Wednesday, July 30, 2008

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Condominium Rents Fell in almost All Districts: 2Q 2008 URA data

According to the latest data from the Urban Redevelopment Authority (URA), 2 in 3 projects with a substantial number of leases saw rents drop in the second quarter from the previous quarter.

URA’s data analysed rents in developments with at least 100 units and that have 10 or more leases each in the first and second quarters this year. Of the 124 projects in this category, 80 - or about 64 per cent - saw rents drop between the two quarters.

Fall in rents by Districts

District 1-4 (City, Tiong Bahru, Mt Faber) -2.80%
District 5 (West Coast) -3.17%
District 7-8 (Beach Rd, Farrer Park) 3.35%
District 9-11 (Orchard, River Valley, Newton) -0.96%
District 12 (Toa Payoh, Novena) * 34.73%
District 14 (Paya Lebar, Eunos, Kembangan) -4.44%
District 15-16 (East Coast, Bedok) -3.45%
District 17-18 (Changi, Pasir Ris, Tampines) -5.35%
District 19-20 (Bishan, Ang Mo Kio, Hougang) -1.24%
District 21-22 (West) -1.05%
District 23-28 (North and northwest) -2.61%

(Notes: The data only compares projects with at least 10 leases signed in each quarter. In total, there were 124 projects that qualified; 80 of them saw rents fall in the quarter, 39 saw rents rise, and five stayed the same.* For District 12, only one project – Trellis Towers – had at least 10 leases signed in each quarter. )
As seen from the data above, rent decline is greatest in the two areas most popular with expats - East Coast and the central region around Orchard Road.

Worst Hit Condos (with sharpest decline in % in rent)

(Median rent in $psf shown in brackets. Information extracted from the Singapore Property Forum.)
Vista Park (Buona Vista) -15.13 (2.58)
Avila Gardens (Changi) -14.89 (2)
Pine Grove (Mt Sinai) -14.75 (2.08)
Duchess Crest (Bukit Timah) -12.42 (4.09)
Palm Gardens (Choa Chu Kang) -11.76 (2.1)

Best Performing Condos (with greatest increase in % in rent)

Trellis Towers (Toa Payoh) 34.73 (4.5)
Pandan Valley (Ulu Pandan) 24.06 (2.63)
The Bencoolen (Bugis) 17.61 (5.81)
Summerhill (Upp Bukit Timah) 14.34 (2.95 )
The Mayfair (Jurong East) 14.13 (3.15 )

URA overall rental data, including those projects with less than 10 leases, showed that rents across the country rose 2.5% in the second quarter. This data should be interpreted in the light that for projects with more than 10 leases, we have an overwhelming number of losers over gainers.

Rents are likely to fall further as the stock of homes available for rental rises. Projects to watch are those which were heavily bought into by investors, such as the 640-unit Icon in Tanjong Pagar, a 430-unit tower at Sail @ Marina Bay, the 600-unit Citylights at Lavender, and the 546-unit Sea View in Amber Road.

May also want to read:

Information of all HDB-DBSS, including future DBSS
History of Singapore Property 1960 to 2008
Buy or Not Buy: How to decide amid mixed market signals
Property Price Index Graph Plotter & Online Property Valuation
Your Property Investment Determines Your Financial Success in Your Life
HDB Resales: West Sees Highest Price Increase


Anonymous said...

hi, this is the first time i am visiting your blog. And i must say, thank you for your contribution and valuable insights. I found many good reads here!

May i get your advise on whether i should buy a resale HDB flat now? I am looking a 5-room flat at bt panjang priced between $400-$450. Prices of the resale flats there are on an all time high - both valuation and COVs (never been this high before).

I am certainly getting mixed signals from diff people. Some say HDB prices will hardly fall, so go ahead and buy now. Some said prices will come down soon in 6-9months time.

I am also aware that HDB resale prices are generally on a high selling price this period...

What's your opinion? Dun worry i will make my own decision;). Thank you so much for your input!

Smart Buyer said...

Dear Anonymous,
I assume you're looking at the newer ones at the town centre. There are older ones further away from the centre which are going at $300-$350 or even below $300. Wonder if you've also explored those options?

The overall outlook for HDB resale market looks very strong. The sort of jobs created in the recent years and those that'll come with the IRs also tend to give strong support to HDB resale flats demand.

In fact, I know of private property owners who are buying into HDB resale flats for investment (via whatever loopholes they can find). Luckily, Singaporeans are entitled to just one HDB flat each otherwise we may see the same sort of wild speculation in the HDB resale market as we've seen in the private property market.

Though there's no such thing as property price increasing forever, I'm afraid that peak has yet to be arrived at for HDB resale market.

The current peak for HDB resale flats is still lower than it's 1996's peak but the "real" value of HDB flats have in fact been enhanced by several HDB policies implemented after 1996. (Policies include sublet of whole HDB flats, singles ownership scheme, more generious govt subsidies which all go towards supporting higher prices for HDB resale flats.) Of course genuine demand for HDB resale flats has also been increased by PRs and new citizens. On top of this, Minister Mah has said that HDB would build only on "orders" (BTO = Build to Order), so the oversupply condition that happened in the 90s is quite unlikely to repeat this time round.

Personally, I think prices for HDB resale flats are likely to rise further, possibly superseding its 1996's peak, before stabilising.

A substantial fall in prices for HDB resale flats over the next few years is likely only if Singapore goes into a deep recession.

I'm just giving you my best guess about what's likely to happen in the resale HDB market. It's by no means gospel truth. Ps exercise your own judgement. You may want to refer to the HDB Resale Price Index from 1990-2008 in the following post:

Anonymous said...

thank you so much for your valuable input!

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