The PropNex and DWG merger in June formed Singapore’s largest property agency. (Photo: Jianwei Huang)
A look back at some of the key property highlights of the year.
By Eugene Huang
2017 has no doubt been an eventful year for the local real estate scene. At a glance, it’s clear that the market is on its way to a swift recovery over various areas. In the past year alone, we’ve seen the relaxation of the cooling measures, the merger of various real estate agencies, and of course, who could miss out en bloc fever!
Indeed, these are exciting times for the market. With less than 100 days till we usher in the new year, let’s look at some of the highlights of 2017.
Relaxation of cooling measures
Back in March 2017, three government bodies (Ministry of Finance, Ministry of National Development and the Monetary Authority of Singapore) released a joint statement on changes to the existing cooling measures. Specifically:
Based on feedback received by borrowers, the Total Debt Servicing Ratio (TDSR) has restricted some of them on the flexibility of monetising their properties during their golden years. Thus, the TDSR framework no longer applies to mortgage equity withdrawal loans, as long as the loan-to-value ratio does not exceed 50 percent.
The Seller’s Stamp Duty (SSD), which was originally introduced to curb speculation on properties, has also been eased, from a four-year period to three years.
With additional conveyance duties (ACD) being applied to property-holding entities, stamp duties were effectively imposed on owners who transfer equity interest to other parties, going through the same process as though the properties were bought or sold directly.
En bloc frenzy
At the time of publication, there have already been 16 developments that have undergone collective sales this year, with many others in the pipeline.
The total value of collective sales in 2017 has hit the $6.2 billion mark, and the numbers are expected to keep growing. The once-slumping property market is now said to be on a turnaround, unequivocally with such numbers. En bloc fever is expected to keep up over the next few months, and this will generate more buzz in the residential market.
Rise of PPI
In October, the Urban Redevelopment Authority (URA) released the Q3 2017 real estate statistics, which recorded a 0.7 percent growth in the private residential market.
These results are a depiction of recovery for the private residential market – one that has been a long time coming. Aside from the Property Price Index (PPI), the rental index also witnessed no change – a notable improvement from the constant decline that the market has been so used to seeing since Q3 2013.
Foreign buyers and investors
Purchases made by foreigners in H1 2017 have seen a 48 percent increase year-on-year, with a 32 percent increase by PRs during the same period. Majority of buyers are nationals hailing from China, Malaysia, India, Indonesia and America, with most of these purchases ranging from $500,000 to $1.5 million.
Buyers aside, Chinese property developers have also been especially assertive in acquiring land, be it via government land sales or collective sales. Market watchers are expecting Chinese developers to keep up with such aggression, especially so in Singapore’s market with its current recovery.
Merger of real estate agencies
2017 also saw the merger of several real estate agencies. In a nutshell, one of the main reasons for the mergers would be the need to capitalise on economies of scale. The emerging trend of Proptech (i.e. real estate technology) in the industry is a likely threat posed to estate agencies, thus prompting them to combine forces.
While the agencies each have their own reasons for the mergers, this is also an indication that the market is preparing for changes in technological advances.
Interest rate war
When it comes to mortgages, war has broken out between three banks – DBS, UOB and HSBC. September 2017 saw both UOB and HSBC pit against DBS, vying to offer the lowest three-year fixed-rate mortgage packages at 1.68 percent. This was largely due to the blip in interest rates, together with the foreseeable increase of interest rates by the US Federal Reserve in the near future.
Transactions of private homes are at its highest since 2013; naturally, the increase of residential property sales propels the demand for mortgage loans as well. Thus, this war of interest rates is shaping up to be extremely competitive.
A report by the central bank stated that Q2 2017 reported a 58.9 percent increase in bridging loan limits granted, as well as an increase of $3 billion in limits granted for outstanding home loans.
2017 has been a vibrant year for the real estate scene. With market watchers labelling this as a period of ‘rapid recovery’, this trend is likely to keep up through 2018 as well. At the same time, with so much talk about Proptech, we’re likely to expect bigger changes to the community with this promising trend.
Even as we near the end of 2017, the thrill we have been experiencing the past 12 months now seem to be but a mere prelude of the bustle we’ll be expecting come 2018.