SINGAPORE HOUSING MARKET STUDY

Transcription

1 SINGAPORE HOUSING MARKET 218 STUDY

2 Executive Summary Singapore residential market on recovery with house prices bottoming out and implementation of government property cooling measures Investors investing in the Singapore Housing market have finally witnessed minuscule capital appreciation in 217 after a 4 year long slump. Annual capital appreciation stands at 2.32% in the last 12 months and.44% in Q4 17. This uptick in sales and volume in private residential transactions has been due to various reasons namely : Improving Singaporean economy. Ease on Sellers Stamp Duty. TDSR( Total Debt Servicing Ratio) threshold removed giving homeowners the ability to finance their homes over the 6% limit and refinance their existing loans. Price and Transactions Timeline (Annual & Monthly) Price Sales Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Sales Price Nov-17 Dec The three submarkets namely OCR(Outer Central Region), CCR(Central Core Region) and RCR(Rest of the Central Region) have an increase in transaction volume up by 77.8%, 4.6% and 55.1 % respectively from OCR being 37% and 2% cheaper than CCR and RCR respectively has led to this surge in transactions. Unsold stocks are reduced to 16,929 in 217 from units in Q The collective home deals and prices are increasing not on the basis of speculation rather on solid fundamentals. We can expect the Singapore market to gain momentum in the coming year. Annual Capital Appreciation Quarterly Capital Appreciation Median Property Price 2.32%.44% $1516per sq. ft. Annual Capital Appreciation Quarterly Capital Appreciation Median Property Price 1.47% 2.32% $1368per sq. ft. Non Landed Landed

3 Housing Demand & Supply Slow population growth, excessive supply and lower projected construction contracts places residential housing demand at unexciting levels The Singapore private residential market was severely over supplied and vacancy rates were as high as 8.9% in Q Government Land sales(gls) planned supply of private homes has been trimmed to 38 units annually from 94 units in the time frame of and respectively to curb the oversupply. The Building and Construction Authority announced its total construction contracts to $24b which were lower than the projected $28b to $35b due to a weak demand from the private sector. Singapore Population Growth Population Unemployment Rate The unemployment rate remains static at 2.1% Q-o-Q whereas the household income has grown by.2% Y-o-Y 217. The job market is tough even though the economy is growing at a healthier rate of 2.3%. Historically, the Singapore housing market has been witnessing a slowdown in the past 15 quarters. Slow population growth and weak demand from the private residential sector has not created exuberant demand in the private residential sector. However, with prices in Singapore bottoming out, on-going en block deals prevalent across Singapore and foreign investment from China improving in comparison to 216 levels as they are outbidding many local developers are factors that might lead to some positive demand in the near future. Housing Market Size Annual Growth Transactions Q1 Q3 17 $24.6 B 48.6%* 6816 *The surge in annual growth is due to the collective (en-bloc) deals

4 Micro-Markets Price Performance and Industry Outlook The primary market in Non-Landed homes and secondary market in Landed homes are showing a strong market sentiment for current and future investors The Singapore Housing market is categorized under OCR,CCR and RCR across Landed and Non Landed Homes. Landed homes only comprises of 2% of the private residential market. Due to attractive price levels in comparison to 213 and a decline of over 16% there has been a tremendous surge in Landed Homes transactions. Number of landed homes sold from Jan-Oct are up 5% from 19 to 1513 units which are primarily secondary market. 15.% 1.% 5.%.% -5.% -1.% -15.% -2.% -25.% Core Central Region Rest of Central Region Outside Central Region 1.% 5.%.% -5.% -1.% -15.% -2.% Performance of non-landed residential projects and executive condominium were astronomical in Q3 217 with 1% of the total units launched being sold in Le Quest and Hundred Palm residences. The Outer Central Region has the maximum number of transactions in the Non-landed Segment with 6499 units sold in 217 which are 77.1% higher than 216. RCR and CCR managing a healthy 55.1% and 4.6% increase in transactions. Gross Rental Yields(+) 3 year capital appreciation(+) 1 year capital appreciation Returns 3 Year Returns 5 Year Y-O-Y Oct 17 Data 3 Year Returns With the on-going price correction in landed homes and uptick in sales and volume in the Non-landed region, Singapore housing market sentiment is definitely on the forefront. Private residential en-bloc deals have reached close to 5 billion. It is anticipated that some of this money will be invested back in 218. Singapore Housing market is set to revive and home prices are expected to rise in the medium long term. Singapore might not be the market solely for rental yield driven investor because of a possible mortgage rate hike, but can be viable investment option for investors looking for capital appreciation in the medium long term.

5 Top Locations for Investment Non landed homes in outer central region and Landed homes in core central region are sound investments submarkets in Singapore for future investors The top locations in non-landed segment are in District 19, District 1, District 3, District 5 and District 9. The Core Central Region which primarily comprises of District 9, 1, 11, the downtown core have on-going launches of condo. This area has seen a.8 percent overall price increase in 217. However, it is advisable to invest in Outer Central Region as it has been the fastest to recover from the 4 year slump specifically due to its affordability factor. The secondary market in District 19 and District 28 in the landed home segment has out-performed many non-landed districts. Top Locations with Maximum Apartment Transactions District 5 District 19 District 3 District 1 District 9 Transactions Average price Top Locations with Maximum House Transactions Non-landed - Kingsford Waterbay - Guocoland s Martin Modern - Hui Hup Realty s Sophia - Martin Modern Springfield Lakes - CDL s Gramecry Park Landed - Kismis Residences - Lorong 1 Realty Park - Water Clove- Sembawang Park District 28 District 19 Transactions Average price Key Developments The Jurong Lake District will be the second largest central business district spread across 36 hectare creating 1, new jobs and 2, homes. $2b Transmission Cable Tunnel Project started in 212 consists of 35km of underground high-voltage transmission lines which is expected to be completed by 218.

6 Investment Scores and Returns The Outer Central Region offers reasonable returns in the medium long term. This is simply because of the affordability factor in comparison to other sub-markets. Micro Market Positioning in Terms of Returns From an investor point of view, assuming the pricing, rental yield and vacancy rate fluctuations remain at their last 5 years average value, rate of returns from investing in Singapore's key micro-markets would be % for Core Central Region, -18.5% for Rest of the Central Region and 5.48% for Outer Central Region. Investment Score Rest of Central Region Core Central Region Singapore Outside Central Region % -15.% -1.% -5.%.% 5.% 1.% Returns Size of bubble indicates median residential price Market Gross Rental Yields 3 year 1 year capital capital Vacancy appreciatio appreciati n on GDP Per Capita (factore d) Transact ion Cost LTV Facto red Cost of Capital Capital Gain Tax Rental Income Tax PSF (USD) PSF Factored Returns 3 Year Returns 5 Year Investm ent Score Core Central Region 2.46%.89% 1% 1.3% 5.25% 24% 5% 1.68% 15.1% % -2.4% % -194 Rest of Central Region 2.72%.46% 5.1% 8.1% 5.25% 24% 5% 1.68% 15.1% % -2.68% -18.5% -147 Outside Central Region 2.81% 5.18% 2.55% 7.1% 5.25% 24% 5% 1.68% 15.1% % -6.29% 5.48% -114 Singapore 2.66% 2.18% 2.32% 8.1% 5.25% 24% 5% 1.68% 15.1% % % -1.21% -152 District 5 3.4% N/A 2.44% 7.1% 5.25% 24% 5% 1.68% 15.1% % N/A District % N/A 3.65% 7.1% 5.25% 24% 5% 1.68% 15.1% % N/A District % N/A 7.59% 8.1% 5.25% 24% 5% 1.68% 15.1% % N/A District % N/A 6.79% 7.1% 5.25% 24% 5% 1.68% 15.1% % N/A District 9 2.3% N/A 2.62% 7.1% 5.25% 24% 5% 1.68% 15.1% % N/A

7 Singapore Micro-Markets Disclaimer This document is not for public distribution and has been furnished to you solely for your information and must not be reproduced or redistributed to any other person. Persons into whose possession this document may come are required to observe these restrictions. This material is for the personal information of the authorized recipient, and we are not soliciting any action based upon it. This report is not to be construed as an offer to sell or the solicitation of an offer to buy any property. Information contained in the report, including projection, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. Neither SquareYards, nor any person connected with it, accepts any liability arising from the use of this document. The recipients of this material should rely on their own investigations and take their own professional advice. Sources: URA.GOV.SG, IRAS.GOV.SG, Savills, Theinvestor, Asiaone