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Longer waiting time for homes, higher construction costs due to Covid-19 curbs: Contractors Association

4/26/2021

Scal said the construction sector has been facing a serious labour crunch since 2020, after many migrants workers returned home amid the pandemic.ST PHOTO

On 23 April 2021, Singapore Contractors Association Limited (Scal) sounded warnings that home buyers will have to endure a longer wait time for the completion of Housing Board Build-To-Order (BTO) flats and private apartments as a result of the border restrictions on travellers from India. Curently, the construction sector is already facing delays which have seen projects knocked back by between nine and 12 months due to a labour crunch brought about by the Covid-19 pandemic.

Just the day before, the Government announced that long-term pass holders and short-term visitors with recent travel history to India will not be allowed entry or transit through Singapore, with the new rule taking effect from 24 April 2021. Those who have previously obtained approval from the authorities to enter the country may also have their approvals revoked.

Education Minister Lawrence Wong, who is co-leading the multi-ministry task force tackling Covid-19, said it will have a major impact on the construction sector.

The construction sector will face further delays to building and housing projects already hampered by the pandemic.

The move to ban long-term pass holders and short-term visitors from India from entering Singapore will have a major impact on the construction, marine and process (CMP) sectors here, said Education Minister Lawrence Wong on Thursday (April 22) "I seek Singaporeans' patience and understanding. If certain projects were to be delayed further, please understand why this has happened and know that we are doing this because of public health reasons. We hope that everyone will cooperate."

The construction sector, especially, will face further delays to building and housing projects already hampered by the pandemic. Hence, the Government is looking at how it can provide additional support for local small and medium-sized enterprises and contractors that will be hurt by the new restrictions.

Singaporeans will inevitably be paying for higher construction costs if the situation is not resolved soon," said Singapore Contractors Association Limited (Scal) in a statement. It noted that the cost of labour and materials has escalated by 30 per cent to 50 per cent. "This tightening will adversely affect the inflow of construction workers and will negatively impact the timeline of construction projects and cause further delays," said the construction association.

Singapore Contractors Association Limited (Scal) have warned that some companies may be forced to close and it will adversely impact some 100,000 residents working in the construction sector. Wee Hur Construction’s director for tender and contracts Sua Chen Shiua said: “We’re hoping the Government can grant us more time to complete our projects so it can relieve some pressure on us and also enforce that all stakeholders share the (increased) expenses instead of contractors taking the biggest hit.”

"This presents a big challenge for the government as they consider implementing property cooling measures after private property prices rose 2.2% last year. Property cooling measure may cause a knee jerk reaction in the market that may last around 6 months or more where buyers hold back from buying properties if for example there is an increase in ABSD by 5% which may inevitably lead to a systemic impact of the construction industry and Singapore's overall economy" says Kiwi Lim from Huttons Asia.

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Extracted from Straits Times news article on 23 April 2021

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Major cities worldwide saw sharp rise in property prices last year after Covid pandemic lockdowns

4/19/2021

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European Union House Prices grew 5.7 % YoY in Dec 2020, following an increase of 5.3 % YoY in the previous quarter. EU House Prices YoY Growth data is updated quarterly, available from Mar 2006 to Dec 2020, with an average growth rate of 2.8 %. The data reached an all-time high of 11.1 % in Dec 2006 and a record low of -4.9 % in Jun 2009. CEIC calculates House Prices Growth from quarterly House Price Index. Eurostat provides House Price Index with base 2015=100. European Union stands for EU27 excluding UK. Analysts believed this is driven by domestic demand and not from rich Asian Chinese foreign buyers / investors.

Last year, as thousands of New Zealanders lost their jobs amid the Covid-19 pandemic, The housing market dipped when New Zealand first went into lockdown in March 2020, but it came back so much faster than it went down after the country was declared free of Covid-19 in June 2020 and has grown exponentially ever since.

New Zealand House Prices grew 15.5 % YoY in Dec 2020, following an increase of 10.7 % YoY in the previous quarter. New Zealand House Prices YoY Growth data is updated quarterly, available from Dec 1990 to Dec 2020, with an average growth rate of 5.8 %. The data reached an all-time high of 24.9 % in Dec 2003 and a record low of -9.1 % in Mar 2009. CEIC calculates House Prices Growth from quarterly House Price Index. The Reserve Bank of New Zealand provides House Price Index, calculated from Reserve Bank of New Zealand estimates, with base December 2003=1000.

"A few years ago, if you bought a property and sold it in the next three years, you’d done well if you broke even. Now, we’re seeing that you can buy a property and sell it six weeks later and make NZ$30,000 (US$21,100). It’s very much a seller’s market." said real estate professionals in New Zealand, "the sharp increase is mainly from domestic demand making this completely unprecedented never seen before in New Zealand".

South Korea's Property index showed property prices has risen sharply in 2020 and still rising - CEIC Data

South Korea property prices grew 11.2 % YoY in Mar 2021, following an increase of 10.3 % YoY in the previous month. South Korea House Prices YoY Growth data is updated monthly, available from Jan 1987 to Mar 2021, with an average growth rate of 2.3 %. The data reached an all-time high of 21.9 % in Aug 1988 and a record low of -13.1 % in Nov 1998. CEIC calculates House Prices Growth from monthly House Price Index. Kookmin Bank provides House Price Index with base January 2019=100.

Germany House Prices grew 8.1 % YoY in Dec 2020, following an increase of 7.9 % YoY in the previous quarter. Germany House Prices YoY Growth data is updated quarterly, available from Mar 2001 to Dec 2020, with an average growth rate of 2.5 %. The data reached an all-time high of 8.4 % in Dec 2016 and a record low of -3.8 % in Mar 2007. CEIC calculates House Prices Growth from quarterly House Price Index. Federal Statistics Office Germany provides House Price Index with base 2015=100.

Canada House Prices grew 7.0 % YoY in Feb 2021, following an increase of 5.4 % YoY in the previous month. Canada House Prices YoY Growth data is updated monthly, available from Jan 1982 to Feb 2021, with an average growth rate of 1.8 %. The data reached an all-time high of 16.5 % in Mar 1989 and a record low of -9.7 % in Apr 1991. CEIC calculates House Prices Growth from monthly House Price Index. Statistics Canada provides House Price Index with base December 2016=100. House Price Index covers New Housing only.

Denmark House Prices grew 8.5 % YoY in Dec 2020, following an increase of 7.5 % YoY in the previous month. Denmark House Prices YoY Growth data is updated monthly, available from Jan 2007 to Dec 2020, with an average growth rate of 2.8 %. The data reached an all-time high of 11.4 % in Jan 2007 and a record low of -16.0 % in May 2009. CEIC calculates monthly House Prices Growth from Property Price Index. Statistics Denmark provides Property Price Index of One Family Houses with base 2006=100. House Prices Growth covers single family houses only.

Luxembourg House Prices grew 13.6 % YoY in Sep 2020, following an increase of 13.2 % YoY in the previous quarter. Luxembourg House Prices YoY Growth data is updated quarterly, available from Mar 2008 to Sep 2020, with an average growth rate of 5.1 %. The data reached an all-time high of 14.1 % in Mar 2020 and a record low of -2.5 % in Sep 2009. CEIC calculates House Prices Growth from quarterly House Price Index. The Portal of Statistics of Luxembourg provides House Price Index with base 2015=100. House Price Index covers purchase prices of apartments only. House Prices Growth prior to Q1 2010 is with base 2010=100.

Norway House Prices grew 10.9 % YoY in Mar 2021, following an increase of 7.1 % YoY in the previous quarter. Norway House Prices YoY Growth data is updated quarterly, available from Mar 1993 to Mar 2021, with an average growth rate of 7.2 %. The data reached an all-time high of 21.2 % in Mar 2000 and a record low of -6.9 % in Dec 2008. CEIC calculates House Prices Growth from quarterly House Price Index. Statistics Norway provides House Price Index with base 2015=100.

Sweden House Prices grew 10.1 % YoY in Dec 2020, following an increase of 6.1 % YoY in the previous quarter. Sweden House Prices YoY Growth data is updated quarterly, available from Mar 1987 to Dec 2020, with an average growth rate of 7.4 %. The data reached an all-time high of 20.8 % in Jun 1989 and a record low of -15.3 % in Dec 1992. CEIC calculates House Prices Growth from quarterly Real Estate Price Index. Statistics Sweden provides Real Estate Price Index with base 1981=100. House Prices Growth covers 1 or 2 dwelling buildings for permanent living only.

Austria House Prices grew 9.4 % YoY in Dec 2020, following an increase of 9.4 % YoY in the previous quarter. Austria House Prices YoY Growth data is updated quarterly, available from Sep 1987 to Dec 2020, with an average growth rate of 4.1 %. The data reached an all-time high of 33.4 % in Sep 1988 and a record low of -6.4 % in Dec 2001. CEIC calculates quarterly House Prices Growth from quarterly House Price Index. Oesterreichische Nationalbank provides House Price Index with base 2000=100. 3.. House Prices Growth covers Vienna only.

Taiwan House Prices grew 6.5 % YoY in Dec 2020, following an increase of 6.1 % YoY in the previous quarter. Taiwan House Prices YoY Growth data is updated quarterly, available from Mar 2002 to Dec 2020, with an average growth rate of 5.8 %. The data reached an all-time high of 20.9 % in Mar 2010 and a record low of -6.0 % in Mar 2016. CEIC calculates House Prices Growth from quarterly Residential Property Price Index. Sinyi Realty Incorporation provides Residential Property Price Index with base March 2001=100.

United Kingdom House Prices grew 6.9 % YoY in Feb 2021, following an increase of 6.4 % YoY in the previous month. UK House Prices YoY Growth data is updated monthly, available from Jan 1992 to Feb 2021, with an average growth rate of 4.4 %. The data reached an all-time high of 26.4 % in Jan 2003 and a record low of -17.5 % in Feb 2009. CEIC calculates House Prices Growth from monthly House Price Index. Nationwide provides House Price Index with base Q1 1993=100.

United States House Prices grew 10.3 % YoY in Dec 2020, following an increase of 7.8 % YoY in the previous quarter. US House Prices YoY Growth data is updated quarterly, available from Mar 1992 to Dec 2020, with an average growth rate of 5.3 %. The data reached an all-time high of 10.8 % in Sep 2005 and a record low of -11.9 % in Mar 2009. CEIC calculates House Prices Growth from quarterly House Price Index. Federal Housing Finance Agency provides House Price Index with base January 1991=100.

In comparison to major cities globally, Singapore House Prices only grew 2.2 % YoY in Dec 2020, following an increase of 0.7 % YoY in the previous quarter. Singapore House Prices YoY Growth data is updated quarterly, available from Mar 1976 to Dec 2020, with an average growth rate of 4.0 %. The data reached an all-time high of 102.0 % in Mar 1981 and a record low of -34.0 % in Dec 1998. CEIC calculates House Prices Growth from quarterly Private Residential Property Price Index. Urban Redevelopment Authority provides Private Residential Property Price Index with base 1Q2009=100.

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Data from CEIC - a trusted global tracker of worldwide property price index

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High end condo sales surge in March with only 5% of foreign buyers as foreigners are kept out of borders

4/13/2021

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Demand for luxury homes surged dramatically in March, based on data released by the Urban Redevelopment Authority (URA), suggesting that the ultra-rich are back with a vengeance following a long hiatus caused by the pandemic.

For private property in general, it was also the highest sales recorded in a month in the past four years.

The developers’ monthly sales data released on 15 April 2021 showed that a total of 546 luxury homes in prime districts were sold last month — up nine times from the 58 units transacted in the core central region of Singapore in February this year and more than 10 times from the 45 sold when compared with March last year.

Last month’s sales of luxury homes was the highest since November 2013, when 668 units at premium locations in central Singapore were sold.

Luxury home sales rose 10-fold in March: Most buyers Singaporeans but foreigners picked up trophy homes

There were around 10 times more luxury private homes in prime districts sold in March than in February 2021
In all, private homes sold in March was the highest since November 2013
Analysts said Singaporeans made up the bulk of the purchases, however, foreign buyers are snapping up the most expensive condos
The trend is likely to continue over the next few months

There were 16 new homes transacted above S$5 million last month in , two of which were sold above S$10 million.

Topping the chart was a penthouse unit at the 99-year leasehold Midtown Modern condominium project near Bugis MRT Station, which sold for S$14.8 million, or a staggering S$4,213 per square foot (psf). The other was a unit at the freehold Meyerhouse condo in East Coast that was sold for S$13.9 million, or S$2,450 psf.

Both were bought by foreign buyers, property experts said.

Condo sales were also brisk across the whole of Singapore. A total of 1,296 units were sold in March, which was around double of the 645 units sold in February and the 660 units sold in March last year.

Kiwi Lim from Huttons Asia believe that Covid measures that had restricted the entry of foreign investors into Singapore's borders these past 14 months has given Singaporeans a rare opportunity to buy luxury condos without competing directly with foreign property buyers.

Singaporeans and PRs snapped up luxury homes like the 558-unit Midtown Modern luxury project, a development by GuocoLand, which was launched in the second half of March. The 368 units sold in March accounted for nearly a third of all private home sales last month.

With the buoyant March numbers this year, it could be an indication that wealthy foreigners are returning to Singapore.

The number of ultra-high-net-worth-individuals (UHNWIs) in Singapore grew by 10.2 per cent last year from 2019, despite the pandemic-led recession. These are people with a US$30 million (S$40 million) net worth inclusive of their primary residence.

It was observed that both foreign and local home buyers were looking to penthouses or units with more than 3,000 square feet. With the limited availability of newly launched penthouses in previous months, penthouses in the resale market were sought after by these UHNWIs who place greater priority on quality and living spaces with Singapore citizens making up the bulk of the transactions.

From the March sales figures, 1,296 private homes sold, 82.2 per cent were bought by Singaporeans, 13.4 per cent by Singapore permanent residents, and 4.3 per cent by foreigners.

Of the properties priced S$5 million and above, there were 10 purchases by Singaporeans. In contrast, there were only two purchases by foreigners. This is another illustration of the ample liquidity among Singaporeans in recent years.

Taiwanese family bought the whole entire development - Eden located at Draycott in the CCR region for $4,8xx psf

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GLS land parcels in confirmed list for 1st half of 2021

4/10/2021

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Proposed Residential Sites for 1H2021 GLS Programme - source: MND

The Government's efforts to moderately increase the supply of land for private homes has caused the supply of unsold new private residential home stocks to fall sharply creating a desperate need for developers to look towards the enbloc sales alternative in acquiring more land parcels. Analysts however believe the upcoming enbloc fever may not be to the extent of the collective-sale fervour seen in 2017 and 2018.

The uptick in residential supply from confirmed sites under the Government Land Sales (GLS) programme for the first half of next year follows sharp cuts in the second half of 2020 owing to the Covid pandemic.

The private home supply of 1,605 units from the four confirmed list sites (as seen in the table above) rose by 235 units or about 17 per cent from a five-year low of 1,370 units in the second half of the 2020 GLS programme.

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The land supply was "carefully calibrated to take into account the Covid-19 and macroeconomic situation. Given the continued uncertainties in economic and labour market conditions, the Government has decided to maintain a moderate supply of private residential units on the confirmed list.

The confirmed list includes one executive condominium (EC) site that can yield about 590 units. The other three sites also offer 9,200 sq m gross floor area (GFA) of commercial space.

Four GLS land parcels in the confirmed list for sale in the 1st half of 2021 includes:

Tampines Street 62 (Executive Condo land site)
Lentor Central (Mixed development land site)
Slim Barracks Rise (Parcel A)
Slim Barracks Rise (Parcel B)

Tampines St 62 (Parcel A) (Executive Condo)

Lentor Central (mixed development)

Slim Barracks Rise (Parcel A and Parcel B)

The two parcels of land at Slim Barracks Rise namely Parcel A and Parcel B will be launched for tender in June while the other two sites on the Confirmed List - an additional parcel on Tampines Street 62 and land on Lentor Central - will be launched in April.

The two sites at Slim Barracks Rise, in the one-north area, located very near the current upcoming condo launch One North Eden, will see good housing demand due to the growing working population in the one-north biomedical and technology hub and located near the Buona Vista MRT station. Both the biomedical and technology sectors are two fast growing sectors which have both benefited from the pandemic.

Kiwi Lim from Huttons Asia believe that with the current low supply of new condo units in the market from the strong domestic demand seen both in the new sale and resale market, these GLS sites are likely to attract a competitive level of bidding activity as developers rush to stock depleted land banks.

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The toughest property cooling measure decision in 2021

4/4/2021

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An amazing total of 10,008 new private residential units were sold in 2020, a year when Singapore recorded its worst recession as a global pandemic resulted in lockdowns in many countries.

This year, private home prices in Singapore rose by 2.9 per cent in the first quarter of 2021, according to official reports released by the Urban Redevelopment Authority (URA) on 1 April 2021. This followed a 2.1 per cent increase in the previous quarter, and a 2.2 per cent rise in private home prices for the whole of last year in 2020 amid the COVID-19 pandemic.

Resale prices in the public HDB housing market rose 2.8 per cent in the first quarter of 2021. This comes after prices in the fourth quarter of 2020 climbed 3.1 per cent over that in the previous quarter. Prices in third quarter of 2020 rose by 1.5 per cent.

Singapore's sound property market fundamentals today, as well as the effectiveness of the government's Covid-19 response packages in helping to keep many businesses has helped build confidence among Singaporeans and among foreigners who are considering moving their families to Singapore amidst a spate of racism against Asians seen happening across the world.

These figures show there is a genuine demand for property and the market is not largely driven by investors

On 18th January 2021, Singapore's deputy prime minister Heng Swee Kiat said the government is paying close attention to the property market after home sales in Singapore during pandemic-ravaged year of 2020 exceeding expectations amid a lower interest rate environment and a still-low unemployment rate - a phenomenon also seen in other developed cities and countries. The government has hinted many times that they may implement cooling measures to "cool" Singapore's property market, so let's examine the government's options:

Reduce Loan To Value (LTV)?

Loan-To-Value (LTV) is an often used ratio in mortgage lending to determine the amount necessary to put in a down-payment and whether a lender will extend credit to a borrower.

The bank loan LTV used to be 80%, but it was tightened to 75% in July 2018 as one of the implemented measures to cool the property market. Further tightening of this Loan-To-Value will especially hurt the first time buyers as most property investors buying their 2nd or 3rd properties generally do not need the maximum LTV for their loans.

Many analysts believed that this Covid spike in property demand is driven by many first time home buyers as we not only see an increase in private property prices, we also see a return of cash over valuation or COV for HDB flat transactions. Covid may have created a genuine need for young adults / couples to move out of their parent's homes and buy their first property. This phenomenon is not only seen in Singapore but also seen in many developed cities around the world.

Lower TDSR?

Total debt servicing ratio (TDSR) refers to the portion of a borrower's gross monthly income that goes towards repaying the monthly debt obligations, including the loan being applied for. A borrower's TDSR should be less than or equal to 60%.

As property loans can be large, long-term liabilities for most individuals and households. TDSR limits ensure that borrowers are not over-leveraged for property purchases. This also limits and reduces the ability of genuine home buyers in getting their desired homes as they will need to meet TSDR requirements when applying for their property loans.

If the government decides to lower TDSR to maybe 50% of the total income, this will greatly impact genuine homebuyers as the banks will only take help of homebuyers income as a guide when calculating the loan amount to offer them for their property purchase therefore going against the spirit of the government's plan for everyone who needs a home to be able to afford them.

Increase ABSD?

Singapore may be the only country in the world that discourages its citizens from buying more than one property by implementing Additional Buyer Stamp Duties (ABSD) on top of its normal Buyer's Stamp Duty due to its limited and scarce land space. Singapore currently charge its own citizens a whopping 12% ABSD for buying a second property and an astonishing 15% ABSD for buying a 3rd property. Some felt its akin to punishing the rich for being rich. So if the government increases the already hefty ABSD towards its own citizens for buying properties, there may be a knee jerk reaction in the property market negatively impacting the critical construction sector which is already reeling from last year's Covid pandemic.

The construction sector has been one of the hardest-hit industries amid the fallout from the pandemic, contracting more than 50% and saw one of the largest declines in employment - by 13,600 workers, second to only the food and beverage services sector. This sector is expected to slowly improve in 2021.

Selling more GLS land parcels?

One suggestion for the government to reduce the price of future new condo launches is to release more land parcels for government land sales (GLS). This will increase the supply of land to build more condos and will also effectively lower the land bidding costs as developers have more land parcels to choose from and not be forced to compete for limited land parcels which effectively will drive up the winning bid price. Higher bids will mean higher prices for the future condo units as developers pass the higher costs to consumers. Some wonder how does the government expect developers to be prudent in their land bids when they are not releasing enough GLS land to meet demand for housing.

Real estate professional Kiwi Lim from Huttons Asia felt the government may not be too keen to sell more land parcels as it may lower the prices of the winning bids for the individual land parcels thereby reducing the total sum from the land sales that contributes to the government reserves, especially when more than $90 billion has already been spent last year from the reserve coffers to manage the economy and Covid pandemic last year.

"This year, our government's policy makers might really have a headache deciding on whether to implement additional cooling measures for Singapore's property market as the government does not want to cripple the construction industry and other industries linked to it. The impact such a decision may have on the overall Singapore economy during this Covid period may be immense. We believe the market is driven by many first time buyers and not purely by investors and foreigners (foreigners were mainly kept out of our borders during this pandemic period). I have never seen our government deliberate so long on implementing property cooling measure after various writeups of possible cooling measures were floated in the mass media." said Kiwi

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Longer waiting time for homes, higher construction costs due to Covid-19 curbs: Contractors Association

Major cities worldwide saw sharp rise in property prices last year after Covid pandemic lockdowns

High end condo sales surge in March with only 5% of foreign buyers as foreigners are kept out of borders

GLS land parcels in confirmed list for 1st half of 2021

The toughest property cooling measure decision in 2021

Kiwi Lim

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Longer waiting time for homes, higher construction costs due to Covid-19 curbs: Contractors Association

Major cities worldwide saw sharp rise in property prices last year after Covid pandemic lockdowns

High end condo sales surge in March with only 5% of foreign buyers as foreigners are kept out of borders

GLS land parcels in confirmed list for 1st half of 2021

The toughest property cooling measure decision in 2021

Kiwi Lim​

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