Vivienne Tayvtay@sph.com.sg@VivienneTayBT
Property buying activity in Singapore has been revving up the past few months amid low-interest rates, pent-up demand and a projected rise in HDB upgraders this year.
PHOTO: ST FILE
PROPERTY buying activity in Singapore has been revving up the past few months amid low-interest rates, pent-up demand following the "circuit-breaker" period and a projected rise in HDB upgraders this year.
Urban Redevelopment Authority (URA) figures released on Friday showed that on a preliminary basis, developers sold 10,024 private housing units in 2020, surpassing the 9,912 units in 2019 by 1.1 per cent.
The property sector is also being monitored "very closely" by the Singapore government, which will adjust policies if necessary, said National Development Minister Desmond Lee. This is to maintain a stable and sustainable property market for Singaporeans.
CGS-CIMB is projecting private home prices to rise by between zero and 5 per cent for 2021 and volume demand to remain stable at between 9,000 and 10,000 units.
Here are some quick takes on what is driving the momentum for property buying in the Republic:
Low-interest rates, sub-1 per cent mortgages
In November 2020, the market was abuzz about Citibank's aggressive home loan promotion for affluent clients who take a home loan of at least S$800,000.
The promotional floating rate from Citi is just under 1 per cent. But the talk is that for the well-heeled buyers of landed properties, the home loan rate could fall even lower.
This compares with UOB's 1.35 per cent and 1.4 per cent for its fixed and floating home loan rates as of Nov 5, 2020.
Pandemic hit different parts of Singapore
A DBS report in October 2020 showed that lower-income earners (S$2,999 and below) made up about 49 per cent of DBS customers who suffered a drop in salary. Within this group, about half saw their income fall by over 50 per cent.
The extent of income deterioration in the food and beverage, hospitality and aviation sectors was even more pronounced than in other industries. In the aviation sector, some 40 per cent of workers' income declined in March. This doubled to 80 per cent in May.
However, the private residential market has seen a disconnect with the general economic underperformance, given the recent surge in home sales and property prices.
The private home price index rose 0.8 per cent in the third quarter of 2020 over the preceding three months. The index is now up 0.65 per cent from a year ago, according to data released by the URA on Oct 23, 2020.
Anticipated lift in HDB upgraders
OrangeTee & Tie chief executive officer Steven Tan expects a surge in upgraders in the coming years, as more owners of new Housing & Development Board flats complete their minimum occupation period between 2020 and 2023 and will likely move to mature public housing estates or private residential properties, he said.
On the other hand, some owner-occupiers and tenants, including expatriates, are downgrading to smaller and more affordable housing due to employment woes and their industries suffering from Covid-19's blow.
Foreign buyers make splash in Sentosa Cove
Buying activity in Sentosa Cove's bungalow market has been getting busier in the past few months on the back of several demand drivers, including buyers from mainland China. List SIR's analysis of URA Realis caveats database showed that 13 Sentosa bungalows transacted for a total S$195.66 million in 2020, up from just four deals adding up to S$83.39 million in 2019.
En bloc market revival
Market watchers are anticipating a new en bloc cycle to start in 2021, as unsold residential units under development fell in Q3 2020 to 26,600 units, signalling undersupply in the primary market. The start of the previous en bloc cycle was in Q2 2016, when inventory fell to 23,000 units.
A "conservative" and "calibrated" release of residential supply under the first-half 2021 government land sales programme is also likely to drive interest in the en bloc market, property analysts said to The Business Times in December 2020.
Supply will rise by 17.2 per cent for H1 2021, but analysts were mixed on whether or not the increase in housing supply was significant.
Singapore real estate one of the Bitcoins of the real estate market?
The time to buy real estate is when “the blood is running the streets” not when everybody is running around trying to buy anything they can get their hands on with ridiculously low interest rates.
The bitcoin frenzy several years ago when it went from 10,000 to 20,000 and nobody in their right mind could understand why.
When I issued my infamous sell signal December 2017 everybody thought I was crazy. A few months later it was down 60%.
Nobody believed me at the time but several years later they realized I was right.
Real Estate Acid Test:
I do not need a lot analysis of market trends mortgage rates etc. to determine which way a real estate market is headed.
Over the past 40 years of dealing with real estate I have developed an amazingly simple acid test for real estate anywhere in the world.
Can I buy three-bedroom home or apartment in the area that I am interested in and rent it out a positive cash flow.
If not the market is near the top, has not much further to go and most likely will drop soon.
Who will continue to buy real estate if they cannot make money on it?
From what I see the only thing that fuelling Singapore's real estate market right now is greedy speculation.
As mentioned in the article above the main factors that are driving current buying in Singapore are.
- Low-interest rates, sub-1 per cent mortgages.
- Anticipated lift in HDB upgraders.
- Foreign buyers
Therefore, the massive amount of buying from Hong Kong Chinese & foreigners leaving Hong Kong for go0od after a dramatic shift in China's policy have fuelled the most recent surge in prices.
Singaporeans do not so much money after this devastating pandemic which triggered a recession.
So, the fuel for this speculation is low interest rates and anticipation of Singaporean real estate going up in a recovery.
I remind you of a similar situation in America in 2007 when I told people to get out of American real estate after I realized that American housewives were buying real estate just because their friends had a house selling party instead of a Tupperware party. They felt that they were not trendy unless they bought.
There was also speculation created by ridiculously low sub prime interest rates and banks willing to lend anybody even if they were not credit worthy.
If I were an Singaporean right now that owns property that has increased dramatically recently I would put a high price on it and sell it as soon as possible.
This cannot continue while my acid test is failing.
I would take the money and would purchase quality real estate in Bali that is still down 20% to 50 % from January prices.
Most prudent buyers realize the time to buy anything in stores is when there is a big sale on, not after it increased in price significantly.
Yes I realize you can not easily come inspect the properties but in this modern age with high quality video and photos you can easily request any visual aids you need to make prudent decision.
When you are ready you can call me on Whatsapp for free +62-8123814014.
No comments:
Post a Comment