Hello, 2019

How Singapore's property landscape could break new ground

Corinne Kerk

What a year 2018 was for property. After four straight quarters of higher private residential prices, the Government introduced cooling measures in July to curtail the exuberance of the market and allow prices to grow at a sustainable rate.

Meanwhile, a slew of new private condominium launches following previous successful en bloc and government land sales were greeting home buyers, who were bowled over by their stunning showflats, innovative features and numerous facilities.

They were not, however, as impressed with the direction homes were heading — mostly towards the smaller end of the scale.

Then lo and behold, new guidelines were announced in October to reduce the maximum number of units allowed in new private housing projects in the heartlands.

These were meant to lessen the cumulative effect new developments could pose to local infrastructure, as well as encourage developers to provide a more balanced mix of unit sizes.

New guidelines to limit the size of balconies, as well as a bonus allowance for indoor communal spaces, were also announced shortly after. These will come into effect on Jan 17.

It is a little too early to determine the full effects these have had on the private residential property market, but there have been some aftershocks for sure.

For instance, The Straits Times has reported how experts have been surprised by the severity of the new property curbs, with reactions ranging from regulations being described as “a sledgehammer to kill a fly”, to concerns about a sales momentum freefall and subdued sales volumes for the months ahead.

How exactly will these impact private property this year, and what else can we expect?

We speak to industry experts so you can be better prepared when property hunting in the months ahead.

Innovative designs for small spaces

Home designs must make strata space feel more spacious despite the smaller unit footprints, says Mr Lee Wai Fong, director and head of the Residential Typology Group at DP Architects.

To achieve this, add features such as higher ceilings, corner windows, full-height window openings, open kitchens and highrise planters.

Certain functions such as storage, a laundry/dryer, and parts of the kitchen and study room can also be transferred out of apartments into communal amenities to make more room.

This is especially relevant for smaller units, as tenants, singles and young people are more predisposed towards co-living and do not mind sharing such amenities.

Possibly cheaper price tags

● Higher additional buyer’s stamp duty
● Tighter loan-to-value limits on residential property purchases
● Stock market turbulence
● Changing interest rates
● The fall-out from the trade war between the United States and China

These factors will affect property purchases, and buyers will accept them as the new normal says Mr Nicholas Mak, executive director at ZACD Group.

Developers will probably bid less for land, and home owners will have to accept a slightly lower land price. The flipside? The cost of a replacement unit may also be moderated. However, this situation could take years to materialise, he adds.

Choice districts identified

Mr Alan Cheong, senior director of research and consultancy at global real estate service provider Savills Singapore, believes desirable locations will include Sim Lian’s project (formerly Tampines Court), and CapitaLand and City Development Limited’s joint-venture development at Sengkang Central.

ZACD Group’s Mak expects prime districts 9, 10 and 11, as well as the east coast and north-east, which have seen many en bloc sales, to generate excitement through new launches.

Post en-bloc buying and selling patterns

What will en bloc-ers do with their millions? For owner-occupiers, it depends on the en bloc proceeds they receive and where they prefer to live.

ZACD Group’s Mr Mak notes that in recent collective sales where developments sold were privatised HUDC projects, sellers received between $1 million and $2.5 million each.

With that, empty nesters could buy a 99-year leasehold condominium unit. But since a private property would likely be smaller and represent a downgrade, others may buy five-room or executive Housing Board flats and keep some money in the bank.

Savills Singapore’s Mr Cheong says many others — particularly investors — are waiting to buy another private property, since those who have tasted the fruit of collective sales tend to want to purchase private property again. Seniors may downgrade to public housing and pass the surplus funds to their children to buy private property, preferably one with en bloc potential 10 to 15 years down the road.

One mortgage type to rule them all

With the continuing uptrend in interest rates, we are likely to see more borrowers opting for fixed rate packages to lock in the lower rates now and hedge against future interest rate hikes.

— Mr Keff Hui, director of Private Client Services, Mortgage Supermart

Interest rates will go up

 

Three per cent is the forecast for the federal funds rate to reach this year, as rates keep heading north. And looking at the pace of US projected rate hikes, Mortgage Supermart’s Mr Hui sees the one- and three-month SIBOR climbing towards 2 to 2.5 per cent by the end of this year.