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carbuncle

03-08-12, 16:37

Busting the myth of a hot property market

Business Times: Fri, Aug 03

[SINGAPORE] When you read about units being snapped up at a record pace, you might think that the property market is sizzling.

But buried beneath the headline numbers, two distinct trends appear to puncture this myth.

Not only is the average unit size sold by developers much smaller now, compared to the pre-global crisis peak year of 2007, but islandwide the average price per square foot is also much lower. That's because more units are being sold in the suburbs instead of the Core Central Region (CCR), where properties are costlier.

In fact, the state of the property market looks very different when viewed from the perspective of total square footage and total dollar quantum of apartments/condos sold by developers, rather than the number of units.

Although developers sold more non-landed private housing units last year and in 2012 (on an annualised basis) than in 2007, the total area of these units and their dollar value were lower than 2007's levels, according to a study by Savills Singapore.

That's because developers have taken to minting smaller units to keep lump sum unit prices affordable to buyers. Also, transactions in CCR, home to high-end properties, have shrunk.

"Contrary to conventional belief or market perception that the residential market is in a red-hot state, the numbers belie the fact that we are nowhere near or back to the levels in the go-go year of 2007 in terms of the total square footage and dollar value sold," said Savills Singapore research head Alan Cheong.

Savills' analysis, which was based on URA Realis caveats data, looked at primary market transactions (that is, developer sales) of non-landed private homes. Across Singapore, developers sold 13,910 units last year, up 19.4 per cent from 2007's figure of 11,647 units. The 2007 figure is also lower than the 2012 annualised figure of 15,824 units (based on caveats for 7,912 units lodged in the first half of this year).

However, the total area of 13.43 million sq ft in the non-landed units developers sold last year was about 19.2 per cent lower than the 16.62 million sq ft they sold in 2007.

Mr Cheong attributes the trend to developers building smaller homes post-GFC across all locations. The average size of private apartments and condos sold by developers in CCR - which includes the traditional prime districts 9, 10 and 11, the financial district and Sentosa Cove - has declined by 30.2 per cent from 1,639 sq ft in 2007 to 1,144 sq ft last year. It dipped further to 1,052 sq ft in H1 2012.

In the Rest of Central Region (RCR), the average size of units sold has shrunk almost a third from 1,338 sq ft in 2007 to 898 sq ft last year before contracting further to 831 sq ft in H1 2012.

In the Outside Central Region (OCR) - home to mass-market condos in suburban locations - the figure slipped 25.3 per cent from 1,292 sq ft in 2007 to 965 sq ft last year. In H1 2012, the figure was 876 sq ft.

Taken individually, the average psf primary market prices achieved in each of the three regions last year and in H1 2012 surpassed those in 2007. But the total islandwide dollar value of the units sold by developers in 2011 and 2012 (annualised), at $16.9 billion and $16.3 billion respectively, are shy of 2007's $22.7 billion.

This is because average home sizes have shrunk in all regions and volumes have dropped dramatically in CCR, where properties are pricier, while the action has swung to the suburbs.

Back in 2007, when foreign buyers were making a beeline for upmarket homes, drawn by the Remaking Singapore story and a strategy to draw high net worth individuals to the island, CCR and OCR each accounted for roughly 35 per cent of the number of non-landed private homes sold by developers.

It's a different picture now, with the exodus of buyers from CCR to OCR.

Only around 10 per cent (1,417 units) of the 13,910 units developers sold last year were in CCR; the share for H1 2012 was 4.3 per cent (337 out of 7,912 units sold).

On the other hand, OCR's share was a formidable 63.9 per cent in 2011 and 75 per cent in H1 2012, translating to primary market sale volumes of 8,884 units and 5,936 units respectively in the region.

"However, the volume increase in OCR for 2011 and H1 2012 could not offset 2007's concentration of transaction value in CCR, resulting in the drop in total sales value of units sold by developers," said Mr Cheong.

Commenting on the shrinking average home size, Roxy-Pacific Holdings executive chairman Teo Hong Lim observes this is due not just to a proliferation of shoebox units but a general contraction of unit size across the board - two, three, four bedders - as developers try to keep lump sum investment sums affordable to buyers.

He also highlights that since the 2009 rule change to include bay windows and planter boxes as part of gross floor area, the saleable area of an apartment has shrunk by about 5-6 per cent even if it has a similar internal layout as before.

Savills' Mr Cheong notes that with the drop in developers' total housing sales revenue compared with 2007 and with more players entering the fray, competition has intensified for land purchases, especially at state tenders. "There are now more fish swimming in a smaller pond."

Agreeing, DTZ's Southeast Asia chief operating officer Ong Choon Fah says: "Selling prices have gone up but land and construction costs have also increased. So developers have to look for ways to better manage costs and development risk."

These include pushing out launches as soon as possible and partnering construction companies. "They have to look for more efficient ways to develop and design their projects."

darrenyc

03-08-12, 20:13

it may not be red hot but it sure is a very expensive market now

carbuncle

03-08-12, 21:15

u need to stop looking at psf... like inflation, psf will only go up up up. gone are the days of 60c kopi. gone are the days of 900psf.

Allthepies

03-08-12, 21:55

property has not become more expensive, it is more of money losing its value :D

phantom_opera

03-08-12, 22:21

According to a 2005 paper written by Sylvain Leduc, Keith Sill and Tom Stark, "a sudden increase in expected inflation (ppl are expecting >4% next year) leads to a long-lasting increase in actual inflation via an accommodative monetary policy (aka low interest rate lah)" Their conclusion makes empiric sense. The oil embargoes in the 1970s created inflationary pressures which weren't reduced until interest rates increased dramatically in 1979 - 1981.

Singapore suffered spikes of hyperinflation in the 1970's

http://www.tradingeconomics.com/chart.png?s=sicpiyoy&d1=19690101&d2=19820831

focus

03-08-12, 22:56

So what is the fair value psf to look at for the different region aat this moment?
My guesstimate :-
CCR) 1900psf -infinity
RCR) 1400-2000psf
OCR) 900-1500psf.

So assuming market goes down 20% across boad,
it wil lbe :
CCR) $1520psf - infinity
RCR) $1120PSF - 1600psf
OCR) $720psf - 1200psf.

Back to around 2009 levels the max?

phantom_opera

03-08-12, 23:17

So what is the correct psf to look at for the different region?
My guesstimate :-
CCR) 1900psf -infinity
RCR) 1400-2000psf
OCR) 900-1500psf.

http://www.ires.nus.edu.sg/webapp/images/srpi/SRPI_20120730.png
For SRPI-NC (non central)
Assume 127.5 was the 1997 peak,
next resistance will be 191 (50%), 207 (61.8%) then 255 (100%)

From the current index of 174.5, another 10% first resistance, then another 12% next resistance, then will be the last most powerful leg of increase to 255

radha08

04-08-12, 08:02

data data and MORE data...:doh:

Alan Shearer

04-08-12, 08:07

Who said the market was hot?

hyenergix

04-08-12, 08:36

MMs now are mostly 99LH in mass market condos that are cheaper, hence the flat psf in recent 1 year does not reflect the actual MM psf in earlier years when they were mostly FH/999LH. This is due to the new restrictions on MMs in landed property areas. Real FH/999LH MM psf are actually much higher and I believe are still increasing.

carbuncle

04-08-12, 11:21

ya just look at TheClift psf now

azeoprop

04-08-12, 14:01

What were the main causes of the flat property market from 2001 to 2005? :beats-me-man:

carbuncle

04-08-12, 14:22

What were the main causes of the flat property market from 2001 to 2005? :beats-me-man:

remnant effect from Asian currency and financial crisis? :beats-me-man:

then

"From March to May 2003, SARS raged in Singapore."

focus

04-08-12, 15:00

For SRPI-NC (non central)
Assume 127.5 was the 1997 peak,
next resistance will be 191 (50%), 207 (61.8%) then 255 (100%)

From the current index of 174.5, another 10% first resistance, then another 12% next resistance, then will be the last most powerful leg of increase to 255

Ok.. Can I draw like this? If like this.. the last leg has already been performed and now waiting for the drop below it goes up again.. can ? :) I am not chartist.. anyhow draw one. So if you look at it, the retracement to the 61.8% level will equate to roughly a 20% Drop in prices.

http://i50.tinypic.com/15fj1gz.png

amk

04-08-12, 17:31

I wonder if any one had done a chart on quantum.
The latest average size of OCR condos is a miserable 8xx sqft :doh:

Say 5ys ago, 700 psf 1400 sqft OCR, today, 1400 psf 800 sqft. Psf index went up in line with inflation, however quantum index hardly went up at all. From this angle, I think prices now can still go up some more.

Ppl did not suddenly get richer ( from income). But ppl's HDB asset value gets higher thanks to PAP. And ppl monetize this gain in fixed asset. too bad it seems this only benefits developer. Although ppl are generally happy. Ask any one who just upgraded from HDB to a condo, never mind the smaller place.

phantom_opera

04-08-12, 19:58

To put things into perspective by combining CCR, RCR and OCR

http://buybyeproperty.com/wp/wp-content/uploads/2012/06/ura-pppi.jpg

phantom_opera

04-08-12, 20:14

@focus

Of course nothing wrong with your chart, TA is always subjective.

But I would say taking the 1997 peak as a reference point is very important.

Bishan 8:

2011-05-25 #07-XX 1,163sqft 1,110psf 1997-07-01 1,102psf $9,304 5,076 days 0.1

I would say those who bought 99LH OCR in 1996 / 1997 will unlikely become sellers at the current level, their rental yield is probably canceled out by bank loan ... if for own stay, selling now is PURE LOSS as shown above. My ex-colleage who bought TPY 5r HDB at 550k also unlikely to sell now at 6XXk ... most of the sellers in the market are those who bought investment properties in 2005 (100% gain) or 2009 (50% or 61.8% gain)

I would proceed to say that if Bishan 8 owner who bought in 1997 could sell at 50% (1650psf) or 61.8% (1780psf) ... time to be on MAX ALERT

BTW those are Sky Habitat PSF ;)

phantom_opera

04-08-12, 20:24

More examples of those who bought in 1996/1997 ... CCR/RCR/OCR

Aspen Heights
2012-02-24 #03-XX 883 1,473psf 1996-06-11 1,377psf $84,768 5,736 days 0.4% pa

Astoria Park
2011-04-13 #05-XX 1,195 837psf 1997-07-01 787psf $59,750 5,034 0.4

Eastpoint Green
2012-03-22 #09-XX 2,088 718psf 1997-02-01 711psf $14,616 5,528 0.1

1997 will be forever remembered in history, just a glance on the curve staring from 1989 you can see the EXPONENTIAL curve, right now we are more like within Natural logarithm only

http://upload.wikimedia.org/wikipedia/commons/thumb/7/73/LogTay.svg/300px-LogTay.svg.png

focus

04-08-12, 21:08

Please ignore the prices in the graph. I was doing some simple up down to see upside versus downside. But from graph, I found there is a pyschological barrier in humans on the downside after a big upside move. The fall seems to be tagged around half of the previous Rise. Just my own guesstimate.

Anyway, the year 2009 to 2012 does looked parabolic to me.
http://i47.tinypic.com/191j6g.jpg

So, if I assumed this is the top, then we have around 20-27.5% fall before it goes flat for a few years and go up parabolic again.

Here is how much Bishan 8 would be if we adhere to my model.

http://i45.tinypic.com/oqdr1d.png

focus

04-08-12, 21:22

Phantom,
Of course, agreed that those who bought in 1997 would have seen all the wind and tides, this type of 25% fall is sup sup water. And they could have break even with all the rentals collected thru the years.

But other projects that are newly launched and bought.. I dunno.

If the logic is all who bought at high can hold.. then how come we got property prices falling every time? Boom/Bust cycle is inevitable. There will always be people who cannot hold, who choose to fold, who have better investment elsewhere, who have a weak heart etc etc.

phantom_opera

04-08-12, 22:02

@FOCUS ... technically, it is possible we are at the top and may suffer a 20-25% correction

That means Punggol will correct from 950psf to 712psf?? If Parc Centros is selling at that psf, I think everyone in this forum will chiong to buy 10 units :p

Since decent size 2br/3br in OCR are around the 1000-1100psf level, a 25% correction will means 750-800psf :scared-1:

SUPER UNLIKELY, of course if Great Depression or WAR / EBOLA strike then different story

So the most likely scenario will be for OCR to hit 1,400psf for 1br/small 2br pricing b4 leaving room for a meaningful correction

For that to happen SRPI-NC will rise another 40% (from 1000 to 1400psf) from 175 to 255 level which is roughly 127.5 X 2 (i.e. 100% from 1997 peak)

carbuncle

05-08-12, 10:38

To put things into perspective by combining CCR, RCR and OCR

http://buybyeproperty.com/wp/wp-content/uploads/2012/06/ura-pppi.jpg

There's something wrong with the URA info... whose is the correct one?
I suspect yours is amalgated of all property types including commercial. But even so 'All Types' URA put as 270. :beats-me-man:

http://a5.sphotos.ak.fbcdn.net/hphotos-ak-ash4/318698_10151975639335244_1950691234_n.jpg

From http://www.ura.gov.sg/pr/text/pr97-44.html

phantom_opera

05-08-12, 10:54

Base reference changed. Anyway there is a convenient link btw TA and affordability, since median family income for 5r hdb is 8800 and condo is 14500, just cut one digit u get peak Psf for OCR

So for hdb is 888psf, roughly a million dollars for 5r
Fir OCR is 1450psf lo

Lol

carbuncle

05-08-12, 11:39

phantom_opera

05-08-12, 11:58

phantom formula 1?

good 1

In 2006, the same formula ie 11000 / 10 u get 1100psf but OCR Psf only 500psf, so rule 1 say buy when resale Psf is half of monthly median family income including Cpf divide by 10

Rule2 say sell when the Psf catch up

carbuncle

05-08-12, 12:15

http://bensonkoh.com/wp-content/uploads/2011/06/PropertyGuru_Analytics_Report_Pebble-Bay.pdf

Came across this by accident.

Didn't know propguru provides some comprehensive reports to agents.

focus

05-08-12, 13:41

http://bensonkoh.com/wp-content/uploads/2011/06/PropertyGuru_Analytics_Report_Pebble-Bay.pdf

Came across this by accident.

Didn't know propguru provides some comprehensive reports to agents.

I think it's generated from the streetsine site.

Oh.. saw the propertyguru analytics.. so maybe it's propertyguru. my mistake

phantom_opera

05-08-12, 14:12

One very critical factor that affect affordability is employer CPF contribution and the monthly contribution ceiling ... employer contribution was cut to 12% during the bad time and gradually restored to current level of 16%, contribution ceiling is up from 4.5k to 5k which is also helping to improve affordability

carbuncle

05-08-12, 14:19

phantom_opera

05-08-12, 14:23

Granted, we can't use all of the employer CPF also. Not all goes into OA.

When a family has 3 persons working, it could be significant :D

carbuncle

05-08-12, 14:38

Looking at the ways some of you bros thrown stats and graphs around, seem like you qualify... :p

---

Property Market Analyst
URBAN REDEVELOPMENT AUTHORITY

Industry: Government/ Civil Service/ Statutory Boards
Job Functions: Data / Statistical Analysis
Website http://www.ura.gov.sg
Job Type: Permanent / Full Time
Date Posted: 5 August 2012

Company Description:

The Urban Redevelopment Authority (URA) is Singapore''s national land use planning authority. URA prepares long term strategic plans, as well as detailed local area plans, for physical development, and then co-ordinates and guides efforts to bring these plans to reality. Prudent land use planning has enabled Singapore to enjoy strong economic growth and social cohesion, and ensures that sufficient land is safeguarded to support continued economic progress and future development. INTRODUCTION Given Singapore''s small size, judicious land use planning is critical for the nation''s future. URA has to take into consideration not just the needs of the city but all the needs of an independent nation and provide sufficient land for economic growth and future development. Our mission is to make Singapore a great city to live, work and play in. We carry out our mission by planning and facilitating the physical development of Singapore, in partnership with the community, to create a vibrant, sustainable and cosmopolitan city of distinction. CHALLENGES With a limited land area of about 699 sq km, URA faces immense challenges in land use planning to house the needs of a nation state. Not all the land area can be developed. For example, water catchment areas already take up 40 per cent of the land area. Height restrictions imposed by our airports on buildings limit how high some of our buildings can go. For instance, flats in housing towns in Tampines, Simei and Changi cannot exceed 12 storeys because of the flight paths of planes from Changi International Airport. Land also has to be set aside for military uses. Our challenge is to find smart solutions so that there will always be space for all our needs. One way is to create new land by reclamation off our seashore. The other way is to make the most of the land we already have. We intensify land use by locating various facilities together instead of separately. For example, we locate stormwater collection ponds under road flyovers; we build stack factories; we go underground; we locate train stations and bus stations over each other. We also constantly find ways to minimise constraints on development by using technology such as cleaner power station fuel to reduce buffer zones of pollutive factories, or we group such industries together and relocate them off shore. For more information, make a trip to our visitor centre, the Singapore City Gallery (http://www.ura.gov.sg/gallery/), or visit us at 45 Maxwell Road, The URA Centre Singapore 069118

Job Description:

Responsibilities

You will be required:-
- To monitor the property market, identify trends and provide market updates and in-depth analysis of the property market for planning and policy decision-making.
- To study the impact of policies on the property market.

Requirements

- A good degree in economics, statistics, real estate or related field
- About 3-5 years of working experience in the real estate or related sectors would be preferred. However, fresh graduates are welcome to apply.
- Numerate with strong quantitative analytical skills.
- Good econometric skills for forecasting and policy modeling; proficiency in modeling and statistical software such as Eviews and SAS would be an advantage
- Excellent writing and presentation skills, and the ability to express complex ideas simply and logically
- Good interpersonal and communication skills
- Ability to work independently as well as in a team is a must
- Ability to work quickly and meet tight deadlines
- Innovative and resourceful

Pre-requisites:
Min. Education Level : Degree
Field of Study : Economics / Real Estate / Statistics
Year of Exp Required : 3
Skills : Forecasting/Projections / Interpersonal skills / Communications skills
Language : English

carbuncle

05-08-12, 14:41

Senior Researcher / Researcher
MINISTRY OF NATIONAL DEVELOPMENT

Industry: Government/ Civil Service/ Statutory Boards
Job Functions: Data / Statistical Analysis
Website http://www.vog.gov.sg
Job Type: Permanent / Full Time
Date Posted: 5 August 2012

Responsibilities

As a Senior Researcher/Researcher, your role is to undertake research and analysis of relevant economic issues (e.g. property market developments, construction market drivers) and social issues (e.g. drivers of quality of life, housing mobility) to enable evidence-based policy formulation and strategic planning.

Your work may include international/local research as well as conceptualization/implementation of data collection methodology and data analytics.

You will work closely with various stakeholders such as Policy Divisons, statutory boards and academia on inter-agency studies.

Requirements

You should have:
At least a good Honours Degree in Economics, Sociology or Statistics from a recognized university
Ability to undertake quantitative analysis would be preferred
Excellent communication skills and the ability to express complex ideas simply and logically
Ability to conduct independent research and contribute effectively as a team player
Final year students and fresh graduates are welcome to apply

If you are shortlisted for the position(s), you should hear from us within 30 days of the closing date of the advertisement.

carbuncle

05-08-12, 14:42

timmy

05-08-12, 14:49

From my two previous posts, FRESH GRADUATES WELCOME TO APPLY. :scared-4:

Makes one wonder how matured they will be in terms of their outlook or experience to play a part in formulating govt policies...

They will likely do basic number crunching when they first join. When they get the kind of proficiency and industry knowledge that fellow forummers have, then start to think abt policies. Not surprised if some of u guys here work in similar positions in the garment.

focus

05-08-12, 14:58

From my two previous posts, FRESH GRADUATES WELCOME TO APPLY. :scared-4:

Makes one wonder how matured they will be in terms of their outlook or experience to play a part in formulating govt policies...

That's why Ngiam Tong Dow wonder whether it is of benefit to retire older civil servants in the name of organisational renewal.

In economics, finance and etc, it is actually the experience that counts a lot. Funny how we are like animal farm. MM lee says he is like a data bank and knowledge repository and he needs to be there to contribute and help the younger, less experienced ministers. But this does not seem to be similar in civil service.

danntbt

05-08-12, 21:51

...and you get a 30% pay cut at 62.......even in Teaching, where experience do count........

carbuncle

05-08-12, 22:13

@focus perhaps civil service just execute only... admin service is the one using brains?

focus

06-08-12, 01:42

@focus perhaps civil service just execute only... admin service is the one using brains?

Uh.. I think admin service is a category in the civil service.
Like PS, Deputy PS, Directors are all members of Admin service.
But they are housed in the respective ministries handling different departments.

Within the departments, the not so elite scholars(will form the head of departments). Then the not so elite scholars will supervise the peasants basic and honours degree holders.

So they will debate and do research and justification on all the options for a policy and then present the recommended one to the Director.
The director ok ...then they present to Deputy PS and PS.
Once Deputy PS and PS Ok.. They go to the Minister of States...
Minister of state ok.. they go to minister..

I think that's the order.. so the debate on pros and cons start are from the young and inexperienced crew of not-so-elite scholar heads and peasants degree holders.

samuelk

06-08-12, 08:11

...and you get a 30% pay cut at 62.......even in Teaching, where experience do count........
if you look at the overall cost, the insurance is a component thst can kill off the hiring of older workers.

once you address that everything Is easy to work out

phantom_opera

06-08-12, 10:18

% of mainland Chinese buying properties in HK

http://img1.cache.netease.com/house/2012/7/24/2012072410280789521.jpg

:scared-5:

radha08

06-08-12, 10:59

ikan bilis

06-08-12, 20:13

phantom_opera

06-08-12, 22:24

a bubble can last so many years

http://upload.wikimedia.org/wikipedia/commons/thumb/e/ed/Vivienda_n_jun2009.png/300px-Vivienda_n_jun2009.png

carbuncle

06-08-12, 22:47

今朝有酒今朝醉......

kane

06-08-12, 23:02

Capital markets trader have this saying, the market can stay irrational longer than you can stay solvent.

phantom_opera

06-08-12, 23:09

Capital markets trader have this saying, the market can stay irrational longer than you can stay solvent.

Mr B will not be happy to learn that :rolleyes:

kane

06-08-12, 23:57

Longist and shortist both suffer when the markets overstay in the irrational state.

And the next favourite saying, the trend is your friend.