singapore property weekly issue 9

Issue 9 | www.Propwise.sg

SINGAPORE PROPERTY WEEKLY – Issue 9

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Contents

Singapore Property This Week Pg 2

When is the Best Time to Buy a

New BTO Flat? Pg 5

Non-Landed Residential Resale

Property Transactions for the

Week of July 2-8 Pg 10

From the Editor

Welcome to the ninth edition of the Singapore

Property Weekly. We added property transactions

in the last issue, sorted by district. We hope they

help you in keeping track of the market!

Mr. Propwise

http://www.propwise.sg/

mailto:[email protected]

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Singapore Property This WeekResidential News

HDB increased launches of BTO flats to

increase applicant’s chance: Minister Khaw

An increase in BTO flats launches will increase

an applicant’s chance of securing a unit as

application rate is lowered, said Minister Khaw

as he announced that HDB will be launching

more new flats and the next launch will be in

September. HDB data showed that a

successful applicant, who participated in BTO

exercises between January to March 2011,

stood a higher chance of choosing a flat in a

BTO project when there were fewer

applicants. Also, increasing launches of BTO

flats will increase second-timers chances of

getting their flats as second-timers’ chances to

select decreased when more first-time

applicants apply for a particular BTO flat. By

increasing BTO launches, Minister Khaw also

aim to stablise housing prices and offer more

choices to applicants.

Seven BTO projects drew a total of 11,548

for 3,556 flats on offer

HDB received a total of 11,548 bids for the

3,556 flats offered under seven BTO projects

in Bukit Panjang, Jurong West, Sengkang,

Tampiness, and Yishun. The 149 studio

apartments on offered at the Golden Carnation

project in Tampiness attracted 531

applications, while 590 four-room flats in Bukit

Panjang attracted 1,505 bids. Over at

Sengkang, there were 645 bids for 168 three-

room flats, 2,933 bids for 944 four-room flats,

and 2,277 bids for 717 five-room flats. At the

Yishun Natura project, 140 four-room flats

attracted over 1,010 applications and 112 five-

room flats attracted 655 bids. At the Golden




Orchid Project in Jurong West, the 232 studio

apartments on offer drew 340 bids.

Resale flat prices increased 3.1% in Q2, up

from the 1.6% rise in Q1

HDB’s data showed that price of resale flats

increased 3.1% quarter-on-quarter in Q2, up

from the 1.6% hike in Q1. Due to strong

demand and limited supply, the resale flat

market has been strong. There were 6,581

resale transactions made in Q2, an increase of

about 6% from Q1, and the price growth in Q2

was also beyond the official flash estimate of a

2.9% hike. However, ERA Realty Network

noticed that transactions were lower in Q2 as

compared to the past when around 8,000

transactions could be achieved.

En bloc sales, especially for those above

$100 million, slowed; successful selling

rate decreased from 65% in whole of 2010

to 51% in H1 2011

Data from Credo Real Estate revealed that the

successful selling rate for plots put up for

enbloc sales decreased from 65% in the whole

of 2010 to 51% in H1 2011. As compared to

the whole of 2010 where only 11 sites valued

at $100 million and above were up for sale, 26

sites above $100 million were up for sale in H1

2011. Out of these 26 sites, only six sites

which were priced below $300 million were

sold; this made the success rate to be 23.1%,

lower than the 27.3% last year. However, the

successful selling rate for plots below $50

million was 87% in H1 2011, more than the

76% for 2010.

PRs only own 3.5% of landed residential

properties in Singapore: Minister

Shanmugam

Law Minister Shanmugam disclosed that only

3.5% of landed residential properties in

Singapore, which includes the Sentosa Cove

properties, are owned by PRs.He mentioned

that properties in




Sentosa Cove are open to foreigners who are

not PRs because Sentosa Cove properties are

planned to target and attract famous, wealthy,

and influential people to come to Singapore.

Mr. Shanmugam reiterated that Singaporeans

will always be the top priority when it comes to

purchasing landed residential property, given

the scarcity of such housing.

Private house subsales increased 10.6% in

Q2

The number of private houses sold in the

subsale market increased 10.6% quarter-on-

quarter in Q2 2011, to 712 units. Despite that,

this rate of increase was lower than a near

27% increase in the 4,562 new private houses

that developers sold. Savills mentioned that

the higher SSD launched in January has

allowed genuine buyers to have access to

units in the primary market directly. Based on

Savills’ analysis of caveats captured by URA

Realis, the resale segment saw a 17.5%

quarter-on-quarter increase to 4,144 units in

Q2 2011.

Commercial

Several projects gained provisional

permission (PP) from URA

In Q2, several industrial and residential

projects island-wide gained PP from URA. One

of them is a Tuan Sing unit in CBD that had

received PP to carry out a development

consisting of 23,530 sq metres GFA of offices

and 380 sq metres of retail space on Robinson

Road. Similarly on Robinson Road, Oxley

Consortium Pte Ltd also gained PP to

redevelop The Corporate Office into a project

that consists of 12,280 sq metres of offices and

2,770 sq metres of shops. Furthermore, some

project sites sold under GLS also gained PP

from URA between April to June. One of them

is the 497-unit Boathouse Residences condo

project.


When is the Best Time to Buy a New BTO Flat?

By Getty Goh

In one of my previous blogs, I wrote about why

I thought HDB flats could be made cheaper for

first time buyers. Serendipitously, the DBSS

debacle occurred shortly after my blog was

published and the public outcry over the

S$880,000 price tag for a new DBSS flat

seemed to reinforce the point that many

Singaporeans are presently frustrated at how

expensive public housing has become. In view

of that, I thought it would be timely for me to

write a blog to explore the pricing mechanism

for new BTO flats and talk about when would

be a good time to buy new flats.

Once again, I must qualify and state that this is

not intended to disparage the Ministries that

are tackling this issue. It is always easier for

people to poke holes at existing policies






than to come up with a workable plan. So this

article is not intended to poke holes at the

policies we currently have in place, but simply

to provide a different perspective. In addition, I

would like to highlight that there is not much

historical data available from HDB on new BTO

flats, thus much of my conclusions are drawn

from circumstantial and anecdotal evidence

extracted from press releases, annual reports,

etc. With that said, here goes…

Pegging new BTO prices to resale HDB

prices

HDB does not officially reveal how new HDB

flats are priced. However, from time to time, we

are able to get a sense of how the pricing

mechanism works from interviews and press

releases from the relevant stakeholders. In a

recent Straits Times article dated 18 Jul 11,

Minister of National Development, Mr Khaw

Boon Wan shared that “the prices of HDB's

new flats are typically pegged to prevailing

resale prices but are discounted.”

As opposed to fixing new flat prices or even

tagging them to things like median income,

pegging new flats to resale flat prices seems

like a logical thing to do as it offers a like-to-like

comparison. While there is no doubt that the

government has complete control over how

new flats are being priced, one would expect

the authorities to also have some influence

over the HDB resale market for the pricing

mechanism cited by the Minister to work.

Allow me to illustrate. Assuming the

government wants to lower new flat prices

without tweaking the housing grants and land

cost, it can do so by launching more BTO flats.

By flooding the market with excess supply, we

should, in theory, expect resale flat prices to

drop as well (due to the overall increase in

public housing supply). Since new flats are

pegged to prevailing resale prices (at a

discount), HDB would then be able to


http://www.straitstimes.com/BreakingNews/Singapore/Story/STIStory_691982.html

http://www.straitstimes.com/BreakingNews/Singapore/Story/STIStory_691982.html



lower new flat prices correspondingly.

Conversely, if the government wants to

increase new BTO prices, it could do the direct

opposite and limit the supply of new BTO flats.

While this may seem to be a fairly round-about

approach, it is plausible as it allows HDB to

indirectly set new BTO prices by influencing

the overall resale market price without varying

the other essential factors (e.g. HDB housing

grant and land cost).

In the ideal world, the situation painted in the

preceding paragraph would proceed like

clockwork and new BTO prices can be

controlled by simply adjusting supply of new

units being released into the market. Alas, the

resale HDB market does not behave like that in

reality. Based on a comparison between the

URA and HDB resale index, it was found that

the HDB resale market and the private

property market behaved very similarly. This is

clearly seen from the high correlation of 88.4%

as well as the 2 markets moving almost in

tandem with each other (see Figure 1). In other

words, even though HDB can launch record

number of BTO units, it would likely have little

impact on resale prices as there are larger

economic forces at work. In view of that, it

does not come as a surprise that the COV

continues to remain high despite HDB

launching many new BTO projects in the

recent months.

Figure 1: Comparing URA and HDB price trends (1990Q1 to 2011Q1)

0

50

100

150

200

250

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URA PPPI HDB Resale Index




The risks of pegging new flats to resale

market prices

Conceptually, the private property market has

always been known to be volatile and

susceptible to market fluctuations. Volatility in

that market segment arises from fewer

restrictions, until quite recently, to buy or sell a

private residential unit. Moreover, the

acquisition of land for private residential

developments is done either through

competitive bidding via the Government Land

Sales (GLS) scheme or the en-bloc process,

which are affected by prevailing market

conditions. Therefore, by pegging new BTO

prices to the resale market, which is highly

correlated to the private property market, are

we not exposing many of our first time home

owners to similar market risks?

At this point, I must concede that what I have

written is purely postulation on my end and I

could be totally wrong. However, given the lack

of HDB data, there is really no way for me to

confirm or refute HDB’s pricing strategy for

new BTO flats. Nonetheless, if the private

residential market is anything to go by, the

principle of pegging new HDB flat to market

prices may have considerable risks. In 1996, at

the peak of the 1990s property boom, there

were about 15,000 non-landed residential

transactions (based on caveats lodged). As at

2009 (before the recent boom), about 41% of

the 15,000 had sold their units off while the

rest were still holding on to their units. Of the

41% who had sold their properties, about 78%

sold it for a loss.

So what does this mean to you? Ultimately, by

pegging new BTO prices to the resale market,

new flats are not insulated from the cyclical

effects of the property market. Just like resale

HDB or even private properties, you could be

overpaying for your new flat when the

economy is doing well.




On the other hand, this finding seems to

suggest that an ideal time to buy a new HDB is

when the overall property market is depressed.

Whether or not public housing should be

heavily subsidised and sold at a fixed price is

really beyond the scope of this blog.

Nonetheless, if you think it is fair for a statutory

board to increase prices of public housing

during a hot property market, you may wish to

ask those who are presently priced out of the

market and let me know what they think.

By Getty Goh, Director of Ascendant Assets, a

real estate research and investment

consultancy firm. Getty has a MSc (Real

Estate) and BSc (Building) from the National

University of Singapore.


http://www.ascendantassets.com/

http://www.moneymatters.sg/



Non-Landed Residential Resale Property Transactions for the Week of July 2-8

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price ($

psf)

3 RIVER PLACE 1,302 1,600,000 1,228

4 CARIBBEAN AT KEPPEL BAY 872 1,482,400 1,700

4 CARIBBEAN AT KEPPEL BAY 1,647 2,500,000 1,518

5 THE PARC CONDOMINIUM 1,518 1,810,000 1,193

5 BOTANNIA 1,302 1,393,000 1,070

5 DOVER PARKVIEW 1,249 1,246,800 999

5 THE STELLAR 2,207 2,150,000 974

5 CARABELLE 1,292 1,250,000 968

5 DOVER PARKVIEW 1,518 1,180,000 777

7 BURLINGTON SQUARE 840 1,134,000 1,351

8 CITY SQUARE RESIDENCES 570 975,000 1,709

8 CITYLIGHTS 893 1,320,000 1,477

8 CITYLIGHTS 1,313 1,641,250 1,250

8 MERA SPRINGS 1,044 1,278,000 1,224

9 URBANA 1,012 2,104,960 2,080

9 RIVERGATE 1,539 3,060,000 1,988

9 YONG AN PARK 3,434 6,000,000 1,747

9 PARC EMILY 1,012 1,730,000 1,710

9 WATERMARK ROBERTSON QUAY 904 1,536,800 1,700

9 ROBERTSON 100 1,152 1,930,000 1,676

9 WATERMARK ROBERTSON QUAY 1,733 2,838,654 1,638

9 UE SQUARE 850 1,160,000 1,364

9 GAMBIER COURT 1,485 1,600,000 1,077

10 GALLOP GREEN 3,218 5,953,300 1,850

10 THE TWINS 2,260 3,850,000 1,703

Postal


Area

(sqft)

Transacted

Price ($)

Price ($

psf)

10 THE MARBELLA 1,076 1,726,000 1,603

10 BELMOND GREEN 1,066 1,703,000 1,598

10 HOLLAND HILL LODGE 538 700,000 1,301

10 GLENTREES 1,345 1,749,800 1,300

11 GLOUCESTER MANSIONS 883 1,378,000 1,561

11 THE LINC 1,281 1,850,000 1,444

11 NINETEEN SHELFORD ROAD 635 870,000 1,370

11 NINETEEN SHELFORD ROAD 753 975,000 1,294

12 BOON TECK VIEW 19,472 21,750,000 1,117

12 AVA TOWERS 1,281 970,000 757

14 THE WATERINA 1,130 1,130,000 1,000

14 BLOSSOM VIEW 1,033 810,000 784

14 ASTON MANSIONS 1,012 785,000 776

14 CRYSTAL MANSIONS 1,259 738,000 586

14 SIN CHUAN GARDEN 1,389 800,000 576

15 AALTO 1,959 3,660,000 1,868

15 AALTO 2,024 3,470,000 1,715

15 PEBBLE BAY 2,745 4,500,000 1,639

15 ONE AMBER 570 905,000 1,586

15 PEBBLE BAY 2,626 3,815,000 1,453

15 THE MAKENA 1,744 2,450,000 1,405

15 PEBBLE BAY 1,894 2,650,000 1,399

15 THE SEA VIEW 1,410 1,932,500 1,370

15 VERTIS 667 900,000 1,349

15 COTE D'AZUR 1,313 1,615,000 1,230




NOTE: This data only covers non-landed residential resale

property transactions with caveats lodged with the Singapore

Land Authority. Typically, caveats are lodged at least 2-3

weeks after a purchaser signs an OTP, hence the lagged

nature of the data.

Postal


Area

(sqft)

Transacted

Price ($)

Price ($

psf)

15 TANJONG RIA CONDOMINIUM 614 723,900 1,180

15 THE AMARELLE 1,152 1,355,000 1,176

15 COSTA RHU 1,765 1,980,000 1,122

15 SPRING @ KATONG 1,087 1,120,000 1,030

15 CHELSEA LODGE 861 870,000 1,010

15 HUA XIN COURT 1,970 1,920,000 975

15 CRESCENDO PARK 1,302 1,200,000 921

15 MARSHALL LODGE 1,776 1,430,000 805

15 VILLA MARINA 1,679 1,338,000 797

16 COSTA DEL SOL 1,313 1,733,160 1,320

16 CASA MERAH 1,572 1,710,000 1,088

16 PARBURY HILL CONDOMINIUM 904 900,000 995

16 EAST MEADOWS 1,485 1,450,000 976

16 LAGUNA GREEN 1,055 963,000 913

16 PALMWOODS 1,184 860,000 726

16 SUNHAVEN 1,389 995,000 717

17 CARISSA PARK CONDOMINIUM 1,324 1,150,000 869

18 TROPICAL SPRING 1,335 1,170,888 877

18 EASTPOINT GREEN 1,130 925,000 818

18 THE TROPICA 1,518 1,180,000 777

18 MELVILLE PARK 1,066 808,000 758

18 ELIAS GREEN 1,518 890,000 586

18 TAMPINES COURT 1,690 955,000 565

19 CHERRYHILL 1,023 941,800 921

19 ROSYTH RESIDENCE 1,033 888,000 859

19 RIO VISTA 1,249 945,000 757

19 RIO VISTA 1,798 1,275,000 709

19 NOUVELLE PARK 1,410 998,000 708

20 THE GARDENS AT BISHAN 2,411 1,750,000 726

Postal


Area

(sqft)

Transacted

Price ($)

Price ($

psf)

20 SIN MING PLAZA 1,475 1,010,000 685

20 FAR HORIZON GARDENS 1,152 780,000 677

21 THE NEXUS 1,055 1,440,000 1,365

21 FREESIA WOODS 1,421 1,650,000 1,161

21 BUKIT REGENCY 1,421 1,380,000 971

21 THE RAINTREE 1,292 1,150,000 890

21 PARC PALAIS 1,313 1,138,880 867

21 SHERWOOD CONDOMINIUM 1,292 1,050,000 813

22 LAKEHOLMZ 1,238 1,020,000 824

22 PARC VISTA 1,259 1,016,888 807

22 PARC OASIS 1,227 976,000 795

23 THE JADE 1,012 938,000 927

23 HILLVIEW 128 1,044 885,000 848

23 GUILIN VIEW 1,238 965,000 780

25 WOODGROVE CONDOMINIUM 2,153 1,350,000 627

26 BULLION PARK 1,259 1,020,000 810

27 EUPHONY GARDENS 1,044 770,000 737

27 SELETARIS 1,636 1,170,000 715




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singapore property weekly issue 9

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