Who sinks or swims in a tumultuous residential market?

By Feily Sofian / The Edge Property | December 28, 2015 10:00 AM SGT
The residential market in 2015 will likely be remembered for its low transaction volume, soft rental market and rising mortgagee sales. However, 2015 had its bright moments and may be better summed up as a year of divergence, where prices headed in different directions to seek a new equilibrium.
Developers sold 7,144 private homes between January and November this year. With no new project being launched in December, the full-year tally will likely be similar to last year’s 7,316 units. In comparison, developers sold almost 15,000 units in 2013.
Notwithstanding this, several launches such as High Park Residences and North Park Residences witnessed brisk sales. In November, meanwhile, MCC Land sold 277 of the 350 units launched at The Poiz Residences at a median price of $1,440 psf.
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Another positive highlight in 2015 was the pickup in secondary market transactions with 5,967 private homes changing hands between January and November, compared with 5,515 in 2014. The high-end segment led the rebound, clocking in 17% more caveats to date than in 2014.
With a median resale price of $1,667 psf, prices of high-end non-landed homes are at attractive levels, comparable to prices of new projects in the city fringe and at a narrow premium to new mass-market projects. Goodwood Residence chalked up the most number of resale transactions in 2015, with 31 units changing hands at an average price of $2,371 psf. Other actively transacted projects were The Sail@ Marina Bay (26 transactions at $1,889 psf), d’Leedon (18 transactions at $1,670 psf), Urban Resort Condominium (17 transactions at $2,274 psf) and Aspen Heights (16 transactions at $1,484 psf).
Here’s more of what’s hot and what’s not in 2015:
Bulletproof segment
Good class bungalows have historically proven to be a bulletproof segment. Although that market has been rather sleepy, prices have remained buoyant. Excluding land plots that are less than 1,400 sqm, the minimum area stipulated by the Urban Redevelopment Authority for GCBs, the average transacted price held firm at $1,392 psf from January to November 2015, on par with 2014 prices, which averaged $1,399 psf.
Despite market doldrums, a bungalow at 35 Ridout Road was sold at a historical high price of $91.7 million in May this year, which works out to $1,251 psf over a land area of 73,281 sq ft. This year also saw one transaction above $40 million for a bungalow at 45 Belmont Road, or$1,420 psf over its land area. The latest big-ticket transaction was for a bungalow at 16 Cable Road that changed hands for $22 million in November, or $1,293 psf of its land area.
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Including land plots which are less than 1,400 sqm, 28 bungalows in GCB designated areas have changed hands between January and November this year, leading to a total transaction value of $618.5 million. In comparison, there were 25 such transactions in 2014 with a total value of $567.8 million.
Five HDB towns bucked market trends
In the public housing sector, five HDB towns bucked the downtrend in prices owing to their prime location and a dearth of new supply. While the HDB resale price index had fallen by 1.8% in the first three quarters of this year, four-room flats in Bishan, Clementi, Geylang, Kallang/Whampoa and Queenstown saw their average and median prices increasing.
The average resale prices for four-room flats in Bishan, for example, inched up 1% from $526,032 in 4Q2014 to $531,342 in 4Q2015. Their median resale price, meanwhile, climbed 2% from $525,000 in 4Q2014 to $537,500 in 3Q2015. HDB has yet to release the 4Q2015 resale statistics as at the date of this study.
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In Clementi, resale prices for four-room flats averaged $551,000 in 4Q2015 compared with $509,750 in 4Q2014, reflecting an 8% gain this year. Separately, their median resale price rose 2% from $497,500 in 4Q2014 to $507,500 in 3Q2015.The biggest price appreciation accrued to four-room flats in Geylang, amounting to 14% in terms of average price and 15% in terms of median price. Kallang/Whampoa took the second spot with a price appreciation of 7% in terms of average price and 13% in terms of median price (see Table 1).
Table 1: Resale prices of four-room HDB flats in five towns increased in 2015
AVERAGE PRICE ($)
MEDIAN PRICE ($)
4Q2014
4Q2015
GAIN (%)
4Q2014
3Q2015*
GAIN (%)
Bishan
526,032
531,342
1
525,000
537,500
2
Clementi
509,750
551,000
8
497,500
507,500
2
Geylang
455,752
518,966
14
425,000
490,000
15
Kallang/Whampoa
509,405
543,400
7
515,000
580,000
13
Queenstown
667,976
667,583
0
667,500
685,000
3

*Latest official data

Source: HDB, The Edge Property

‘The biggest loser’
Although the proportion of unprofitable deals have been trending up, they are still a minority, accounting for 8.5% of secondary market transactions in 2015. In fact, the market malaise in 2015 involved mostly large units and properties with large price quantum in general as they bear the brunt of a tighter credit environment and interest rate hikes. Units of 1,300 sq ft or bigger accounted for 49% of unprofitable deals in 2015, followed by those in the 1,100 to less than 1,300sq ft size range (see chart).
Chart

Source: URA, The Edge Property

On TheEdgeProperty.com, resale listings for non-landed homes that were classified as undervalued have an average asking price of above $2 million. Separately, the 11 non-landed properties put up for mortgagee sales in December averaged 1,589 sq ft in size (see Table 2).
Table 2: Eleven non-landed homes put up for mortgagee sale in December 2015 with an average size of 1,589 sq ft
PROJECT NAME
ADDRESS
AREA (SQ FT)
euHabitat, #03
Jalan Eunos
527
Goodlink Park, #02
Sembawang Road
2,120
Hillsta, #19
Phoenix Road
635
Montebleu, #13
Minbu Road
807
Orange Grove Residences, #01
Orange Grove Road
2,422
Orchard Scotts, #02
Anthony Road
2,174
Park Green, #10
Rivervale Link
1,346
People’s Park Complex, #16
Park Road
1,119
Seletar Park Residence, #01
Seletar Road
1,077
St Thomas Suites, #19
St Thomas Walk
2,013

Source: Colliers, DTZ, JLL, Knight Frank

This article appeared in The Edge Property Pullout, Issue 709 (December 28, 2015) of The Edge Singapore.