Singapore's residential market is expected to remain resilient both in terms of transaction volume and prices in 2019, despite the July 6 cooling measures. Demand for residential properties has stayed largely resilient since the cooling measures, although buyers have become more selective in view of the higher upfront costs due to the increase in the additional buyer's stamp duty (ABSD) across the board, with the exception for first-timers. This is evidenced from the encouraging sales in select new launches such as JadeScape and Parc Esta in recent months.
Additionally, rents and occupancy rates are recovering, underpinned by the low incoming supply through 2021. This bodes well for the rental market and could translate into some buying demand in completed properties as rental yield recovers. For 2018, we expect overall residential prices to grow by between 7 and 8 per cent. Transaction volume is expected to come in at around 23,000 units. This is just a tad lower than the 25,000 units transacted last year. Next year, prices are expected to remain in positive territory at between zero and 3 per cent. This is generally supported by the nation's GDP growth forecast which, according to Oxford Economics, will be around 3.1 per cent in 2019.
Properties put up for auction surge
The number of properties put up for auction surged by almost 50 per cent in 2018 compared with 2017, even as the number that successfully went under the hammer fell sharply. There was a rush of listings in the final three months of 2018, with more than a third put up in the fourth quarter, according to a property consultancy. There were 1,120 properties put up for auction — the highest since 2011 — a 47.4 per cent increase from the 760 listings last year. Out of the 1,120 listings, 41.9 per cent were residential properties, 22.9 per cent were retail units and 24.8 per cent industrial properties. Owner sale listings also reached a record high since 2011, increasing by 72.7 per cent. But this was driven by a larger number of listings in the retail and industrial segment. There were 689 auction listings in 2016 and 788 in 2015, with the majority of listings being residential properties.
About 60 per cent of 2018's listings were put up between July and December, with 291 and 380 listings in the third and fourth quarter, respectively. The decline in successful auctions also meant that sellers have not dropped their prices as much as buyers would have hoped. “Sellers may not be so willing to adjust their prices in response to cooling measures,” said Mr Lee Sze Teck, head of research for property agency Huttons Asia. “Some of them are in a strong (cashflow) position, so they are not in a hurry to sell.” The numbers in the auction market were similar to the resale market, which has been affected more by the cooling measures as compared to new launches, added Mr Lee. Based on caveats lodged with the Urban Redevelopment Authority, Mr Lee said that resale volume for private properties tumbled by more than 40 per cent after the cooling measures. Only 2,672 resale transactions were recorded in the third quarter of 2018, compared to 4,700 in the previous quarter.
The outlook for the private residential leasing market looks promising in 2019, with rent and occupancy rates likely to improve as supply eases and demand continues to be supported by displaced owners. According to data from the Urban Redevelopment Authority (URA), a total of 10,119 private residential units are slated for completion in 2019, higher than the 7,898 units that could be completed this year. However, the tally for 2019 is still lower than the ten-year average annual supply of 12,950 units, noted Huttons Asia head of research Lee Sze Teck. In the first three quarters of this year, the URA private residential property rental index has edged up 1.6 per cent after turning around in Q1 2018, although rents are still nearly 12 per cent below their peak in Q3 2013, analysts said.
Huttons Asia expects rents to pick up by 2 per cent for 2018 as a whole, and projects the upward trajectory to continue next year, supported by economic growth. Mr Lee said: "If market demand maintains at the 10-year historical average of 11,400 units, occupancy rate will continue to improve and rents might edge up another 3-5 per cent in 2019." Drilling down by region, rents in the core central region (CCR) could pick up faster than the rest of central region (RCR) and outside central region (OCR), Huttons forecasts. "There has been very low volume of launches in the CCR for the past few years. Coupled with the high number of successful en bloc deals in the CCR - almost 40 sites or 1,800 units since 2016 - it means that growth of new residential units in the CCR will be very low in 2019," said Huttons' Lee Sze Teck.
Putting his investment eggs in a range of baskets is paying off well for engineer and property investor Dennis Leong. The strategy is delivering him stable returns and setting him up for a sustainable retirement. Besides owning a total of five residential properties in China and Singapore, his portfolio includes shares, real estate investment trusts (Reits) and bonds. While in China, he bought three properties there - all fully paid up and being rented out. In Singapore, he has two properties. Besides his residential unit, he own a two-bedroom, 860 sq m apartment in central Singapore. He bought this unit a decade ago at $980,000 and its market value is approximately $1.8 million. All four investment properties are fully paid up and rented out at an annual yield of about 6 per cent. The properties in China are leasehold while those in Singapore are freehold.
What your condo management can do if you break rules
Park properly in condos or you may get slapped with hefty wheel clamp release fees. But are management corporations (MCs) allowed to issue punitive fines? The answer is actually no. Under the Building Maintenance and Strata Management Act (BMSMA) - the framework MCs use to administer estates - MCs have no powers to impose fines and penalties. But lawyers and property experts say fees - not fines - are likely allowed if covered by the property's by-laws. In 2016, the Strata Titles Board (STB) ruled that a by-law which imposed a penalty and was not made in the interest of all unit owners was invalid. By-laws are made through resident votes at general meetings and are binding on the building's subsidiary proprietors, lessees and occupiers. Commercial and industrial buildings are similarly subject to the BMSMA and not allowed to impose fines or penalties. As a result, MCs are cautious when dishing out these charges.