It seems Singapore’s property slump might soon be over. Recently, a wave of en-bloc sales swept Singapore, leading us to believe that housing prices could soon be in the rise.
Why is this cause for concern? Well, since 2009, the government has been implementing a bunch of cooling measures designed to discourage property speculation and keep prices reasonable. These include measures like the dreaded Additional Buyer’s Stamp Duty.
But thanks to the wave of en-bloc sales, it looks like housing prices might be once again be on the way up.
Those people who benefitted when their properties got sold in en bloc deals will be looking for new homes to purchase, which will raise demand on the property market and increase prices. On the other hand, if buyers do not bite, this spate of new developments could lead to an oversupply of private housing and drive prices downwards.
Whichever camp you fall into, here’s why you might not want to wait too long before committing to a new home in 2018.
Short-term prices are likely to rise
The direction property prices will take is anybody’s guess. However, commentators predict that short-term prices might very well spike as anticipation for the spate of new developments following the en bloc sales rises.
Private property is now a lot more affordable for the average Singaporean than before the cooling measures were implemented. Not only have home prices fallen, but incomes have also risen. Anticipation of the many new launches could well result in a glut of interested buyers.
That means that anyone looking to buy property in the short-term had better do so soon, as inflated prices are likely to follow. On the other hand, those who manage to get their hands on a property early could be in a good position to sell at a profit after three years once their Seller’s Stamp Duty liabilities lapse.
List of en-bloc sales in 2017
For those on the look-out for new launches, here’s a list of the properties sold in en bloc sales in 2017, on land which is likely to be developed very shortly into new residences.
- One Tree Hill – sold for $65m / $1,664psf in May 2017
- Goh & Goh Building – sold for $101.5m / $3,288psf in May 2017
- Rio Casa – sold for $575m / $706psf in May 2017
- Eunosville – sold for $766m / $909psf in Jun 2017
- The Albracca – sold for $69.1m / $1,409psf in Jul 2017
- Serangoon Ville – sold for $499m / $835psf in Jul 2017
- Toho Green – sold for $1.4 million per unit in Aug 2017 (owners received $719,000 profit)
- Tampines Court – sold for $970m / $676psf in Aug 2017 (owners received between $1.71m to $1.75m per unit)
- Jervois Gardens – sold for $72m in Sep 2017 (owners received $3.3m to $4.5m per unit)
- Nanak Mansions – sold for $201.1m / 1,841psf in Sep 2017
- Sun Rosier – sold for $271m in Sep 2017 (owners to receive $2.86m to $4.77m)
- Seraya Crescent (6 plots) – sold for $26m in Sep 2017
- Florence Regency – sold for $629m / $842 psf in Oct 2017 (owners to receive $1.84m to $1.89m per unit)
- Dunearn Court – sold for $36.3m / $1,371 psf in Oct 2017 (owners to receive $2.91m to $3.12m)
- Changi Garden – sold for $248.8m / $888psf in Oct 2017 (apartment owners to receive $2.14m to $2.27m per unit)
- Normanton Park – sold for $830.1m / $969psf in Oct 2017 (owners to receive $1.68m to $1.86m)
- Casa Contendere – sold for $72 / $1,638psf in Nov 2017
- Amber Park – sold for $72m / $1,638psf in Nov 2017 (owners to receive $5.9m to $7.5m per unit)
- Mayfair Gardens – sold for $311m in Nov 2017 (owners to receive $1.7m to $2.98m per unit)
- How Sun Park – sold for $81.1m in Nov 2017 (owners to receive $4.05m per townhouse)
Not an en bloc beneficiary? Here’s what you must do
For prospective property buyers who haven’t been lucky enough to benefit from an en bloc sale, here’s why you should care about the surge of en-bloc sales this year.
The spate of en-bloc sales basically means that there are now thousands of Singaporeans who’ve recently enjoyed huge capital gains and who are now on the prowl for new homes. What’s more, as some of these buyers have become overnight millionaires, they are likely to have a surplus of cash for their property purchases.
All of the above means that this group of wealthy en bloc beneficiaries are likely to bid property prices upwards in the near future.
It is worth noting that an en-bloc transaction takes approximately one year to be completed. In the event of complications such as outvoted residents objecting, the transaction might be delayed further. After the completion of the transaction, the sellers have to wait about 4-6 months before receiving their funds.
What this means is that many of these people will be timing their purchase of their new home to be completed in about 1.5 years from the date their en bloc sale is confirmed. That also means that there will be many who have not alighted upon a new property… yet.
So what does this mean for property purchasers who are competing with the newly-wealthy en bloc beneficiaries? Simply put, it means that if you intend to purchase a new home in 2018, you need to act soon, before the wave of en bloc beneficiaries floods the market. It’s also important to note that home loan rates are expected to rise within the year, so make sure you’re making the right decision with your mortgage as well by using our simple MoneySmart Home Loan Wizard to compare the rates on the market. You can also get free advice from one of our mortgage specialists on how best to approach this.
Do you plan to buy a new home in 2018? Share your concerns in the comments.