BT: Jittery developers go low-rise on confidence

BT: Jittery developers go low-rise on confidence
By KALPANA RASHIWALA

The worst- kept secret in the property market is out in the open. Not only are developers less upbeat about the future but a third of them actually expect prices of new homes to decline. And market performance for the suburban residential sector may be the worst hit.

This dose of pessimism was reflected in the latest readings of Real Estate Sentiment Index (RESI) put out by the developers body and NUS.

In the wake of the Aug 30 cooling measures, some 34 per cent of developers polled for Q3 expect prices for new residential launches to decline, albeit by less than 10 per cent, over the next six months. None of the developers surveyed in Q1 and Q2 had predicted price drops.

Just 44 per cent expect more new residential units to be launched over the next half year, down from 68 per cent in the previous quarter.

The sentiment indices slipped below the psychologically significant mark of 5 in Q3, indicating respondents were less upbeat in the quarter and expect more uncertain market conditions over the next six months.

The consensus as indicated by net balances is generally weaker.

Polled on how the suburban residential sector would perform, the net balance in Q3 was -43 per cent. This means that most expect the sector to perform worse over the next six months. In Q2, this net balance was +27 per cent, hinting at better future performance.

'The strong historical price growth in the sector is not likely to be sustained moving forward. Downward adjustment to the price growth, if it occurs in the next few months, will ease some pressure on the affordability level of mass-market residential properties in suburban areas,' said Associate Professor Sing Tien Foo of NUS.

The net balance for the future market performance of the prime residential sector, while still in positive territory, has also been declining significantly, from +54 per cent in Q1 to +32 per cent in Q2 and +3 per cent in Q3.

About 70 per cent of the developer respondents in the latest survey were concerned that the government could intervene to dampen the property market further.

They also cited other factors that could hurt sentiment over the next six months. The concerns included a slowdown in the global economy (cited by 60 per cent), an increase in the supply of development land (53 per cent), too many new property launches (49 per cent), rising interest rates (47 per cent) and tightening financing/liquidity in the debt market (40 per cent).

Eighty-four per cent of all survey respondents consider it likely and very likely that there will be a further increase in the supply of development land over the next six months. An even higher proportion, 90 per cent, of respondents expect the government to further boost the supply of Build-to-Order and Design, Build and Sell Scheme public housing flats as well as executive condo (EC) units.

Recent government steps to cool the market are expected to have most impact on the HDB resale and mass private housing market segments. About 76 and 64 per cent respectively of survey respondents rated their impact on these two market segments over the next six months as significant. Conversely, the measures are expected to have the least impact on the high-end/luxury segment with 64 per cent predicting minimal impact. For the mid-end private housing segment, 79 per cent foresee only moderate impact.

Real Estate Developers' Association of Singapore and NUS' Department of Real Estate polled slightly over 70 respondents for their latest Q3 survey, similar to the size for the Q1 and Q2 surveys.

The Current Sentiment Index, where respondents are asked to rate overall Singapore real estate market conditions now compared with six months ago, fell from 5.8 in Q2 to 4.8 in Q3.

The Future Sentiment Index, where respondents rate overall property market conditions over the next six months, also slipped from 5.9 in Q2 to 4.8 in Q3. As a result, the Composite Sentiment Index (the average of the two indices), also declined to 4.8. The index ranges from 0 to 10 with a score below 5 indicating deteriorating market conditions.

Redas CEO Steven Choo said: 'The RESI was able to track closely the immediate impact the cooling measures has on sentiments in the property sector.'

Agreeing, Knight Frank chairman Tan Tiong Cheng said: 'The findings are not surprising. Just look at the amount of land government has been releasing and the supply of new HDB flats and ECs they're planning, plus the demand-side measures. People have put on their thinking caps to figure out how they'll be affected, whether they are HDB upgraders, buying a second/investment property, or even downgrading.

'The latest survey results are a clear signal to government that the measures are having an impact,' he added.

Separately, the NUS' Institute of Real Estate Studies yesterday released its monthly Singapore Residential Price Index tracking prices of completed non-landed private homes. The overall index rose one per cent month on month in September, slightly slower than the 1.1 per cent increase in August.

NUS' sub-index for Central region, which covers a basket of properties in districts 1-4 and 9-11, increased 0.6 per cent in September, the same pace as in August. The sub-index for Non-Central region appreciated 1.4 per cent in September, slightly slower than the 1.6 per cent gain posted in August.

Property market shows signs of cooling as measures take effect

TODAY: Property market shows signs of cooling as measures take effect

by Jonathan Peeris | Oct 16

SINGAPORE - The Government's cooling measures appear to have tempered demand.

Data released on Friday by the Urban Redevelopment Authority (URA) showed that 911 private homes were sold last month - a 27-percent drop compared to August, when 1,259 units changed hands.

The September figure was the second-lowest monthly sales recorded this year. In June, when the World Cup was held, only 847 units were sold.

The decline in sales volume is expected to continue. Analysts estimate launches and sales in the fourth quarter to hover between 800 and 1,000 per month. Still, they expect sales for the whole of the year to exceed 14,000 units.

And sentiment will likely improve in the first three months of next year, analysts said.

Looking ahead, buyers would be watching interest rates closely, said Dr Chua Yang Liang, Jones Lang LaSalle's Head of Research for South-east Asia.

Said Dr Chua: "As total returns compress, interest rates are expected to play a bigger role in influencing buyers' decisions. The impact of state intervention on home demand and prices may thus be cushioned in light of today's falling interest rates."

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MAS signaling monetary policy to be tightened

Looks like hot money flowing into Singapore assets have good reason to continue to do so.

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TODAY: Monetary policy tightened
by Millet Enriquez | Oct 15

MAS signals its intent to combat inflation, even as economic growth slows

SINGAPORE - Taking global markets by surprise, the Monetary Authority of Singapore (MAS) tightened its monetary policy yesterday - signaling its intent to combat inflation even as the Republic's economic growth slows.
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Economy pauses

TODAY: Economy pauses for breath after Q2's breakneck pace

Oct 14

Despite Q3 contraction, Singapore still on track to meet 2010 forecast: MTI

SINGAPORE - The Ministry of Trade and Industry (MTI) announced this morning that the Singapore economy remains on track to achieve the overall growth forecast of 13 to 15 per cent for the whole of 2010.

Advance estimates showed that the economy expanded by 10.3 per cent in the third quarter of 2010 compared to the same period a year ago. However, on a seasonally-adjusted quarter-on-quarter annualised basis, the economy contracted by 19.8 per cent, a reversal from the growth of 27.3 per cent in the previous quarter.

The median forecast of 19 economists surveyed by Bloomberg News was for a 15.7-per-cent contraction.

"The decline in growth momentum was an expected correction from the exceptional growth in the first half of the year," noted the MTI in its press release.

Asian nations from Thailand to Japan have taken steps in the past month to cool the appreciation in their currencies, which is threatening exports at a time when global growth is slowing. Prime Minister Lee Hsien Loong has said Singapore's economy may "moderate" in the coming months after a record first-half expansion, citing risks from the Europe and the United States.

"Singapore is typically a bellwether for the region's export outlook and it is the first to show cracks as global growth slows," economist Alvin Liew of Standard Chartered said before the report. Threats to Asian growth include "the fading impact of stimulus packages, stubbornly high unemployment rates and austerity measures that are likely to crimp consumption in the West," he added.

On a seasonally adjusted quarter-on-quarter annualised basis, the manufacturing sector contracted by 57 per cent in the third quarter, after expanding by 67 per cent in the preceding quarter. This decline is largely attributable to the biomedical manufacturing cluster, the MTI said.

The construction sector also contracted on a seasonally adjusted quarter-on-quarter annualised basis, by 12 per cent, compared to an expansion of 29 per cent in the preceding quarter. This was mainly due to the completion of key commercial and industrial building projects earlier in the year.

The services producing industries registered a modest sequential growth of 1.6 per cent, following a 13 per cent expansion in the previous quarter. Growth in trade-related services sectors, such as wholesale trade and transport and storage moderated from the high growth seen in the first half of the year.

Growth in the rest of the year will be underpinned by a number of industry-specific factors, noted the Trade Ministry. In particular, continued growth in global demand for electronic products will lend some support to the electronics and precision engineering clusters.

Increasing visitor arrivals driven by a resurgent Asian market and new tourism product offerings such as the Integrated Resorts will continue to bolster the tourism-related sectors, the Ministry added.

MTI will release the preliminary GDP estimates for the third quarter of 2010, next month in the Economic Survey of Singapore.

An update of sales since the new property measure took hold

ST: Weekend sales for ECs slow
By Joyce Teo

Weekend sales for executive condominiums (ECs) slowed somewhat after a burst of excitement last Friday when the first new EC in five years went on sale.

Still, experts expect demand for ECs - a hybrid between public and private housing - to remain relatively strong.

The 406-unit EC project The Canopy in Yishun Avenue 11 has attracted 250 applicants since viewing started last Friday. Prices are from $600 to $700 per square foot (psf) and bookings start this Saturday.

This response seems less enthusiastic than that for the recently launched EC project Esparina Residences in Sengkang, though an industry source noted the latter - near an MRT station - is better located.

Last Friday, buyers had snapped up 344 units of Esparina, near Buangkok MRT station. Another 20 units of the 573-unit project were sold over the weekend, said developer Frasers Centrepoint.

It had received 1,155 applicants in all. Prices are from $730 to $750 psf.

New ECs have initial sale restrictions similar to those for other public housing, and they are cheaper than new mass market condos.

On the private condo front, Far East Organization released 110 units of The Lanai in Hillview Avenue at a preview over the weekend and has sold 76 units, including a bulk buy.

The 999-year leasehold condo is priced from $1,290 psf and will be launched this weekend, it said.

At the freehold Vacanza@East in Lengkong Tujoh, another 20 units or so were sold over the weekend, taking total sales to 130 units, said Hoi Hup Sunway.

The 473-unit project started its preview late last month, when it moved nearly 90 units. It is priced at slightly more than $1,000 psf on average.

'The effect of the property measures has sunk in. Investors are a bit more cautious,' said Cushman and Wakefield managing director Donald Han.

'Speculators are out, so that took some wind out of the market. The good thing is we have not seen prices coming down.'

The Government implemented measures to cool the market on Aug 30.

Mr Han said developers will now take a longer period to sell units. 'It's all about pricing. Prices in some locations may come down slightly but overall, it's going to be a flat fourth quarter.'