Singapore Property Weekly Issue 192

8/9/2019 Singapore Property Weekly Issue 192

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Issue 192Copyright 2011-2014 www.Propwise.sg . All Rights Reserved.
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CONTENTS

p2 What is the Impact of Population

Growth on Property Prices?

p9 Singapore Property News This Week

p13 Resale Property Transactions

(January 7 January 13 )

Welcome to the 192 th edition of theSingapore Property Weekly .

Hope you like it!

Mr. Propwise

FROM THE

EDITOR
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SINGAPORE PROPERTY WEEKLY Issue 192

Page | 2Back to Contents

By Gerald Tay (Guest Contributor)

Heres the burning question this article will tryand answer: Will a 6.9 million population by2030 support property prices or increase itexponentially?

To answer it we will analyse the historicalprice indices of the Singapore privateresidential property market and compare thatto population growth.

This article aims to help investors, buyers andsellers to:

1. Do their own analysis when buying or selling

2. Understand in-depth the historicalproperty market trends

What is the Impact of Population Growth on Property Prices?


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3. Manage risks rather than predict unknownfuture

4. Make better property investment

decisionsThe charts and tables are based on publicinformation collected and collated fromvarious sources, including:

Urban Redevelopment Authority (URA)

Monetary Authority of Singapore (MAS)

Singapore Statistics (Singstat)

Some notes for readers

The tables below show real propertyreturns after consumer inflation versus annualpopulation growth rates over a 38-year period(1975 to 2013)

Over a 38-year period, the populationgrowth rate is 2.3% per annum.

Over a 38-year period, property pricegrowth is 7.8% per annum.

What mid to long term means depends

on each individual buyers preference.

The ONLY period that produces a highproperty price growth rate from7.5% to14%was during Singapores rapidindustrialisation years of 1975 to 1996.


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From peak to peak, the years after 1996produces negative or very low returns for property buyers, even with populationgrowth exceeding 2% per annum.

The table above proves a simple point entering the market close to the bottomwill always provide generous returns for property buyers regardless of population

growth. From 1998 to 2000, populationgrowth was at a low of 1.7%, yetregistered a high return of 22.57% for buyers

Regardless of a high 3% populationgrowth rate in the period from 2008 to2009, property prices plummeted 28%after inflation.


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Even with a population growth of 2.33%between year 1996 to 2000, propertyreturn was a negative 7.14% comparedwith other periods.

Mid-term holding-wise, property returnswas unjustifiable even with populationgrowth above 2% per annum betweenfrom 2000 to 2013.

Long-term property holding provesdisastrous for buyers who enter at or close to peak market after 1996. PropertyReal Returns were negative even with anincreasing population growth rate as highas 2.5% per annum.

Summary Points

1. Population growth has NO directcorrelation whatsoever with propertyprices.


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2. Singapore property prices are highlydependent on a confluence of complexfactors such as government policies,monetary policies, economic conditions

(internal and external), monetary supply,bank lending curbs, interest rates, etc.

3. Large property price growth occurredprimarily in the early years of rapidindustrialisation from 1975 to 1996. After

1996, Property Real Returns havediminished regardless of populationgrowth.

4. From 2015 to 2030, a population target toreach 6.9 million population represents agrowth rate of 1.5% per annum. It is one

of the lowest since Singaporesindependence. This growth rate may evenbe capped lower with a tightening of foreign workers and productivity policies.

5. Future land use for both infrastructureand housing have already been allocatedand planned for a future 6.9 millionpopulation. Buyers who bought properties

at or close to the 2013 peak market willhave bought into far future prices.

Who will win in the future propertymarket?

For sceptical readers, you can say Im wrong

about the lack of correlation between propertyprices and population growth. Before Improven wrong and you start jeering away, letme point this out: smart property buyers willwin on either outcome for the future propertymarket regardless of which occurs:

First outcome: Going forward to 2030,property prices rise exponentially due to the6.9 million population,


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S GA O O 192


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You find them showing off photos of their latest branded purchases, expensive dine-insand luxury holidays to gain likes inFacebook and tell the world they have

arrived.

They buy overpriced properties at adeceivingly low price quantum but with highPSFs. Those slightly richer buyers dabble inmid to high-end luxury investment properties

to emulate the rich.3. Rich Speculators

They believe land is limited and they belongto an all-exclusive club where their spouseseat beluga caviar instead of salmon roe. Theyare primarily buyers who dabble in highlyspeculative high-end properties to add to their collection of exotic trophies.

They may be one of those buyers who boughtSentosa Cove properties and have lost half

the value today. Certain rich people haveeccentric habits. In particular, Sentosa Covelanded-property owners have paid manymillions to ogle at container ships and breathe

smelly fumes as they sail by their sea-frontproperty.

But then again, they are rich. So why shouldwe care if they can afford to lose millions or how they spend their money on worthless

toys. Its peanuts for them anyway.By guest contributor Gerald Tay, who is thefounder and coach at CREI Academy GroupPte Ltd , an organization dedicated toempowering retail property investors withsmarter investing philosophy and strategies.

He is a full-time investor with over 13 years of solid experience in building his wealththrough Property Investment and is financially wealthy today.

SINGAPORE PROPERTY WEEKLY I 192
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Singapore Property This Week


Residential

Resale v o lu m es o f p r iv ate h o m es

increased 8.4% in H2 2014

In H2 2014, 2,528 more private homeschanged hands than in H1 that year.

According to DTZ, there was an 8.6 percentincrease in the resale volumes of privatehouses. Lee Nai Jia from DTZ said that assellers adjusted their prices to fit demand,resale volumes increased. Lee added that theweak rental market has pushed home ownersto sell their properties. Ong Choon Fah fromDTZ believes that resale volumes willcontinue to increase. On the other hand, newsales by developers fell by 36 percent to2,520 units in H2 from H1 last year. Despite

that, Ong believes that developers would notbe cutting prices any time soon as they havereserves to tide through the lull sales period.

(Source: Business Times)

Land b ids fo r EC s i t e h i t s a new low

Land bids for an executive condominiumlocated at Sengkang have been the lowestsince 2011, according to the Business Times.Sim Lian won the bid for the site near

Anchorvale Crescent for $280.04 psf ppr. Thiswas lower than the $367 psf ppr bid that wasmade for a neighbouring site in February2014. The Anchorvale Crescent site had onlymanaged to attract 3 bids.

SINGAPORE PROPERTY WEEKLY I 192


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Christine Li from OrangeTee said that the 30percent mortgage service ratio cap onexecutive condo units have dampeneddemand for executive condo units by

developers. As such, developers have beenless willing to bid for executive condo landsites. The recent increase in executive condolaunches in Punggol and Sengkang have alsoadded on to developers negative sentiments,said Li.


HDB resa le pr ices down by 1 .5% in Q4

In Q4 last year, resale prices of HDB flatsdropped by 1.5 percent from Q3.Nonetheless, resale transactions of HDB flatsincreased by 2.7 percent to 4,635 units fromOctober to December last year. According toHDB, resale prices have fallen by a total of 6percent by the end of 2014. Eugene Lim fromERA believes that the fall in HDB resale

prices and transaction volumes was due tothe implementation of cooling measures suchas the Mortgage Servicing Ratio. Lim saidthat the increase in supply of new Built-To-

Order flats and Sale of Balance Flats havealso impacted resale volumes of HDB flats.Nonetheless, resale volumes are expected toincrease in 2015, according to marketexperts. Not only so, Ong Kah Seng fromRST Research added that resale flat prices

are expected to fall as the demand for privatehouses and executive condominiumsincreases. HDB rentals are expected toincrease by 7 percent in 2015, said Ong.


Shor t - t e rm ren ta l po l i cy fo r p r iva t e homes under review

The Urban Redevelopment Authority (URA)will be reviewing its policy on short-termrentals of private homes.



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Under URAs guidelines, private homes haveto be rented out for no less than 6 months tosafeguard the living environment of residents.While some believe that a relaxation in the

short-term rental policy will benefit touristsand home owners, Minister for NationalDevelopment, Khaw Boon Wan, said thatleasing private homes on short-term basis willraise concerns about noise and security.Donald Han from Chesterton Singapore said

that vacancy rates for private homes haveincreased to about 8 percent since Q3 2014,and be predicts that more private homes willbe left vacant in the next 12 to 18 months.Han added that he believes there will be a 10percent increase in vacancy rates of privatehomes in the next year.


Commercial

JTC to provide more de ta i led renta l da ta

Rental price indices have been reviewed byJTC to provide more detailed data for businesses. JTC had increase the number of industrial price and rental indices from 6 to24, according to the Business Times. Thiswould include price and rental indices for single-use factory space, and sub-indices for multiple-users factories. Furthermore, theindices would be expanded to cover moreareas. JTC have also reclassified propertiesbased on their location, remaining tenure andland-use zoning so as to improve industrialprices and rental indices. Following thelaunch of the Fair Tenancy Framework, these

changes have since been in effect.(Source: Business Times)



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In d u s t r i al p r o p e rt y p r i c es f al l b y 0 .1 % i n

Q4 2014

Industrial prices and rentals have fallen by 0.1percent and 0.6 percent in Q4 last year,based on the updated price and rental indicesby JTC. Since Q4 2014, more geographiesand property types have been included in thecalculation of industrial price and rentalindices. According to JTC, multiple-user factories saw a 4.4 percent year-on-year increase in the previous year. Also,occupancy rates remained at 90.9 percentlast year. JTC believes that industrial pricesand rents will continue to moderate in 2015as an ample supply of industrial space isexpected to be released from 2015 to 2016.However, Chia Siew Chuin from Collierspredicts that industrial property prices maydecrease by up to 3 percent this year.


Office rents up by 9 .8% in 2014

According to the Urban Redevelopment Authority (URA), office rents increased by 9.8percent while prices for office units increasedby 4.5 percent in 2014. Particularly, in Q4 lastyear, office rents increased by 1.7 percentafter a 2.6 percent increase in the Q3. On theother hand, rents and prices increased by 0.9percent in 2014 for the retail market.Nonetheless, market experts believe thatretail rents will fall this year due to decreaseddemand. However, the office market shouldcontinue growing, said experts. Alice Tan fromKnight Frank said that prime office rents arelikely to experience slower growth as demandfor rental units in the central business districtfalls. She predicts that the annual growth inthe office market will be around 5 to 7percent.




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Non-Landed Residential Resale Property Transactions for the Week of Jan 7 Jan 13

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

PostalDistrict

Project NameArea(sqft)

TransactedPrice ($)

Price($ psf)

Tenure

3 QUEENS 1,195 1,438,000 1,204 99

5 THE ROCHESTER 840 1,230,000 1,465 99

5 DOVER PARKVIEW 936 1,000,000 1,068 99

9 NOMU 1,389 3,380,000 2,434 FH

9 URBAN RESORT CONDOMINIUM 2,120 4 ,902,000 2 ,312 FH




10 BELMOND GREEN 1,270 2,077,000 1,635 FH

10 HOLLAND MEWS 904 1,450,000 1,604 FH10 RICH MANSION 1,765 2,400,000 1,360 FH

11 PAVILION 11 958 1,610,000 1,681 FH

11 HILLCREST ARCADIA 1,970 2,000,000 1,015 99

14 THE WATERINA 1,356 1,628,000 1,200 FH

15 MANDARIN GARDEN CONDOMINIUM 1,572 1,400,000 891 99

16 BLEU @ EAST COAST 1,173 1,300,000 1,108 FH

16 KEW GREEN 3,025 2,080,000 688 99

17 THE GALE 1,044 1,080,000 1,034 FH

18 NV RESIDENCES 797 860,000 1,080 9918 THE TROPICA 1,518 1,250,000 824 99

18 CHANGI RISE CONDOMINIUM 1,130 905,000 801 99

18 THE TROPICA 1,238 968,000 782 99

19 PALM GROVE CONDOMINIUM 1,496 1,520,000 1,016 999

19 CHILTERN PARK 1,249 1,250,000 1,001 99

PostalDistrict

Project NameArea(sqft)

TransactedPrice ($)

Price($ psf)

Tenure

19 EVERGREEN PARK 1,173 890,000 759 99

20 THE GARDENS AT BISHAN 1,152 1,160,000 1,007 99

21 THE CASCADIA 581 1,045,000 1,798 FH

21 SYMPHONY HEIGHTS 1,152 1,100,000 955 FH

21 HIGH OAK CONDOMINIUM 1,216 1,120,000 921 99

21 SPRINGDALE CONDOMINIUM 1,130 1,030,000 911 999

23 CASHEW HEIGHTS CONDOMINIUM 1,647 1,508,000 916 999

23 GUILIN VIEW 1,701 1,360,880 800 99

25 CASABLANCA 926 818,000 884 99

26 MEADOWS @ PEIRCE 1,195 1,300,000 1,088 FH27 ORCHID PARK CONDOMINIUM 958 725,000 757 99

27 YISHUN EMERALD 1,399 1,030,000 736 99



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