Why Quite simply the answer is price London has become extremely expensive and investors who have their minds set on buying in the United Kingdom are being forced to buy further away from the centre of the capital Even other parts of the country have been attracting interest from Singaporeans for the first time in 2013 and that trend will continue this year
One spanner in the works for pure investors will be the April 2015 planned implementation of a foreign capital gains tax for the first time British buyers have been paying up to 28 percent and the UK
Review of 2013Overseas
UK Look outside Londongovernment has announced it will close the loophole whereby property gains by non-UK owners remained untaxed Itrsquos still too early to tell the impact this will have on UK property purchases by overseas buyers but many market watchers expect minimal change in transaction numbers a
- Doris Tan Head of Overseas Residential Sales JLL Singapore
I think 2014 will be an interesting year as Singaporeans will continue to look abroad for investments and London
will be their top choice now as a new tax law will deter investors from buying - when itrsquos implemented in 2015 Therefore I think 2014 will be a good year to invest in
London And those who purchased a number of London properties may want to consider selling before 2015
PropertyGuru Market Outlook 2014 62
Tab
le o
f Co
nte
nts
Share
Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
Tab
le o
f Co
nte
nts
Share
ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
Tab
le o
f Co
nte
nts
Share
With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
Tab
le o
f Co
nte
nts
Share
Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
Tab
le o
f Co
nte
nts
Share
If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
- Bookmark 1
-
- Button 60
-
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- Page 81 Off
- Page 92 Off
- Page 103 Off
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-
- Button 58
-
- Page 6 Off
- Page 81 Off
- Page 92 Off
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- Page 124 Off
- Page 135 Off
- Page 146 Off
- Page 157 Off
- Page 178 Off
- Page 189 Off
- Page 1910 Off
- Page 2111 Off
- Page 2312 Off
- Page 2413 Off
- Page 2614 Off
- Page 2715 Off
- Page 2916 Off
- Page 3017 Off
- Page 3118 Off
- Page 3219 Off
- Page 3420 Off
- Page 3521 Off
- Page 3622 Off
- Page 3823 Off
- Page 3924 Off
- Page 4025 Off
- Page 4326 Off
- Page 4427 Off
- Page 4528 Off
- Page 4829 Off
- Page 4930 Off
- Page 5031 Off
- Page 5132 Off
- Page 5233 Off
- Page 5434 Off
- Page 5535 Off
- Page 5636 Off
- Page 5737 Off
- Page 5838 Off
- Page 5939 Off
- Page 6040 Off
- Page 6141 Off
- Page 6242 Off
- Page 6343 Off
- Page 6444 Off
- Page 6545 Off
- Page 6646 Off
-
- Button 59
-
- Page 6 Off
- Page 81 Off
- Page 92 Off
- Page 103 Off
- Page 124 Off
- Page 135 Off
- Page 146 Off
- Page 157 Off
- Page 178 Off
- Page 189 Off
- Page 1910 Off
- Page 2111 Off
- Page 2312 Off
- Page 2413 Off
- Page 2614 Off
- Page 2715 Off
- Page 2916 Off
- Page 3017 Off
- Page 3118 Off
- Page 3219 Off
- Page 3420 Off
- Page 3521 Off
- Page 3622 Off
- Page 3823 Off
- Page 3924 Off
- Page 4025 Off
- Page 4326 Off
- Page 4427 Off
- Page 4528 Off
- Page 4829 Off
- Page 4930 Off
- Page 5031 Off
- Page 5132 Off
- Page 5233 Off
- Page 5434 Off
- Page 5535 Off
- Page 5636 Off
- Page 5737 Off
- Page 5838 Off
- Page 5939 Off
- Page 6040 Off
- Page 6141 Off
- Page 6242 Off
- Page 6343 Off
- Page 6444 Off
- Page 6545 Off
- Page 6646 Off
-
- Button 57
-
- Page 6 Off
- Page 81 Off
- Page 92 Off
- Page 103 Off
- Page 124 Off
- Page 135 Off
- Page 146 Off
- Page 157 Off
- Page 178 Off
- Page 189 Off
- Page 1910 Off
- Page 2111 Off
- Page 2312 Off
- Page 2413 Off
- Page 2614 Off
- Page 2715 Off
- Page 2916 Off
- Page 3017 Off
- Page 3118 Off
- Page 3219 Off
- Page 3420 Off
- Page 3521 Off
- Page 3622 Off
- Page 3823 Off
- Page 3924 Off
- Page 4025 Off
- Page 4326 Off
- Page 4427 Off
- Page 4528 Off
- Page 4829 Off
- Page 4930 Off
- Page 5031 Off
- Page 5132 Off
- Page 5233 Off
- Page 5434 Off
- Page 5535 Off
- Page 5636 Off
- Page 5737 Off
- Page 5838 Off
- Page 5939 Off
- Page 6040 Off
- Page 6141 Off
- Page 6242 Off
- Page 6343 Off
- Page 6444 Off
- Page 6545 Off
- Page 6646 Off
PropertyGuru Market Outlook 2014 62
Tab
le o
f Co
nte
nts
Share
Malaysiarsquos property sector was one of the best performing sectors in 2013 and looks set to be closely watched this year
In a bid to curb the robust growth and increasing prices in Malaysiarsquos property market The Malaysia 2014 Budget announced in October 2013 by the countryrsquos Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak saw significant changes made to property purchases especially among overseas buyers Of these policies two stand out for those seeking to invest in the country One is the raising of the minimum price of property that can be purchased by overseas buyers to RM1 million from the previous RM500000 The other is pegging of the Real Property Gains Tax (RPGT) for non-Citizens at 30 percent on the gains from properties sold within five years and five percent for subsequent years thereafter
At the same time property developers will be prohibited from implementing projects that have features of the Developer Interest Bearing Scheme (DIBS) to prevent them from incorporating interest rates on loans into house prices during the construction period This will prohibit financial institutions from providing final funding for projects involved in the DIBS scheme
MEASuRES BRiNG uNCERTAiNTiES fOR fOREiGN iNVESTORS
These policies are expected to slow Malaysiarsquos property market with a decline in the level of home sales in the short term Given that Singaporeans came top of the list of overseas buyers in Malaysia prior to the introduction of the cooling measures the bulk of this drop in transactions can be attributed to reactions by Singaporean investors to the measures come January 2014
Review of 2013Overseas
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 63
Tab
le o
f Co
nte
nts
Share
ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
Tab
le o
f Co
nte
nts
Share
With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
Tab
le o
f Co
nte
nts
Share
Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
Tab
le o
f Co
nte
nts
Share
If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
- Bookmark 1
-
- Button 60
-
- Page 6 Off
- Page 81 Off
- Page 92 Off
- Page 103 Off
- Page 124 Off
- Page 135 Off
- Page 146 Off
- Page 157 Off
- Page 178 Off
- Page 189 Off
- Page 1910 Off
- Page 2111 Off
- Page 2312 Off
- Page 2413 Off
- Page 2614 Off
- Page 2715 Off
- Page 2916 Off
- Page 3017 Off
- Page 3118 Off
- Page 3219 Off
- Page 3420 Off
- Page 3521 Off
- Page 3622 Off
- Page 3823 Off
- Page 3924 Off
- Page 4025 Off
- Page 4326 Off
- Page 4427 Off
- Page 4528 Off
- Page 4829 Off
- Page 4930 Off
- Page 5031 Off
- Page 5132 Off
- Page 5233 Off
- Page 5434 Off
- Page 5535 Off
- Page 5636 Off
- Page 5737 Off
- Page 5838 Off
- Page 5939 Off
- Page 6040 Off
- Page 6141 Off
- Page 6242 Off
- Page 6343 Off
- Page 6444 Off
- Page 6545 Off
- Page 6646 Off
-
- Button 58
-
- Page 6 Off
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- Page 92 Off
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- Page 146 Off
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- Page 178 Off
- Page 189 Off
- Page 1910 Off
- Page 2111 Off
- Page 2312 Off
- Page 2413 Off
- Page 2614 Off
- Page 2715 Off
- Page 2916 Off
- Page 3017 Off
- Page 3118 Off
- Page 3219 Off
- Page 3420 Off
- Page 3521 Off
- Page 3622 Off
- Page 3823 Off
- Page 3924 Off
- Page 4025 Off
- Page 4326 Off
- Page 4427 Off
- Page 4528 Off
- Page 4829 Off
- Page 4930 Off
- Page 5031 Off
- Page 5132 Off
- Page 5233 Off
- Page 5434 Off
- Page 5535 Off
- Page 5636 Off
- Page 5737 Off
- Page 5838 Off
- Page 5939 Off
- Page 6040 Off
- Page 6141 Off
- Page 6242 Off
- Page 6343 Off
- Page 6444 Off
- Page 6545 Off
- Page 6646 Off
-
- Button 59
-
- Page 6 Off
- Page 81 Off
- Page 92 Off
- Page 103 Off
- Page 124 Off
- Page 135 Off
- Page 146 Off
- Page 157 Off
- Page 178 Off
- Page 189 Off
- Page 1910 Off
- Page 2111 Off
- Page 2312 Off
- Page 2413 Off
- Page 2614 Off
- Page 2715 Off
- Page 2916 Off
- Page 3017 Off
- Page 3118 Off
- Page 3219 Off
- Page 3420 Off
- Page 3521 Off
- Page 3622 Off
- Page 3823 Off
- Page 3924 Off
- Page 4025 Off
- Page 4326 Off
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- Page 4528 Off
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PropertyGuru Market Outlook 2014 63
Tab
le o
f Co
nte
nts
Share
ldquoDemand and interest will wane in the next six months or so as Singaporeans are adopting a wait-and-see approach on how the new measures will affect themrdquo said Khalil Adis Founder and Property Journalist of Khalil Adis Consultancy
ldquoThis will cause buyers to stay away from the market until the Malaysian government releases further details on how these measures will be implementedrdquo
This could spell trouble for properties in popular regions such as Iskandar where some analysts have already noted a slowing down of demand in the past few months With waning interest anticipated a price correction is likely to occur within the next six months after the new RPGT rate was implemented on 1 January
As Khalil mentioned ldquoIskandar (in Johor) will be the most affected We are already seeing a significant drop in interest for new launches - unlike a year ago when buyers were flocking to snap up units in the regionrdquo
ldquoHowever we are going to see property launches in Medini zone continuing to be popular in 2014 because it is the only place in Malaysia where foreigners can enjoy a tax break and buy below RM1 million without paying the RPGTrdquo
OTHER REGiONS SHOw PROSPECT
On the brighter side despite the buying outlook for residential property in Johor expected to be subdued in 2014 prospects in other
regions in Malaysia look set to flourish For example Kuala Lumpur will see a lot more commercial projects being offered due to the Malaysian governmentrsquos efforts in ramping up supply for more office and retail spaces
In addition according to MP Data a Malaysian real estate business intelligence company the Klang Valley - with its prime locations such as Mont Kiara Bangsar and Damansara Heights will continue to remain popular as many foreign investors tend to value the capital appreciation of the high-end residential properties located in these areas
Penang will be another location worth paying attention to because of the strong interest from foreign investors that the state continues to attract - particularly for high-end projects in good locations This is due to potential buyers being accustomed to Penangrsquos own RM1 million minimum purchase price for condos enacted two years ago
ldquoMalaysia will still be an attractive location for property investment in 2014 but investors must take a long-term investment horizon This is because Malaysian properties remain relatively affordable compared to properties in Singapore driven by the weakening RM against the Singapore dollarrdquo
ldquoAlso Malaysia continues to be one of the few countries that allows foreigners to own freehold properties an incentive for Singaporeans who wish to procure more affordable residences outside of the city-staterdquo Khalil concluded a
Malaysia in 2014 Still a property hotspot or fading star
PropertyGuru Market Outlook 2014 64
Tab
le o
f Co
nte
nts
Share
With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
Tab
le o
f Co
nte
nts
Share
Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
Tab
le o
f Co
nte
nts
Share
If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
- Bookmark 1
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-
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-
- Button 59
-
- Page 6 Off
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- Page 6545 Off
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-
- Button 57
-
- Page 6 Off
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- Page 2614 Off
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- Page 3219 Off
- Page 3420 Off
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- Page 6444 Off
- Page 6545 Off
- Page 6646 Off
PropertyGuru Market Outlook 2014 64
Tab
le o
f Co
nte
nts
Share
With 2014 being the year of the Horse we ask Master Lynn Yap Singaporersquos Feng Shui Queen to give a glimpse into how we should place our bets in 2014
GallopinG ahead into the New Year
Review of 2013Lifestyle
what will the year of the Horse bring for property investments
From the feng shui point of view the Horse year will focus on three main areas such as emotion infectious illnesses and property matters
It is known as a ldquoJia Wurdquo year meaning that the first half of the lunar year has ldquoyang woodrdquo while the later half has ldquoyin firerdquo
This will be ldquovery challengingrdquo for property as it is predominantly a strong fire year with no ldquowaterrdquo element ldquoWaterrdquo elements are very important when it comes to auspicious property investments
Since the earth will be very dry property which is an ldquoearthrdquo element will see prices start to fall sharply in the first half of the year
PropertyGuru Market Outlook 2014 65
Tab
le o
f Co
nte
nts
Share
Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
Tab
le o
f Co
nte
nts
Share
If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
- Bookmark 1
-
- Button 60
-
- Page 6 Off
- Page 81 Off
- Page 92 Off
- Page 103 Off
- Page 124 Off
- Page 135 Off
- Page 146 Off
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- Page 178 Off
- Page 189 Off
- Page 1910 Off
- Page 2111 Off
- Page 2312 Off
- Page 2413 Off
- Page 2614 Off
- Page 2715 Off
- Page 2916 Off
- Page 3017 Off
- Page 3118 Off
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-
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-
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- Page 6545 Off
- Page 6646 Off
-
- Button 59
-
- Page 6 Off
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- Page 189 Off
- Page 1910 Off
- Page 2111 Off
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- Page 3017 Off
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- Page 6646 Off
-
- Button 57
-
- Page 6 Off
- Page 81 Off
- Page 92 Off
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- Page 124 Off
- Page 135 Off
- Page 146 Off
- Page 157 Off
- Page 178 Off
- Page 189 Off
- Page 1910 Off
- Page 2111 Off
- Page 2312 Off
- Page 2413 Off
- Page 2614 Off
- Page 2715 Off
- Page 2916 Off
- Page 3017 Off
- Page 3118 Off
- Page 3219 Off
- Page 3420 Off
- Page 3521 Off
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- Page 4025 Off
- Page 4326 Off
- Page 4427 Off
- Page 4528 Off
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- Page 5434 Off
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- Page 5636 Off
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- Page 6040 Off
- Page 6141 Off
- Page 6242 Off
- Page 6343 Off
- Page 6444 Off
- Page 6545 Off
- Page 6646 Off
PropertyGuru Market Outlook 2014 65
Tab
le o
f Co
nte
nts
Share
Although it is a Horse year and the Horse typically signifies galloping it will be a year where property prices will gallop downwards Those in the property business like property agents and bankers will be busy trying to sustain and deliver on forecast projections It is important though that we remember not to whip the Horse but to gallop along with it
There can be many reasons for this sharp fall mainly due to stricter cooling measures higher interest rates and stricter loan requirements - as well as the 2014 feng shui charts
Already in the last quarter of the Snake year in 2013 we began to see property prices falling And once the Horse year officially arrives in Li Chun on 4 February 2014 we may experience a sharper fall in property prices
In the second half of the year the ldquoyin firerdquo is strong This can cause property prices to rise a fair bit and then remain stable towards the end of the year
This is because the ldquoyin firerdquo supports the ldquoearthrdquo element which represents property Therefore property prices would start to rise but not at the same rate that overall property prices will fall in the first half of 2014
Lifestyle Galloping ahead into the New Year
If there is the presence of SARS or related illnesses other infectious diseases or a big fall in the American stock market in the Horse year property prices could continue to fall sharply in the second half of the year
who will be most affected negativelypositively in a financial sense
Not a favourable year for property sellers and renters
Those planning to sell property in the lunar year 2014 will have to be prepared to make less profit from the sale as compared to years prior when the property market was on the upswing
Those planning to sell property in 2014 have to be prepared to reap less profits from the
sale as compared to previous years when the property market was on the upswing
- Master Lynn Yap Feng Shui Queen
PropertyGuru Market Outlook 2014 66
Tab
le o
f Co
nte
nts
Share
If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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-
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-
- Page 6 Off
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- Page 135 Off
- Page 146 Off
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- Page 2111 Off
- Page 2312 Off
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- Page 2715 Off
- Page 2916 Off
- Page 3017 Off
- Page 3118 Off
- Page 3219 Off
- Page 3420 Off
- Page 3521 Off
- Page 3622 Off
- Page 3823 Off
- Page 3924 Off
- Page 4025 Off
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PropertyGuru Market Outlook 2014 66
Tab
le o
f Co
nte
nts
Share
If one waits too long into the year to sell there is a risk of losing even more
The advice is to not be too stubborn when it comes to selling a property Simply make enough and move on There will always be an opportunity to ride the property cycle but only from 2019 the Year of the Pig onwards Gains in capital appreciation will be substantial gains due to steep rises in property prices just like in 2007
The year 2014 will also not favour the rental market as rental prices will start to fall quite significantly as well However do hold on to your property even if rental income cannot cover the mortgage
The year 2014 will favour buyers
This is because falling property prices may be enticing for property buyers however like any investment buyers needs to weigh the pros and cons before making their decisions
Are there tips on how to grow wealth in 2014
Hold on to your cash This is because money is tangible in value and will not be adversely subjected to large fluctuations in the market a
Master Lynn Yap also known as Singaporersquos
Feng Shui Queen (registered mark 2000) is
a veteran practitioner of the art and science of
metaphysics
She holds a degree in Business Administration
from National University of Singapore and is no
stranger to offering advice and consultations
to different strata of society
Over the years her personal well-being has improved tremendously So too
have the lives of the many people from all walks of life who have consulted
her vast knowledge and expertise in this field
Every year Master Lynn is invited by many business practitioners and
organisations to give feng shui talks as well as deliver her predictions for
the year Currently she writes for PropertyKaisercom a property portal
on a fortnightly basis on top of her consultation work on
wwwfengshuiqueencom
She also writes a very successful blog ldquoThe Fengshui Savvy Investorrdquo at
wwwlynnyap8888blogspotcom
aboUT Master Lynn
Lifestyle Galloping ahead into the New Year
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
- Bookmark 1
-
- Button 60
-
- Page 6 Off
- Page 81 Off
- Page 92 Off
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- Page 1910 Off
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-
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-
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-
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- Page 189 Off
- Page 1910 Off
- Page 2111 Off
- Page 2312 Off
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- Page 2614 Off
- Page 2715 Off
- Page 2916 Off
- Page 3017 Off
- Page 3118 Off
- Page 3219 Off
- Page 3420 Off
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- Page 3924 Off
- Page 4025 Off
- Page 4326 Off
- Page 4427 Off
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-
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-
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- Page 146 Off
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- Page 178 Off
- Page 189 Off
- Page 1910 Off
- Page 2111 Off
- Page 2312 Off
- Page 2413 Off
- Page 2614 Off
- Page 2715 Off
- Page 2916 Off
- Page 3017 Off
- Page 3118 Off
- Page 3219 Off
- Page 3420 Off
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- Page 3924 Off
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- Page 5939 Off
- Page 6040 Off
- Page 6141 Off
- Page 6242 Off
- Page 6343 Off
- Page 6444 Off
- Page 6545 Off
- Page 6646 Off
About UsPropertyGuruisAsiarsquosleadingonlinepropertyportalgroupusedbyalmost11million
propertybuyersviewingover89millionpropertypagesandgeneratingover350000
enquiriesforrealestatedeveloperandagentadvertisersndasheverymonth
HeadquarteredinSingaporePropertyGuruwasfoundedin2006bytwoentrepreneurs
withavisiontosimplifythepropertysearchprocessandhelpbuyerssellersandinvestors
makebetterpropertydecisionsfasterTakingadvantageofAsiarsquosgrowingaffluence
propertydemandandonlineexplosionthecompanyreceiveditsfirstVCinvestment
fundingin2008andsecuredapproximately$60minvestmentin2012fromDeutsche
TelekomSouthEastAsiarsquoslargestdigitalinvestmenttodate
TheawardwinningcompanyfocusesheavilyoninnovationOverthelasttwoyearsthe
Companyhasdevelopedandlaunched16mobileapplicationsinfourcountriesandthree
languagesTheseapplicationshavereceivedoveramilliondownloadsAlmost50percent
ofPropertyGurursquosvisitsinSingaporenoworiginatefromamobiledevice
PropertyGuruwasalsothefirsttointegrateitswebsitewithsocialmediafirsttolaunch
Singaporersquosonlydedicatedpropertynewspaper-withover100000copiescirculated
island-wideeverymonthThecompanyhasalsodevelopedapropertyeventsplatform
withapproximately30showsheldannuallyacrossfourcountriesaddressing30000
potentialpropertybuyersontheground
68
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
- Bookmark 1
-
- Button 60
-
- Page 6 Off
- Page 81 Off
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- Page 178 Off
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- Page 1910 Off
- Page 2111 Off
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- Page 2916 Off
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- Page 3118 Off
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-
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-
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- Page 1910 Off
- Page 2111 Off
- Page 2312 Off
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- Page 2614 Off
- Page 2715 Off
- Page 2916 Off
- Page 3017 Off
- Page 3118 Off
- Page 3219 Off
- Page 3420 Off
- Page 3521 Off
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- Page 3823 Off
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- Page 4025 Off
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- Page 4427 Off
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- Page 5838 Off
- Page 5939 Off
- Page 6040 Off
- Page 6141 Off
- Page 6242 Off
- Page 6343 Off
- Page 6444 Off
- Page 6545 Off
- Page 6646 Off
DisclaimerThisreportandotherresearchmaterialsmaybefoundonourwebsiteatwww
propertygurucomsgQuestionsrelatedtoinformationhereinshouldbedirected
toPropertyGuruatthenumberindicatedbelowThisdocumenthasbeenprepared
byPropertyGuruforgeneralinformationonlyPropertyGurumakesnoguarantees
representationsorwarrantiesofanykindexpressedorimpliedregardingtheinformation
includingbutnotlimitedtowarrantiesofcontentaccuracyandreliability
WhilstfactshavebeenrigorouslycheckedPropertyGurudoesnottakeresponsibilityfor
anydamageorlosssufferedasaresultofanyinadvertentinaccuracywithinthisreport
Thisreportshouldnotberelieduponasabasisforenteringintotransactionswithout
seekingspecificqualifiedprofessionaladviceAnyinterestedpartyshouldundertaketheir
owninquiriesastotheaccuracyoftheinformation
PropertyGuruexcludesunequivocallyallinferredorimpliedtermsconditionsand
warrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamages
arisingtherefrom
ThispublicationisthecopyrightedpropertyofPropertyGuruPteLtdcopy2014
All rights reserved
Informationcontainedhereinshouldnotinwholeorpartbepublishedreproduced
orreferredtowithoutpriorapprovalAnysuchreproductionshouldbecreditedto
PropertyGuru
69
Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
- Bookmark 1
-
- Button 60
-
- Page 6 Off
- Page 81 Off
- Page 92 Off
- Page 103 Off
- Page 124 Off
- Page 135 Off
- Page 146 Off
- Page 157 Off
- Page 178 Off
- Page 189 Off
- Page 1910 Off
- Page 2111 Off
- Page 2312 Off
- Page 2413 Off
- Page 2614 Off
- Page 2715 Off
- Page 2916 Off
- Page 3017 Off
- Page 3118 Off
- Page 3219 Off
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Creditssteve melhuishCo-Founder and Chief Executive Officer
andrew battInternational Group Editor
andrewpropertygurucomsg
adam rahmanSenior Marketing Executive
adampropertygurucomsg
romesh navaratnarajahSenior Editorromeshpropertygurucomsg
carl hampelHead of Data Business
Keith cheongHead Research and Analytics
sue ellen manaloCreative Designer
oscar vidalData Engineer
niko nyrhilaSoftware Engineer
propertyguru pte ltd51 Goldhill Plaza 11-0305
Singapore 308900Tel (65) 6238-5971
Fax (65) 6534-9544
70
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