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HDB resale prices down for 11th straight month in December: SRX

The resale prices of Housing and Development Board (HDB) flats fell 0.4 per cent on-month in December, hitting a 41-month low, the Singapore Real Estate Exchange (SRX) said on Thursday (Jan 8).

According to the SRX data, prices are now at their lowest since August 2011.

The price drop was driven by non-mature estates, which saw resale prices decline 0.9 per cent last month. However, prices in mature estates increased 0.2 per cent compared to the previous month.

Four- and five-room flats saw their resale prices fall by 0.7 per cent and 0.3 per cent respectively. Prices for three-room flats remained flat, while executive flats saw a price increase of 1.8 per cent.

Overall, prices have declined 6.1 per cent from the same period a year ago and 10 per cent from the peak in April 2013, SRX said.

A total of 1,295 HDB resale flats were sold last month, a 4.1 per cent decrease from the 1,350 transacted units in November.

Mr Nicholas Mak, head of research and consultancy at SLP International, said: “There is a seasonal factor; typically, at the end of the year in November, in December, the transaction volume tends to be lower.

And at the same time, that is also when both buyers and sellers may take a holiday, as a result, prices could also remain flat or soften, but in this case, prices softened because of the various cooling measures that the Government has put in place.

“In the public housing market, one of the property measures that actually reduced the amount or demand is the mortgage servicing ratio (MSR). The MSR actually restricts the amount of income that an individual can use to service the loan, and by restricting the amount of financing available to the home buyer, the Government also in a way restricts their housing budget, and this actually has an impact on softening the prices.”

Meanwhile, compared to a year ago, resale volume was up 28 per cent, SRX said.

Mr Mak noted: “In 2013, the Government imposed more cooling measures, while in 2014, the Government is actually letting those existing cooling measures work its way through the system. So when the cooling measures were introduced in 2013, it actually (shocked) the system and hence there might be a more immediate effect then.

“But the important thing is actually to look at the general trend, over these two years or three years, and we can see that for the whole of 2014, the property prices and volume have actually been contracting.”

For the rest of the year, some property analysts expect prices to slide further – between 4.5 per cent and 8 per cent.

TOX REMAINS NEGATIVE

Overall median Transaction Over X-Value (TOX), which measures whether people are overpaying or underpaying the SRX estimated market value, remained negative in December at -S$4,000.

For HDB towns with more than 10 resale transactions last month, Queenstown reported the highest median TOX of S$3,000, followed by Bukit Merah and Jurong East with S$1,500. The lowest median TOX was in Ang Mo Kio, Bukit Panjang and Choa Chu Kang, at -S$19,500, -S$14,000 and –S$11,000 respectively.

Source : Channel NewsAsia – 8 Jan 2015

Outlook for Singapore hotel sector positive: Report

The overall outlook for the hotel sector in the Republic this year appears positive, according to the latest report by real estate services firm Cushman & Wakefield.

After a challenging year in 2014 when hotel occupancy rates fell, Cushman & Wakefield said it expects demand to recover in the short term.

Geopolitical tensions in the region and a spate of aviation incidents last year dampened the demand for hotel rooms in Singapore.

The occupancy rate fell to 84.3 per cent from 86 per cent in 2013 – due to the decline in tourist arrivals and a growing supply of rooms. But Singapore still topped the region in terms of room rates.

It saw an average room rate of US$207 in 2014, with Hong Kong trailing behind at US$193.

With Singapore celebrating its golden jubilee this year – coupled with the South-east Asian Games, market watchers said they expect to see a 4 to 5 per cent climb in tourist arrivals.

Momentum in the luxury segment, in particular, is forecast to be strong.

Said Mr Robert McIntosh, Executive Director of CBRE Hotels Asia Pacific: “Over the last few years, luxury has been the one area that has really stood out. Room rates and occupancy are both increasing very strongly – that’s partly because we went from 2009 when people were not prepared to spend any money on luxury hotels, and now they are, and because there has been a relatively lack of increase in the supply in the luxury segments – whereas the mid-tier and the upscale hotels actually had a decline overall in the revenue per available room.”

With Singapore being a key regional hub, inbound business travel is expected to remain strong.

Said Ms Sigrid G. Zialcita, Managing Director, Research Asia Pacific of Cushman & Wakefield: “Singapore fared among one of the best in terms of office occupancies. A lot of the sectors have grown and what we have seen is actually a snowball effect on the hospitality sector. Looking at the luxury or the upper upscale segments where corporate demand is a significant driver of activity, they have fared quite well over the past years.”

As geopolitical tensions ease, experts said continuing investment in infrastructure and visa facilitation measures will further propel growth.

They warned however that slowing GDP growth in Singapore could potentially weigh on corporate demand, while regional leisure visitor numbers could be hurt by the strength of the Singapore dollar in relation to its regional peers.

Source : Channel NewsAsia – 8 Jan 2015

More homeowners look to refinance loans as SIBOR inches up

More homeowners who took housing loans from banks are now looking for refinancing options. Loan specialists said they have been getting more inquiries since the recent spike in SIBOR (Singapore Interbank Offered Rate).

Homeowners – whose mortgages are tied to SIBOR – are now facing higher monthly payments. One of those affected is 30-year-old engineer Lai Ming Kwan, who bought an executive condominium with his wife two years ago and he opted for a bank loan that is tied to SIBOR.

With the benchmark rising sharply in recent days, Mr Lai is concerned about how it will affect him. He said: “They predicted that it will stay at 0.3 per cent to 0.4 per cent for a few years. I did not expect it would go up to so high … SIBOR is increasing so fast that my pay cannot catch up with the financing rates.”

Both Mr Lai and his wife are working and have a 16-month-old child. “Expenses, lifestyles will have to change a bit because I have to save up more to contribute to the housing loan … so there’ll definitely be an impact, maybe less shopping. With the child coming up, there is also school fees, childcare fees, so the depletion will come from my savings. Having a second child will also mean more expenses,” he added.

Some homeowners, like Mr Lai, cannot look into other financing options yet because their loan deal has a lock-in period, which requires them to stick to the same bank for a couple of years. However, loan specialists said that those whose lock-in periods are up are already starting to look at refinancing options. This can include looking for a housing loan with fixed interest rates instead of being tied to one with variable rates.

One mortgage consultancy said that it has received many inquiries on refinancing in recent days, about 30 per cent more when compared to last year. Mr Sean Lim, the mortgage consultant head at iMoney, said: “They want to know what is happening in the market … So they are taking time to digest and understand what is happening in the market.

“The pace of increment did catch me by surprise. But it is also half-expected. The trend has been going up slowly over the last six months. Looking at the market trend, it will continue to go up.”

With interest rates rising, banks can be expected to review their mortgage rates and plans. Analysts said that potential home buyers or those who are hoping to refinance their housing loans should choose a package that best suits their financial needs.

Source : Channel NewsAsia – 7 Jan 2015

SIBOR remains well below historical levels: Analysts

The three-month Singapore Interbank Offered Rate (SIBOR) reached 0.63 per cent on Wednesday (Jan 7), compared to 0.45 per cent on Jan 2.

SIBOR is a key benchmark used to determine various lending rates. While the recent increase may signal the end of low interest rates, analysts said that for now, SIBOR remains well below historical levels.

At 0.63 per cent, the three-month SIBOR is now at its highest in recent years. Analysts said this is due to expectations of an increase in US interest rates later this year and also new regulations in Singapore requiring banks to set aside more liquidity.

However even at current levels, analysts pointed out that from a historical standpoint, interest rates are still some way off from “normal”.

Mr Alvin Liew, a senior economist at UOB, said: “If you bring yourself back to 2007, the rates were easily many times higher than where we are at 0.6 per cent. So I think largely in part due to the last six years, prolonged stability has inbuilt a lot of complacency in the market psyche, now with rates coming up.

“It is coming up from a very low base, so the increase looks magnified, but on a historical basis, we are still not anywhere near normal interest rates levels.”

Homeowners and buyers are likely to be among the first to feel the effects of a rising interest rate environment as many home loans are pegged to SIBOR. Business costs may also increase but according to analysts, firms may find that it is still manageable.

Mr Alfred Chia, CEO of SingCapital, said: “Corporate activity-wise, as far as SMEs (small and medium enterprises) are concerned, as long as their loan amount is not big, it is still something that is able to be digested.

“But of course, if you talk about a loan size of hundreds and millions of dollars, then even a 0.1 per cent increase would have significant changes. But once again, all these rate hikes are not unexpected. I think a lot of the businesses have already been geared up, it is just the way that it is coming.”

Looking ahead, expectations are that the three-month SIBOR will hover around 1 per cent at the end of this year. However, this may change depending on the pace of US interest rate hikes.

Source : Channel NewsAsia – 7 Jan 2015

Singapore’s hotel occupancy down in 2014: Cushman & Wakefield

Hotels here have seen their growth affected by regional geopolitics and negative reactions to aviation incidents, property consultancy Cushman & Wakefield said on Monday (Jan 5).

In its latest report on the outlook of the hotel industry across Asia, Cushman & Wakefield said hotel occupancy in Singapore is expected to have fallen to 84.3 per cent in 2014, down from 86 per cent the previous year, due to a growing supply of rooms and the decline in tourist arrivals.

Still, Singapore remains one of the best performing markets in the region, with hotels here commanding the highest average room rate (ADR) in the region. Singapore’s ADR in 2014 was US$207 (S$276), ahead of Hong Kong at US$193 and Sydney at US$185.

However, Cushman & Wakefield said it will be difficult for hotels here to maintain their margins. “Although marginal growth in room rates are partially mitigating the slight downshift in occupancy, hoteliers will be challenged to sustain bottom-line margins in an environment of intensifying competition and growing costs,” it said in the report.

The property consultancy said it remains optimistic on the outlook for Singapore’s hotel industry, and expects demand to recover in the short term and keep pace with the growth in supply in the medium term.

Source : Channel NewsAsia – 5 Jan 2015