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Lawrence Wong announced on 16 May 2020 that new HDB BTOs and properties will be priced higher in future due to higher costs of construction brought about by Covid.
1. Higher Construction Costs:
The measures to keep Covid-19 transmission low in the construction sector are bound to increase costs for contractors, which they will have to bear in principle. National Development Minister Lawrence Wong said at a press conference on 16 May 2020 that construction costs will rise as a result, and all in Singapore must be prepared to bear them.
The measures to keep Covid-19 transmission low in the construction sector are bound to increase costs for contractors, which they will have to bear in principle. National Development Minister Lawrence Wong said at a press conference on 16 May 2020 that construction costs will rise as a result, and all in Singapore must be prepared to bear them.
Pent up demand immediately caused property prices to increase after lockdown in China
2. Pent Up Demand:
We see a lot of pent up demand accumulating from the 1st half of this year as the usual yearly demand for properties build up during the Covid pandemic where viewings were reduced and eventually stopped during the circuit breaker period.
Huttons Asia's real estate professional Kiwi Lim said "property buyers after enduring for the first half of the year released some pent up demand when sales picked up during circuit breaker period to exceed pre-circuit breaker period sales even though buyers were not able to physically view showflats but had to buy only thru online viewings. This is unprecedented and an amazing show of strong market demand.
We see a lot of pent up demand accumulating from the 1st half of this year as the usual yearly demand for properties build up during the Covid pandemic where viewings were reduced and eventually stopped during the circuit breaker period.
Huttons Asia's real estate professional Kiwi Lim said "property buyers after enduring for the first half of the year released some pent up demand when sales picked up during circuit breaker period to exceed pre-circuit breaker period sales even though buyers were not able to physically view showflats but had to buy only thru online viewings. This is unprecedented and an amazing show of strong market demand.
Pent up demand in the market see sales of new launches during Circuit Breaker exceed pre-Circuit Breaker period.
Vicky Zhao's husband bought $28 million Ardmore Park last month in April 2020
3. Foreigner buyers returns
Huttons Asia's property analyst Kiwi Lim said "foreign buyers have always made a splash in our real-estate property market and during this Covid pandemic, Singaporeans see a rare period where the majority of foreign buyers are absent as they are locked down in their own countries, resulting in only a small trickle of foreigner purchases, e.g. Vicky Zhao's purchase last month. These foreign buyers will return once the dust settles over Covid."
Huttons Asia's property analyst Kiwi Lim said "foreign buyers have always made a splash in our real-estate property market and during this Covid pandemic, Singaporeans see a rare period where the majority of foreign buyers are absent as they are locked down in their own countries, resulting in only a small trickle of foreigner purchases, e.g. Vicky Zhao's purchase last month. These foreign buyers will return once the dust settles over Covid."
These cooling measures previously implemented by the government successfully prevented a bubble in Singapore's real estate forming a very stable asset class even during such unforseen crisis like the Covid pandemic
4. New Singapore Permanent Residents (SPR)
Each year, we have around an estimated 30,000 new permanent residents in Singapore and these new SPRs are not eligible for BTOs and they have to wait 3 years before they can buy a HDB resale flat. Many of them are urgent to own a property and therefore chose to buy a private condo instead. This group of new SPRs this year have also been holding back their purchase due to Covid and their demand for property will accumulate to coincide with the new batch of 30,000 SPRs next year to search for their dream homes.
5. Many Enbloc Buyers Are Still Actively Looking
More than 10,000 millionaire households were created during the 2017 and 2018 enbloc fever. Less than half of these owners had made their move to buy properties with their new wealth derived from property. The other half is expected to make their move soon.
Each year, we have around an estimated 30,000 new permanent residents in Singapore and these new SPRs are not eligible for BTOs and they have to wait 3 years before they can buy a HDB resale flat. Many of them are urgent to own a property and therefore chose to buy a private condo instead. This group of new SPRs this year have also been holding back their purchase due to Covid and their demand for property will accumulate to coincide with the new batch of 30,000 SPRs next year to search for their dream homes.
5. Many Enbloc Buyers Are Still Actively Looking
More than 10,000 millionaire households were created during the 2017 and 2018 enbloc fever. Less than half of these owners had made their move to buy properties with their new wealth derived from property. The other half is expected to make their move soon.
6. Developers Have Lesser Land Banks
Developers have launched around an estimated 2 / 3 of their available land banks bought during the enbloc fever and will have lesser new condo projects to launch in the next few years.
7. Circuit Breaker Creates New Demand
Families are required to stay home during this recent Circuit Breaker period and such an extended period of being at home with the family has caused enormous friction among family members resulting in more enquiries for properties as adults decide to finally move out after procrastinating for years.
Developers have launched around an estimated 2 / 3 of their available land banks bought during the enbloc fever and will have lesser new condo projects to launch in the next few years.
7. Circuit Breaker Creates New Demand
Families are required to stay home during this recent Circuit Breaker period and such an extended period of being at home with the family has caused enormous friction among family members resulting in more enquiries for properties as adults decide to finally move out after procrastinating for years.
8. Future GLS
We are seeing a new trend for GLS sites as government now require developers to include extra ancillary works from developers when they bid for Government Land Sales (GLS) to also require developers to build roads, parks, bus interchange, community centres, etc. These will result in higher costs and take up part of the land area therefore transferring the higher cost to buyers eventually.
We are seeing a new trend for GLS sites as government now require developers to include extra ancillary works from developers when they bid for Government Land Sales (GLS) to also require developers to build roads, parks, bus interchange, community centres, etc. These will result in higher costs and take up part of the land area therefore transferring the higher cost to buyers eventually.
Can you imagine what will happen to market sentiment if a cure or vaccine for Covid is discovered tomorrow?
If you enjoyed reading the analysis above or if you are keen to hear more from Huttons Asia's Kiwi Lim on his real estate market analysis for your asset progression, you may Whatsapp 9386 4036 to arrange for an insightful Zoom online session with him.
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Developers with projects under construction but yet to be completed will now have more time to sell and construct.
The Government announced today temporary relief measures for property developers affected by disruptions to construction timelines and sales of housing units resulting from the COVID-19 pandemic, and in particular the implementation of the circuit breaker from 7 April to 1 June 2020. The Government will continue to ensure that prices for private residential properties remain broadly consistent with economic fundamentals. Hence, these temporary relief measures do not alter the other existing residential property market cooling measures.
Real estate consultant Kiwi Lim from Huttons Asia Pte Ltd believe these new timely relief measures will prevent developers from being pressured to offer steep discounts due to Covid-19 effect on the market.
Real estate consultant Kiwi Lim from Huttons Asia Pte Ltd believe these new timely relief measures will prevent developers from being pressured to offer steep discounts due to Covid-19 effect on the market.
Buyers of projects like One Pearl Bank - an iconic rare city condo on top of the beautiful Pearl's Hill will have more time under the progressive payment scheme to pay their instalments. Click to find out more.
The temporary relief measures for developers, to be implemented with immediate effect, are:
(i) Extension of the Project Completion Period (PCP) by 6 months for residential, commercial and industrial development projects;
(ii) Extension of time by 6 months for the commencement and completion of residential development, and sale of housing units in residential development projects in relation to the remission of the Additional Buyer’s Stamp Duty (ABSD) for housing developers;
(iii) Extension of the PCP and/or disposal period by up to a total of 6 months for residential development projects under the Qualifying Certificate (QC) regime for foreign housing developers
(i) Extension of the Project Completion Period (PCP) by 6 months for residential, commercial and industrial development projects;
(ii) Extension of time by 6 months for the commencement and completion of residential development, and sale of housing units in residential development projects in relation to the remission of the Additional Buyer’s Stamp Duty (ABSD) for housing developers;
(iii) Extension of the PCP and/or disposal period by up to a total of 6 months for residential development projects under the Qualifying Certificate (QC) regime for foreign housing developers
Residential condo projects like Leedon Green (former Tulip Garden) a quality development by MCLLand and Yanlord Land in exclusive private enclave, near 2 MRT & popular schools - will enjoy relief over completion dates.
The PCP for qualifying residential development projects on Government sale sites, or on land which was directly alienated or had their lease renewed by the Singapore Land Authority (SLA), will be extended by 6 months. To qualify for the extension, both of the following conditions are to be met:
(i) The land was awarded on or before 1 June 2020, or the land was directly alienated or had their lease renewed by SLA on or before 1 June 2020; and
(ii) The original timeline for the project to be completed was on or after 1 February 2020.
Eligible developers will be notified by the respective agencies. No application is necessary.
(i) The land was awarded on or before 1 June 2020, or the land was directly alienated or had their lease renewed by SLA on or before 1 June 2020; and
(ii) The original timeline for the project to be completed was on or after 1 February 2020.
Eligible developers will be notified by the respective agencies. No application is necessary.
Condo projects like Jui Residences will enjoy an extension of the PCP and / or disposal period by up to a total of 6 months for residential projects under the Qualifying Certificate (QC) regime for foreign housing developers
Under the ABSD regime, developers are to commence and complete the residential development, and sell all housing units in the residential development project within the specified timelines[3], failing which they will be subject to the ABSD on the purchase of the land. Under the temporary relief measures, the specified commencement, completion and sale timelines will be extended by 6 months, for qualifying residential property developments.
To qualify for the extension of the specified timeline for commencement of residential development, both of the following conditions are to be met:
(i) The land was purchased on or before 1 June 2020; and
(ii) The original timeline for commencement of the residential development expired on or after 1 February 2020.
To qualify for the extension of the specified timeline for commencement of residential development, both of the following conditions are to be met:
(i) The land was purchased on or before 1 June 2020; and
(ii) The original timeline for commencement of the residential development expired on or after 1 February 2020.
Extracted from MND Newsroom Press Release on 6 May 2020
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New Temporary Relief Measures for Singaporean Married Couples Affected By Remission of ABSD Timeline
Singaporean married couple purchasing a second residential property jointly expecting a remission of the ABSD paid on their second residential property will have more time to sell.
The Government announced today temporary relief measures for property developers and individuals affected by disruptions to construction timelines and sales of housing units resulting from the COVID-19 pandemic, and in particular the implementation of the circuit breaker from 7 April to 1 June 2020. The Government will continue to ensure that prices for private residential properties remain broadly consistent with economic fundamentals. Hence, these temporary relief measures do not alter the other existing residential property market cooling measures.
The Tre Ver is a beautiful condo developed by reputable UOL loved by Singaporean couples.
Real estate consultant Kiwi Lim from Huttons Asia Pte Ltd felt that most of the newly announced temporary relief measures to be implemented with immediate effect are targeted at cushioning developers from Covid-19 impact, with the following measure affecting new launch property buyers and some Singaporean married couples, e.g.
(i) Extension of the Project Completion Period (PCP) by 6 months for residential, commercial and industrial development projects;
Buyers of buildings-under-construction (BUC) will now have a bit more time to pay their progressive payment as developers are given more time to build their projects.
(ii) Extension of time by 6 months for the sale of the first residential property in relation to the remission of ABSD for the second residential property purchased by a Singaporean married couple.
Under the ABSD regime, a Singaporean married couple purchasing a second residential property jointly has to sell their first residential property within the specified timeline, failing which they will not be eligible for a remission of the ABSD paid on their second residential property. The specified timeline for sale of the first residential property is:
(i) 6 months after the date of purchase of the second property, if it is a completed property; or
(ii) 6 months after the issue date of the Temporary Occupation Permit (“TOP”) or Certificate of Statutory Completion (“CSC”), whichever is the earlier, if the second property was uncompleted at the time of purchase.
(i) Extension of the Project Completion Period (PCP) by 6 months for residential, commercial and industrial development projects;
Buyers of buildings-under-construction (BUC) will now have a bit more time to pay their progressive payment as developers are given more time to build their projects.
(ii) Extension of time by 6 months for the sale of the first residential property in relation to the remission of ABSD for the second residential property purchased by a Singaporean married couple.
Under the ABSD regime, a Singaporean married couple purchasing a second residential property jointly has to sell their first residential property within the specified timeline, failing which they will not be eligible for a remission of the ABSD paid on their second residential property. The specified timeline for sale of the first residential property is:
(i) 6 months after the date of purchase of the second property, if it is a completed property; or
(ii) 6 months after the issue date of the Temporary Occupation Permit (“TOP”) or Certificate of Statutory Completion (“CSC”), whichever is the earlier, if the second property was uncompleted at the time of purchase.
Pasir Ris Central's upcoming fully integrated condo and shopping mall will be a star attraction for east side lovers
Under the temporary relief measures, the specified sale timeline for remission of ABSD paid on their second residential property for Singaporean married couples will be extended by 6 months. To qualify for this extension, both of the following conditions are to be met:
(i) The couple’s second residential property was jointly purchased on or before 1 June 2020; and
(ii) The original timeline for sale of the first residential property expired on or after 1 February 2020.
Eligible Singaporean married couples can refer to the IRAS website for more details. The application for the remission of ABSD must be made within 6 months after the date of sale of the first residential property.
(i) The couple’s second residential property was jointly purchased on or before 1 June 2020; and
(ii) The original timeline for sale of the first residential property expired on or after 1 February 2020.
Eligible Singaporean married couples can refer to the IRAS website for more details. The application for the remission of ABSD must be made within 6 months after the date of sale of the first residential property.
Extracted from MND Newsroom Press Release on 6 May 2020
