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Singapore Real Estate Market Review January 2008
real estate market review january 2008 Download this article
January 2008 started with a cocktail of ‘not-so-good’ and outright bad news for the Singapore real estate market. Developers holding back launches of new home projects and the roller-coaster performances by the stock markets the world over did little to calm the lingering jitter already felt since late last year. The Government of Singapore Investment Corporation (GIC) came out in the open to explain its decision to buy into UBS and hinted that it was ready to crack its huge war chest for more established banks in distress. The GIC statement might well be the strongest signal so far for an imminent meltdown in the global financial market.
A fierce debate is now on whether the US is already in a housing-led recession or is going into one. In fact, across the US, individuals and businesses are tightening their belts in the wake of worsening problems in the housing market and air-tight credit.
A) Uncertainties reign in the larger market
(A.1) Year of the Rat or Year of the Dread?
The second half of 2007 was marred by the US sub-prime housing crisis which has thus far appeared to be a bottomless pit. The credit markets are still saddled with bad debts. With massive write-offs of over US$40 billion by banks and lenders in general, the trouble looks set to be dragged into 2008.
In response to the distressed situation, the US Federal Reserve, in three quick and decisive moves in January 2008 itself chopped interest rate down to 3% in order to prop up consuming spending. If the situation does not turn around by March, the Fed will make further rate cuts.
The threat of recession, inflation and even stagflation cannot be dismissed. It appears that 2008 will be amongst the most challenging market environments facing the US and the whole world in many years.
(A.2) US at the brink of recession while home foreclosures surge
An industry report in the United States showed that 2,200,000 homes or over 1% of all households in the US are facing the threat of widespread foreclosures.
In terms of percentage, the number represents 75% increase in repossession of homes by the lenders compared with a year earlier. However, the December figures showed a gloomier picture. A total of 215,749 foreclosure filings were recorded, making a 97% increase from the same month in 2006.
As it is, the US economic growth in the fourth quarter of 2007 was visibly down with only 0.6% growth, the worst performance since 2002. Manufacturing, housing, employment and consumer spending all turned in ineffectual performances in the final quarter of 2007. For the whole year, the US economy grew by only 2.2%, the weakest performance since 2002.
In 2007, US home prices in 10 major metropolitan areas fell a record 8.4% and there is still no sign of bottoming after 11 consecutive months of decline.
(A.3) US can absorb the massive write-downs
The raging Asian economies are expected to slow down this year as a result of the financial turmoil and a flagging housing market in the US which remained the largest buyer of Asia’s exports.
However, some optimists are predicting that US growth may hit 2.5% this year, up from last year's 2.3% due to better exports resulting from cheaper US dollars.
They argued that housing crisis alone cannot induce a recession, noting that previous US recessions had been accompanied by oil price spikes, runaway inflation and tight monetary policy.
US banks are sufficiently well-capitalised to absorb the huge write-downs of more than US$40 billion. It is not a situation like Asian banks during the 1997 Asian currency crisis.
(A.4) A recession in the US may help ease inflation in Singapore
As a nation heavily reliant on imports of energy and food, Singapore cannot avoid importing inflation from her trading partners. As such, inflation rate could hit a high of 6% in the first three months.
The quantum of the recent taxi fare hike, food price and oil price increases are all much higher than earlier expected. With 18% to 25% upward revision, the increase in Annual Values of real estate (including all types of properties such as residential, commercial and industrial properties) is significantly higher in 2008.
The consumer price index (CPI) surged 4.2% in November 2007 year on year, a 25-year high. However, the irony is that a probable US recession this year could ease inflationary pressure with demand for essential goods and oil going lower as a result.
(A.5) Government’s objective to stabilise property prices
Minister for National Development Mah Bow Tan has acknowledged that the government had taken several steps to try and cool down speculative activity in the property market including the withdrawal of the Deferred Payment Scheme in September 2007 which was initially aimed at stimulating demand for housing during bad years.
However, the current property market jitter cannot be attributed to those cooling-off measures as the market had been affected by external factors beyond the authorities’ control, chief of which the lingering US sub-prime mortgage crisis which consequently induced the global financial market turmoil.
He said that news of ample supply of private residential properties in the next couple of years had also contributed to the current market lull as buyers choose to wait for choice purchase and more competitive prices.
The Minister assured the public that the government is keeping a very close tab on the real estate market and will be ready to tweak the policy levers anytime to ensure stability in the market.
(B) News on property sales in Singapore
(B.1) Dented sentiment causes developers to delay launches
Developers are resigned to the dented market sentiments in the aftermath of the sharp stock market correction in January 2008 and the growing fear of a recession in the US which continue to sideline prospective buyers. Many high profile launches have been shelved for the time being.
In fact, the consortium which is developing Marina Bay Suites has shelved the pre-Chinese New Year launch of its signature project at the Marina Bay area.
Keppel Land, one of the components in the consortium which owns Marina Bay Suites is also re-scheduling its other property launches to mid-2008. The planned delay involves the next phase of 400 units at the Reflections at Keppel Bay, The Tresor and Madison Residences.
City Developments also said it might consider short-term leases for Lucky Tower, which it acquired through a collective sale in May 2006.
Other developers had said that they would monitor global markets to see how things would develop before they launch any project.
So far, only Waterfront Wave, jointly developed by Far East Organisation and Fraser Centrepoint, has been launched to lukewarm response. Only three out of the total nine tower blocks were opened for the weekend preview and half of the 120 units on show were reportedly sold at between $750 and $800 psf. According to the developer, one of the units was sold at the highest price of $874 psf.
(B.2) 2008 unlikely to repeat the feat of last year’s vintage
A total of 14,826 new homes were sold in the whole of last year. The record number was 3,679 homes more than the previous year which saw 11,147 new home transactions.
2007 home sale |
2006 home sale |
Increase in sale |
14,826 |
11,147 |
3,679 |
Close to 90% of the new home deals last year were done in the first three quarters. Sales were reduced to a crawl in the last quarter of 2007 after the revelation of the severity of the US sub-prime mortgage crisis.
See below for property transactions in the four quarters of 2007. In the fourth quarter, the transaction of new homes was reduced to a trickle – not even half of the previous quarter.
Sale Volume |
|
Sale Volume |
|
1st quarter | 4,783 |
3rd quarter |
3,450 |
2nd quarter | 5,129 |
4th quarter |
1,464 |
Prices of new homes also fell and price gaps within each category of new homes narrowed.
The US housing crisis aside, another big factor causing the dip in confidence is the high asking prices that have gone beyond reasons. In 2007, a record 200 new homes were sold at more than $4,000 per sq ft (psf). This is a price level never reached in previous years.
As a result, a ‘tug-of-war’ has begun for many new home projects where the price gap between what developers are asking for and what buyers seem willing to pay is almost ‘unbridgeable’.
The waiting game is on and a more cautious mood among buyers may persist for the whole year; unless and until the global financial situation becomes clearer.
(B.3) Private home prices rose 6.6% in Q4
The URA price index for private residential property rose 6.6% in the last quarter of 2007. It was a shade lower than the 8.3% growth registered in the July-September period.
For the whole of 2007, prices for private residential property rose 31% - which exceeds four times the nation’s GDP growth of around 8%.
One of the reasons for the slower fourth quarter growth was the tentativeness of buyers after the government withdrew the Deferred Payment Scheme in September 2007 which was the main cause of the speculative froth seen in the first half of 2007.
Other recent measures taken by authorities to prevent a property bubble from ballooning included raising development charge (DC) percentage from 50% of market value to 70% (by itself a 40% increase) and making drastic changes to Collective Sales Laws to make it tougher for developers to buy older apartments collectively.
(B.4) Private home prices will ease in 2008
In the fourth quarter of 2007, the price increase was led by non-landed homes in outside central region (OCR) where the index showed an increase of 7.5%.
Prices of non-landed private residential properties went up by 7% and 7.3% respectively in the Core Central Region and Rest of Central Region.
Below is a quarter-on-quarter comparison price growth of the three geographical regions.
|
Third quarter |
Fourth quarter |
Core Central Region |
8.3% |
7.0% |
Rest of Central Region |
7.9% |
7.3% |
Outside Central Region |
7.9% |
7.5% |
Prices are expected to slide across the board as about 41,600 new private housing units (out of the 65,400 in the pipeline) are expected to be completed between 2008 and 2010.
About 38,000 units in the supply line (or 58%) have not been sold by developers yet. Besides, this does not take into account new sites that will be made available for developers through the Government Land Sales (GLS) programme, which has been gaining momentum since late last year as developers’ choice instrument of land-banking.
(B.5) Market uncertainties depressed sub-sale activities towards end of 2007
Across the island, sub-sales as a percentage of total private housing sales fell from 14.4% in the third quarter last year to 10.7% in the final quarter.
In the Core Central Region (CCR), where speculation was the hottest, the sub-sale percentage fell from 24.8% to 18.6% over the same period. The drop could be attributed to uncertainty of the global financial markets as well as the withdrawal of the deferred payment scheme in September 2007.
(B.6) New home sale dropped
New home sales, which had averaged 1,480 a month between January and September, fell to below 600 per month in October and November last year.
In December 2007, only 305 new homes were sold, the lowest number since June 2007. Mid-tier homes and homes at suburban suffered the biggest drop with only 56 mid-tier units sold in December, 80% less than in November.
For suburban projects, the number of units sold fell to 60, a 35% drop in volume.
However it is a different story in the prime city centre. New home sales jumped 36% to 175 units, boosted by a bulk purchase of 97 units in Goodwood Residences at a median price of $3,200 psf.
(B.7) Demand for landed properties expected to rise
Demand for landed homes should remain strong and upside on the prices certain. This is despite the prices for landed homes having already risen 25% to 27% last year.
There are three main reasons why landed properties should still be favourites among home buyers:
- Firstly, the demand for landed homes will continue to be shored up by en bloc sellers who are displaced after handing over vacant possession of their properties.
- Secondly, the future supply of landed properties will be restricted to about 4,451 units over the next three years.
- And last but not least, when compared to prices of high-end condos, landed homes still lag behind by a long distance.
(C) Rents should sustain in the first half of 2008
(C.1) Rents of private homes beginning to go down
Data from the Urban Redevelopment Authority released on 25 Jan 2008 showed that rental rises were not as sharp as before for condos in key areas.
Rentals for non-landed property in the coveted core central region, which covers Tanglin and Bukit Timah, for instance, grew only 5.3%, less than half the rate of 12.2% achieved in the third quarter.
In the Rest of the Central Region (RCR), rental growth slid from 11.9% to 8.8%, and Outside the Central Region (OCR) rental growth also slid from 11.8% to 8.5%.
Overall rents of private homes grew 6.8% in the fourth quarter, slowing from an 11.4% rise in the previous period. However, for the whole of 2007, private home rentals still registered a strong surge of 41.2%.
Looking six months ahead, rents of private homes should hold firm or even rise by a shade due to a sustained growth of the domestic economy.
(C.2) Short supply of private homes in first half of 2008 may sustain rents
Despite the above figures, there is a sole factor that could prop up rents for private homes, i.e. the small stock of newly completed homes in the first half of 2008.
In 2007, the stock of completed private homes increased by just 1,448 units - the smallest rise in at least 12 years. The stock had increased by 4,008 units in 2006, 7,453 units in 2005, and 10,969 units in 2004.
The situation is more severe in the prime areas where expats are moving out in droves from the prime districts to Rest of Central Region (RCR) to take up residence there. This has caused a steeper rise in non-landed rents in RCR compared to the CCR.
With many private residential projects likely to be completed only in late 2008 and 2009, rentals for non-landed properties should increase further in the first half of the year.
(C.3) Singapore occupancy costs up 106% in 2007
A recent survey by an international property consultancy firm showed that occupancy costs in Singapore have jumped 106.4% to US$16,220 per workstation per year over 2007. The island city is now the 13th most expensive city to work globally. Last year, it occupied a lowly 55th place.
Occupancy costs include the average total cost of leasing net usable space of 10,000 square feet within a prime CBD location. The costs include rent and outgoings, such as maintenance costs and any charges normally payable by the occupier. Each city is then ranked on a 'per workstation' basis.
The trend is expected to continue in Singapore with the depletion of office stock in the CBD as several office buildings undergo redevelopment and/or upgrading and no significant new supply of office space till 2010. However the economic slowdown in Europe and the US may bring down the occupancy costs in Singapore.
(C.4) Increase in Retail space in Orchard Road to thwart rent rise by end 2009
Almost two million square feet of new retail gross floor area is set to open in the area between now and 2011. The addition of such space in Orchard Road will definitely soften retail rents along the shopping belt.
Most of it will come from brand new malls, with two - Ion Orchard and Orchard Central - to be ready this year. It has been a decade since any new shopping mall is built at Orchard Road.
With more new malls coming on stream, landlords of older properties will bear the brunt. In fact, monthly rents along Orchard Road have slowed to 2.6% to hit an average of $45.50 per sq ft at the end of last year.
As such, prime retail rentals will rise by a much smaller percentage this year, unlike last year's whopping 22.1% increase.
For this year, 930,000 sq ft of new shops will be made available for rent in Orchard and Scotts Roads. Besides the new malls, additional space such as extensions to Paragon Shopping Centre, partners' Shopping Centre and the adjacent Hotel Phoenix will also add to the supply. The table below shows the upcoming new space:
Location | Gross Floor Area added | Estimated date of completion |
Ion Orchard | 900,000 sq ft | 2008 |
Orchard Central | 370,000 sq ft | 2008 |
Lend Lease | 350,000 sq ft | 2009 |
Youth Park | 40,000 sq ft | 2009 |
Mandarin Gallery | 160,000 sq ft | 2010 |
partner’s Shopping Centre | 100,000 sq ft | 2011 |
International Building | 20,000 sq ft | Not known |
Paragon | 11,600 sq ft | 2008 |
Total new area: | 1,951,600 sq ft |
(C.5) Demand for industrial space expected to stay strong
Continued presence of multi-national companies (MNCs) will hold up demand for industrial space this year. As of now, there are no signs yet to show any withdrawal of MNC facilities in Singapore. The persistent shortage of office space across the island will help to keep up demand for light industrial space.
As such, overall occupancy rate for industrial space is expected to maintain at last year’s high level or may even rise slightly this year.
However, demands for warehousing space may ease after the supply of 702,000 sq m of logistics and distribution space is available in the next two years.
(D) News on En bloc Sale
(D.1) Fourth quarter 2007 en bloc sale dipped
In the final quarter of 2007, only $1.28 billion of residential collective sale sites changed hands, nowhere near the $11.2 billion in the first nine months. The transactions included the following:
December 2007 Collective Sale Transactions
Districts | Project Name | Psf price | Total |
9 | Welkin Mansions | - | $12,034,572 |
8 | Hertford Apt | - | $12,034,169 |
10 | Draycott Eight | $2,600 psf | $7.55 mil (Each) |
November 2007 Collective Sale Transactions
Districts | Project Name | Psf price | Total |
10 | Westwood Apt | $2,525 psf | $435 mil |
11 | Hill Park | - | $90 mil |
19 | Kovan Court | $734 psf | $1.22 mil (Each) |
8 | Mergui Court, Mergui Lodge, Northern Mansions, The Mergui, and Norfolk Court | $580 psf | $120 mil |
12 | View Point Mansion | - | $1.375 mil (Each) |
October 2007 Collective Sale Transactions
Districts | Project Name | Psf price | Total |
10 | Ban Guan Park | - | $2.2 mil (Each) |
10 | The Aspine | $1,870 psf | $138 mil |
(D.2) Pearlbank Apartments up for $750 million
One of the oldest condominium, Pearlbank Apartments at Pearl's Hill has been put up for collective sale for $750 million or $1,456 psf ppr, inclusive of $143.3 million in development charge for realising the allowable plot ratio of 7.2 in the Master Plan 2003 and in differential premium for extension of state lease to its full 99-year tenure.
The 38-year-old project is sitting on a site of 7,653 sq m and it comprises 280 apartments and eight commercial units and more than 80% of the owners have already consented to the collective sale. Most of them are expected to enjoy 60% in collective sale premium. Based on an average unit size of 1,200 sq ft, 500 new apartments can be built on the site.
(D.3) Collective sale of Regent Garden rejected by STB
The Strata Titles Board (STB) has ordered the collective sale of Regent Garden to be cancelled as the Board ruled that the $34 million sale had not been done in good faith.
The majority owners of the 31-unit West Coast Road condominium site will contest the ruling at the High Court. Likewise, the buyer Allgreen Properties would contest the ruling.
The Board might have also taken into consideration the wrong calculation of the Development Charge (DC) to be payable by the developer. Besides, there was an allegation that the buyer paid some minority owners more money as a means to entice them to join the collective sale.
The STB also found that the valuation for the collective sale was way below the true market value. And therefore, the final sale price of $34 million, which was based on the valuation report, was too low.
(D.4) Minority owners at Horizon Towers challenging STB
Nine minority owners, who have vehemently objected the collective sale of Horizon Towers from the onset, have banded together to appeal against a Strata Titles Board’s ruling made last month.
The action will further delay the legal completion of the much-maligned collective sale, which was inked on 12 February last year, as all the rest including the developer, will have to wait for the outcome of the appeal which will only be heard on 1 February 2008.
The minority owners are appealing against STB's decision on the grounds that the board erred in law by approving the sale and ordering minority owners to be bound by a sale and purchase agreement they did not endorse.
(D.5) Finland Gardens en bloc deal rejected by STB
The Strata Titles Board (STB) had ruled against the collective sale application of Finland Gardens in Siglap last November citing failure to meet statutory requirements.
The Board said that the consent obtained had fallen short of the statutory 80% majority and that there was no good faith in the way the sale price was finally secured.
At the request of the buyer, the majority owners filed an appeal with the Supreme Court in December against the STB's ruling. On 17 January this year, the buyers Sing Holdings and a joint venture partner applied to the Supreme Court to be included as a party to the appeal.
The eight owners who objected to the sale had complaint about the way the sale price was negotiated. They felt the Sale Committee could have asked for a higher price from the eventual buyer, Sing Holding, instead of asking it to match a competing offer from another bidder.
If the collective sale comes to fruition, each owner would stand to gain about $1 million to $1.27 million, depending on square footage.
(E) Foreign interest in commercial buildings in Singapore
(E.1) German SEB Asset bought stake in 12 floors of 79 Anson Road
SEB Asset Management from Germany had paid $215 million for a stake in 12 floors of 79 Anson Road office building. The unit price for the 117,423 sq ft of freehold office space works out to be $1,831 per sq ft (psf) of strata area.
The remaining 45 per cent of 79 Anson Road is owned by the Central Provident Fund Board.
The seller, Ferrell Asset Management, had earlier bought the stake for $90 million in January 2006 and the sale price is a 139% gain in just two years.
The buyer, SEB Asset Management from Germany also bought 12 floors of office space in Springleaf Tower at Anson Road for $2,088 psf of net lettable area in October 2007. And in April 2007, the group acquired SIA Building for about $526 million or $1,783 psf.
(E.2) Singapore Power Building sold for $1b to overseas property fund
Singapore Power Building at Somerset Road has been sold for $1 billion to an overseas property fund managed by Singapore’s Pacific Star group. The sale price works out to be around $1,820 psf of the total net lettable area (NLA) of about 550,000 sq ft.
Previously known as PUB Building, the 17-storey building is sitting on a leasehold land with a remaining lease of about 66 years.
The current gross floor area (GFA) of the building exceeds the allowable plot ratio under the 2003 Master Plan and as such it will not be possible for the new owner to redevelop the building. The investment potential of the building is lease renewals or partial change-of-use to include retail areas on the ground floor.
(F) News on Government Land Sale (GLS) Programme
With the expectation of more demand for mass-market homes and the current bearish market, developers are likely to turn to the Government Land Sales (GLS) programme, rather than private collective sale, to enhance their land banks.
In the next few months, the developers should be kept busy by the offering of more plum 99-year private condo sites in mature public housing estates near MRT stations.
(F.1) Second batch of hybrid Private HDB flats launched
The second batch of public housing under the Design, Build and Sell Scheme (DBSS) went on sale on 5 January 2008 at its Boon Keng Road site. The first batch of such public flats at Tampines was launched last year to overwhelming response. The prices of the different flat types are as follows:
Prices | Quantity | |
Three-room flats | $349,000 - $394,000 | 72 units |
Four-room flats | $523,000 - $597,000 | 168 units |
Five-room flats | $536,000 - $727,000 | 474 units |
By the end of day one, a total of 8,000 viewers thronged the show flat with 1,100 of them impressed enough to hand in applications for the 714 hybrid private HDB flats in Boon Keng.
Another 2,500 such hybrid private HDB flats are being planned for Ang Mo Kio, Bishan, Toa Payoh, Simei and Bedok in the coming months.
(F.2) UOL and joint venture partner clinched Simei site
Main-board-listed UOL Group and its joint-venture partner Peak Century beat two rivals with the top bid of $236 million or $296 psfppr to clinch a Simei residential site.
The 99-year leasehold site - with a gross floor area of 797,434 sq ft - attracted much fewer bids than a similar suburban Woodlands site in November 2007. However, the bid price of $296 is higher than the $232 psf fetched by the Woodland site, probably due to Simei being regarded as a better location.
The Simei site is near Simei MRT station, Eastpoint Mall and schools. The site's new development is likely to sell at between $700 psf and $750 psf.
(F.3) Ho Bee-IOI joint venture awarded Sentosa’s Pinnacle site
The joint venture partnership of Ho Bee Investment and Malaysia's IOI Properties outbid two other developers with a cheque of $1.097 billion (or $1,822 psf ppr) for The Pinnacle Collection site at Sentosa Cove. The record winning bid is 14% above the reserve price of $1,600 psf ppr. It also beat the previous benchmark of $1,799.78 psf set by SC Global for Beachfront Collection.
Escalating cost of construction has been cited as reasons for the absence of the other major property players.
The 231,676 sq ft site has a 2.6 plot ratio and a height limit of 20 storeys, the tallest allowed in Sentosa Cove. The developers will build 280 units comprising a mix of three- and four-bedroom units as well as penthouses.
(F.4) Transitional office site fetches only one bid
Only one bid of $7.8 million offered by an unheralded construction company Mezzo Development, was received at the close of the public tender by the Urban Redevelopment Authority (URA) for a temporary office site in Aljunied Road.
The offer was far lower than the $30 million earlier predicted by partners. In fact, the $7.8 million offer works out to just $38.37 psf ppr - close to the level of some industrial space.
The 1.88 ha site was the fourth transitional office site offered by URA. Last week, the third site at Mountbatten Road was awarded to the same company which also put in the top bid of $69.17 psf ppr.
The lukewarm response to the recent tender exercises for transitional office sites may be due to the lingering worries over a probable recession in the US. Moreover, the rising construction costs may have deterred many cash-strapped developers.
(F.5) West Coast seafront condo site launched
THE Urban Redevelopment Authority (URA) has launched a 99-year-leasehold seafront condo site next to Blue Horizon condo for public tender.
The site can be developed into a new condo up to 36 storeys high with full view of the sea and the West Coast Park directly opposite it. It is within 5 minutes’ drive to shopping and entertainment attractions at VivoCity, St James Power Station and Sentosa.
The site is also near National University of Singapore, one north, and Science Park. So a new condominium should be able to attract high-income professionals, researchers and engineers working at the nearby institutes and facilities.
The site can be developed into a condo with about 300 units averaging 1,250 square feet.
(F.6) Yishun condo site facing reservoir launched
The Housing & Development Board (HDB) has released a 99-year-leasehold condo site at Yishun avenues 1 and 2 for public tender. The site is facing Lower Seletar Reservoir and is near Singapore Orchid Country Club/Golf Course.
Besides the advantage of having the reservoir view and the lush greenery of the country club, the site also enjoys the proximity to Khatib MRT Station and as such the offer bids should be in the region of around $200 to $300 per square foot (psf) of potential gross floor area.
The 2.7 hectare site has a 2.1 plot ratio which allows a 24-storey height and about 500 apartments averaging 1,200 sq ft.
New freehold condo units in the vicinity such as The Sensoria and Northwood were sold at prices ranging from $600 psf to $650 psf. The new condos on the site should be able to fetch $600 psf to $650 psf when launched.
(F.7) Record 20 bids for Jalan Sultan site
Despite recent lull in state land tenders, the Urban Redevelopment Authority (URA) had received a record 20 bids in public tender for a 15,200 sq ft site including 17 two-storey conservation shophouses at Jalan Sultan.
The highest bid of $14.8 million or $973.63 psf also exceeds the reserve price of $7.8 million by about 90%. It is estimated that the cost for each shophouse unit could be around $1.3 million, considering renovation and restoration costs.
(G) News on HDB Resale Market
(G.1) Higher Cash-Over-Valuation (COV) fetched by HDB flats
In the fourth quarter of 2007, a total of 269 HDB flats were sold for $500,000 or more. This is a 69% increase over the 159 flats sold for more than $500,000 each in the third quarter. And 12 resale flats were transacted at $700,000 or higher.
Larger HDB flats in central locations are commanding higher premium than before. The $890,000 transacted price for a 21st-storey executive flat along Mei Ling Street in Queenstown is a case in point. Last November, another executive flat along the same street went for a then-record $780,000.
Such a trend will push up demand for entry-level private homes for two reasons:
- The price gap between public housing and private homes has narrowed as a result of higher COV; and sellers of such flats will have the financial muscle to buy mass market private homes.
- Secondly, new homeowners could also consider a private condo, rather than a resale flat for their first home, as there would be very little cost savings when buying a resale flat.
The detailed breakdown of HDB flats sold for more than $500,000 in the 3rd and 4th quarters of last year is as follows:
Price range | 4th Quarter Sale |
3rd Quarter Sale |
$500k – $599k | 207 |
134 |
$600k – $699k | 50 |
24 |
Above $700k | 12 |
1 |
Total | 269 |
159 |
(G.2) Quantity of HDB resale transactions down but more larger flats sold
The number of HDB resale transactions had fallen to a new record low in 2007 - with only 29,436 transactions. This happened as buyers started to resist higher cash-over-valuation (COV).
The whole year transactions of all resale flats are as follows:
2007 | 1-room |
2-room |
3-room |
4-room |
5-room |
Executive |
Total |
Q1 |
5 |
67 |
1,908 |
2,365 |
1,402 |
511 |
6,258 |
Q2 |
3 |
65 |
2,390 |
3,091 |
2,305 |
854 |
8,708 |
Q3 |
6 |
65 |
2,179 |
2,833 |
1,901 |
738 |
7,722 |
Q4 |
7 |
80 |
1,945 |
2,525 |
1,667 |
524 |
6,748 |
The transaction figure was lower than the previous lowest record of 29,723 set in 2006.
After some strong growth in the second and third quarters, the stock-market jitters in the fourth quarter caused some prospective buyers to stay on the fence, causing resale transactions in the last three months of 2007 to fall 13% to 6,748.
However, on the whole, a healthy economy actually propelled the resale prices 17.5% higher for the whole of last year. In the fourth quarter, HDB resale prices rose 5.7%, lower than the increase of 6.6% in the third quarter.
In the fourth quarter, 86% of all resale transactions required COV, up from 80% in the third quarter. The median COV amount also increased to $22,000 in the last three months of the year, from $17,000 in the previous quarter.
However, a higher number of larger flats such as five-room and executive flat were transacted in 2007 as compared to a year ago.
For the whole year, the number of five-room resale transactions rose 13.3% to 7,275; while the number of executive flats resale transactions rose 17.9% to 2,627 as compared with 2006.
(G.3) Queenstown flat sold for record $890,000
A 13-year-old 21st storey executive flat in Block 150, Mei Ling Street, was sold for $890,000. The executive flat in Queenstown comes with expansive views of Sentosa and Mount Faber.
The current owner of the 1,614 sq flat reportedly paid only $300,000 for it in 1992.
Before this transaction, the highest transacted price for an HDB flat in the central area was $780,000 for a similar Executive flat in Mei Ling Street in November 2007. Five other similar executive flats in the same locality were also sold in the November/December period at prices ranging from $728,000 to $765,000.
A five-room resale flat in nearby Kim Tian Place was sold for $720,000 last June.
(G.4) 4-room Jalan Membina flat sold for $590,000
A five-year old four-room flat at Blk 21 Jalan Membina, which has a fabulous view of Sentosa, and a superb location near Tiong Bahru MRT station and Tiong Bahru Plaza was sold for a record $590,000 in the beginning of the year.
HDB's latest data show four-room units in the same area sold for $415,000 to $495,000 late last year.
(G.5) A better economy contributing to an ‘upgrading’ trend in 2008
The two tables (5.1 and 5.2) below give a good impression of the transactions of the different flat types in the last couple of months. Demand for larger flats continues to hold up well.
- In January 2008 five-room flats enjoyed a 25.88% share (or 597 transactions) of the total monthly transactions, a marked improvement from the 24.87% share (or 486 transactions) a month ago.
- In the same month, Executive flats took up 8.32% share (or 192 transactions) of the total monthly transactions, an increase from 7.52% share (or 147 transactions) in December 2007. The 45 more units sold in January 2008 represent a 30% improvement in sales volume.
The higher demand for larger flats may reflect an improving economic prospect, wage increases and a general ‘upgrading’ trend.
Table 5.1 - January 2008 HDB Resale Transactions
3-room |
4-room |
5-room |
E-Flats |
Total |
|
Ang Mo Kio | 61 |
29 |
12 |
3 |
105 |
Bedok | 58 |
26 |
25 |
7 |
116 |
Bishan | 8 |
34 |
10 |
5 |
57 |
Bt Batok | 39 |
53 |
12 |
13 |
117 |
Bt Merah | 40 |
33 |
27 |
0 |
100 |
Bt Panjang | 8 |
33 |
25 |
5 |
71 |
Bt Timah | 1 |
3 |
0 |
1 |
5 |
Central Area | 13 |
2 |
1 |
0 |
16 |
Choa Chu Kang | 5 |
50 |
37 |
17 |
109 |
Clementi | 27 |
17 |
10 |
3 |
57 |
Geylang Aljunied | 35 |
19 |
6 |
4 |
64 |
Hougang | 27 |
59 |
33 |
13 |
132 |
Jurong East | 18 |
16 |
19 |
7 |
60 |
Jurong West | 43 |
61 |
38 |
19 |
161 |
Kallang Whampoa | 27 |
22 |
12 |
0 |
61 |
Marine Parade | 13 |
9 |
9 |
0 |
31 |
Pasir Ris | 0 |
21 |
28 |
27 |
76 |
Punggol | 0 |
14 |
35 |
0 |
49 |
Queenstown | 56 |
16 |
16 |
0 |
88 |
Sembawang | 0 |
26 |
36 |
7 |
69 |
Sengkang | 0 |
34 |
46 |
8 |
88 |
Serangoon | 22 |
27 |
14 |
8 |
71 |
Tampines | 37 |
58 |
48 |
17 |
160 |
Toa Payoh | 51 |
21 |
13 |
3 |
88 |
Woodlands | 30 |
87 |
67 |
16 |
200 |
Yishun | 61 |
67 |
18 |
9 |
155 |
Total | 680 |
837 |
597 (25.88%) |
192 |
2,306 |
Table 5.2 - December 2007 HDB Resale Transactions
3-room |
4-room |
5-room |
E-Flats |
Total |
|
Ang Mo Kio | 57 |
24 |
12 |
1 |
94 |
Bedok | 51 |
30 |
22 |
3 |
106 |
Bishan | 5 |
18 |
11 |
8 |
42 |
Bt Batok | 32 |
34 |
14 |
4 |
84 |
Bt Merah | 37 |
33 |
17 |
0 |
87 |
Bt Panjang | 7 |
26 |
22 |
6 |
61 |
Bt Timah | 1 |
2 |
1 |
3 |
7 |
Central Area | 7 |
7 |
0 |
0 |
14 |
Choa Chu Kang | 7 |
52 |
21 |
6 |
86 |
Clementi | 36 |
12 |
3 |
3 |
54 |
Geylang Aljunied | 26 |
16 |
3 |
2 |
47 |
Hougang | 17 |
54 |
30 |
17 |
118 |
Jurong East | 21 |
15 |
10 |
4 |
50 |
Jurong West | 23 |
50 |
37 |
11 |
121 |
Kallang Whampoa | 29 |
19 |
11 |
3 |
62 |
Marine Parade | 5 |
8 |
3 |
0 |
16 |
Pasir Ris | 0 |
20 |
15 |
15 |
50 |
Punggol | 0 |
14 |
28 |
3 |
45 |
Queenstown | 49 |
13 |
10 |
3 |
75 |
Sembawang | 0 |
22 |
29 |
6 |
57 |
Sengkang | 0 |
43 |
46 |
8 |
97 |
Serangoon | 14 |
15 |
8 |
7 |
44 |
Tampines | 22 |
62 |
33 |
10 |
127 |
Toa Payoh | 41 |
11 |
14 |
0 |
66 |
Woodlands | 15 |
101 |
62 |
19 |
197 |
Yishun | 54 |
64 |
24 |
5 |
147 |
556 |
765 (39.15%) |
486 |
147 |
1,954 |
Buy, Sell, Rent, Invest, In Singapore
Billy Chen
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Tel: (+65) 88689999
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billy@billychen71.com
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