ERA 2015-12-05 - Where Is The Residential Property Market Heading in 201...

Where is the Residential
Property Market
Heading in 2016?
EUGENE LIM
Key Executive Officer
AGENDA:
1)
2)
3)
4)
5)
6)
HDB Resale Market

HDB Rental Market
Private Residential Sales
Private Residential Leasing
Cooling Measures
Longer Term Perspective
HDB RESALE
MARKET
1Q1990
1Q1991
1Q1992
1Q1993
1Q1994
1Q1995
1Q1996
1Q1997
1Q1998
1Q1999
1Q2000
1Q2001
1Q2002
1Q2003
1Q2004
1Q2005
1Q2006
1Q2007
1Q2008
1Q2009
1Q2010
1Q2011
1Q2012
1Q2013
1Q2014
1Q2015
9 Consecutive Quarters
of Price Decline
160.0
DOWN 9.9%
Over
9 Quarters
140.0
120.0
100.0
80.0
60.0
40.0
20.0
0.0
Source: HDB, ERA Research

4
Rate of Price Decline

Slowing Down
RPI
% change
2014Q4
137.0
-1.51%
2015Q1
135.6
-1.02%
2015Q2
135.0
-0.44%
2015Q3
134.6
-0.30%
Rate of Price Decline Has

SLOWED DOWN
1st 3Q 2014
4Q2013
3Q2014
CHANGE
% CHANGE
145.8
139.1
(6.7)
DOWN 4.6%
4Q2014
3Q2015
CHANGE
% CHANGE
137.0
134.6
(2.4)
DOWN 1.8%
1st 3Q 2015

6
The Straits Times, 24 October 2015
Source: The Straits Times, 5 November 2015
Resale HDB Prices
Source: SRX, ERA Research
UP in November
For Month of November 2015:
Overall Resale Flat Prices: UP 0.4%

3-Room Flat Prices: DOWN 0.7%
4-Room Flat Prices: UP 0.5%
5-Room Flat Prices: UP 1.4%
Executive Flat Prices: DOWN 0.2%
10
As at November 2015:
Year-on-year (from November 2014):
Resale HDB Prices DOWN 1.9%
Since the peak in April 2013:
Resale HDB Prices DOWN 11.3%
11
Prices of Flats in
Mature HDB Estates Hold Better
Non-Mature Estates (as defined by HDB):

Bukit Batok, Bukit Panjang, ChoaChu Kang, Hougang, Jurong East, Jurong West, Punggol, Sembawang, Sengkang, Woodlands & Yishun.
12
Resale Prices in Mature Estates
MORE RESILIENT:
In November 2015:
Mature Estates: UP 0.4%
Non-Mature Estates: UP 0.3%

Year-on-Year (compared with November 2014):
Mature Estates DOWN 1.6%
Non-Mature Estates DOWN 2.1%
13
Median HDB Transaction

Over X-Value (TOX) ($)
14
Moderating Prices
Likely to Continue in 2016
155
150
Projected 2015
DOWN < 2.5%
145
140
135
130
125
120
2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
20112011 2011201220122012201220132013201320132014201420142014201520152015
15
2014 Resale HDB Volume

at Historical Low
40,000
37,205
35,000
30,000
32,257
29,723 29,436
28,419
24,633 25,094
25,000
18,100 17,318
20,000
15,000
10,000
5,000
0
2006
2007
2008
2009
2010
2011
2012
2013
2014
16
1st 3Q 2015 Resale Transactions
UP 12.9%
compared with 1st 3Q 2014
1st 3Q 2014
1st 3Q 2015
CHANGE
% CHANGE
12,683
14,314
+ 1,631
+ 12.9%
17
Resale Volume DOWN 15.9%

in November 2015
18
Source: The Business Times, 5 November 2015
19
Resale Transactions likely to

Rebound in 2015 and 2016
8000
7011
7000
6228
6000
6581
6560
5903 5921 5892
5631
5286
5235
5000
4000
4335
4529
4389
4001
3781
4893
4513 4635
4135
3000
2000
1000
0
20
Resale Mix
5R
23%
Exec
7%
2R
1%
3R
29%
4R
40%
21
Resale HDB Prices

UPWARD RISE IN PRICES
DOWNWARD CORRECTION
Period
Index
Period
Index
Q3 2005
73.2
Q2 2013
149.4
Q2 2013
149.4
Q3 2015
134.6
Increase
+76.2
Decrease
-14.8
Over 31
Quarters
(7.75 Years)
UP 104%
Over 9
Quarters
(2.25 Years)
DOWN
-9.9%
(Avg 13.4%)
22

23
2015Q3
2015Q1
2014Q3
2014Q1
2013Q3
120
2013Q1
2012Q3
2012Q1
2011Q3
20
2011Q1
40
2010Q3
77.2
2010Q1
2009Q3
2009Q1
2008Q3
2008Q1
2007Q3
2007Q1
2006Q3
2006Q1
60
2005Q3
2005Q1
No One is Selling a Loss

Today
160
140
134.6
100
80
75% GAIN
Over 10 Years!
The Business Times, 28 April 2015
24
The Straits Times 27 May 2015
The Straits Times, 20 November 2015
25
HDB Outlook for 2016

For 2015, projected 18,000 20,000 resale
transactions
Main impact on Resale HDB Market:

HDBs BTO & SBF launches
For 2016,
Resale prices expected to stay flat
Resale volume continue to pick up as prices have
stabilized
26
HDB Subletting Market
Average HDB Sub-letting Volume
UP 20%
to
> 10,000
units per Quarter
4000
12000
3500
10000
3000
8000
2500
2000
6000
1500
4000
1000
2000
500
0
1R
2R
3R
4R
5R
Exec
Total
28
HDB Rentals STABLE
29
As at October 2015:
Year-on-Year: DOWN 3.3% from October 2014
From the Peak in August 2013: DOWN 7.2%
30
SUSTAINED Higher Volume

to Continue into 2016
HDB owners who cannot get a good price for their flats
may decide to rent out their units instead
Subletting transactions likely to increase as more

private residential homes are completed & HDB
upgraders may to move into the new condos and rent
out their existing flats
Little upside for rents due to increasing competition
amongst landlords as more BTO flats approach MOP
and private property get completed
31
COMPETITION from Private Market
With private rentals falling due to the supply of

newly-completed homes, the HDB rental market
has also come under some pressure
However, HDB rental rates are still more
attractive than private rate; and they do have a
strong support base, especially those with a
lower than $2,500 budget
Also, as the economy restructures to be less
reliant on foreign labour, we can expect soft
rentals going into 2016
32
Private Property Prices
33
8 Consecutive Quarters of
Price Decline
DOWN 8%
Over
8 Quarters
34
2015Q1
2014Q3
2014Q1
2013Q3
2013Q1
2012Q3
2012Q1
2011Q3
2011Q1
2010Q3
2010Q1
2009Q3
2009Q1
2008Q3
2008Q1
2007Q3
2007Q1
2006Q3
2006Q1
2005Q3
2005Q1
2004Q3
2004Q1
Prime (CCR) Property Prices Taking

the Biggest Hit
180
160
140
OCR
RCR
CCR
120
100
80
60
40
20
Source: URA, ERA Research

35
Overall Price Decline Has

Been MODERATE
3Q2013
PEAK
3Q2015
CHANGE
% CHANGE
154.6
142.3
(12.3)
(8%)
3Q2014
3Q2015
CHANGE
% CHANGE
Year on Year
148.6
142.3
(6.3)
(4.2%)

36
Rate of Price Decline Has

Increased Marginally
1st 3Q 2014
4Q2013
3Q2014
CHANGE
% CHANGE
153.2
148.6
(3.5)
DOWN 3.0%
4Q2014
3Q2015
CHANGE
% CHANGE
147.0
142.3
(4.7)
DOWN 3.2%
1st 3Q 2015

37
The Straits Times, 12 November 2015
38
Price Decline to CONTINUE into 2016
1)
2)
Price decline expected to continue into

2016
Extent of decline depends on:

a) Any changes to cooling measures
b) Interest rate changes
c) Any external shocks
39
TRANSACTION VOLUME
40
New Project Sales depends on

New Launches
12000
TDSR
10000
8000
2662 4545 4358

4111 2399
6000
2407
4000
6526
5402 5916
2000
4353
5412
1546
1585 1380
1530 1384
1344
1071
4538
2430 2568
1744
1988 1749
2665
2410
1531 1376 1311 2116
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015
Sold
Resale
Launched
Source: URA REALIS, ERA Research

41
New Project Sales
DOWN 1.7%
7,000
6,000
5,940
5,837
1st 3Q2014
1st 3Q2015
5,000
4,000
3,000
2,000
1,000
0
42
Secondary Market
UP 23%
Resale + Subsale
6,000
5,000
4,000
3,000
2,000
4,147
5,081
1,000
0
1st 3Q2014
1st 3Q2015
43
Overall Volume
UP 8.2%
due to Slowdown in New Project Sales

12,000
10,000
8,000
4,147
5,081
5,940
5,837
1st 3Q2014
1st 3Q2015
6,000
4,000
2,000
0
New Projects
Resale + Subsale
44
Transactions Outlook
Resale transaction volume expected
to be around 6,000 units for 2015; a
20% INCREASE over 2014
Quieter Primary Market for 2015
Developers launching in phases
Selective buyers
45
Transactions Outlook for 2016
Fewer launches in 2016

Fewer plots of land released for sale
More active resale market as prices
continue to stabilize.
46
Private Residential
Rental Market
47
8 Consecutive Quarters of Decline

120
118
116
114
118.2
117.6117.9
117.6
116.8
116.6
116.1
115.9
115.2
114.8
114.2114.5
114.1
113.7
112.2
112.8
112 111.4
111
110.3
110
108
106

48
CCR
RCR
2015Q3
2015Q1
2014Q3
2014Q1
2013Q3
2013Q1
2012Q3
2012Q1
2011Q3
2011Q1
2010Q3
2010Q1
2009Q3
2009Q1
2008Q3
2008Q1
2007Q3
2007Q1
2006Q3
2006Q1
2005Q3
2005Q1
2004Q3
2004Q1
Rents Declined Across All Sectors

140
120
100
80
60
40
20
OCR

49
Rate of Decline Not Drastic

3Q2013
PEAK
118.2
3Q2015
CHANGE
% CHANGE
110.3
(7.9)
DOWN 6.7%
3Q2014
3Q2015
CHANGE
% CHANGE
Year-on-Year
115.2
110.3
(4.9)
DOWN 4.3%

50
Rental Transactions Steady

25000
20000
15000
10000
5000

51
Prime Home Rents:
Singapore is 3rd Worst Performer

Among 18 Cities
Tightened immigration & labour policies,

Moderated economic growth
Estimated completion of 20,000 private
residential units island-wide
Low population & workforce growth in 2015
Overall rentals is expected to decline, with an
estimated 3 to 5 %year-on-year drop in rentals of
high-end residential properties by 4Q2015.
52
Rental Outlook
Rents expected to continue their decline into
2016 due to:
a) Record number of completions, especially

in the CCR and OCR
b) Restrictions on foreign labour
c) Less attractive expatriate packages
Increasingly more tenants signing 12-month

leases
53
54
Source: The Business Times, 25 June 2015

55
The Business Times, 16 September 2015
56
Source: Department of Statistics, 1 October 2015
57
Source: The Straits Times, 12 June 2015
58
Costliest Cities in Asia Pacific

1.
2.
3.
4.
5.
6.
7.
8.
Shanghai
Beijing
Seoul
Hong Kong
Guangzhou
Busan
Tokyo
Shenzhen
9. SINGAPORE
Source: ECA International 11 June 2015
59
Stronger SGD = Higher Cost for Expats
"Although, like many currencies, the Singapore dollar

has weakened against the US dollar, it strengthened
against a number of other major currencies.
Assignees, having been relocated from one of these
locations into Singapore, are likely to require a higher
cost of living allowance in order to maintain their
spending power."
Lee Quane
Regional Director Asia
ECA International
11 June 2015
60
COOLING MEASURES
The Straits Times, 4 July 2015
WHY?
Private property prices DOWN 7 straight
quarters
Waning support from HDB upgraders
because HDB prices DOWN 8 straight
quarters
Oversupply of private residential property
24,000 vacant units
22,000 units completing in 2015
21,000 units completing in 2016
Interest rates increasing
Mortgagee sales increasing
Jobs at stake 16% of people employed
work in real estate & construction industry
62
63
Market Not Soft Enough!
Ravi Menon
Managing Director
Monetary Authority of Singapore
21 July 2015
Property prices have softened

somewhat, but like I said last
year, in the context of the price
increase that had occurred
60 per cent over three years
the softening we have seen is
really not all that much.
So, its still premature to
consider removing any of the
cooling measures that are in
place.
64
TODAY, 17 August 2015
65
66
TODAY, 17 September 2015
67
68
Cooling Measures to Stay for Now

"I would say it's still not time yet to unwind
the cooling measures.
The price adjustments that we've seen so far
have been moderate compared to the
increase in prices that took place very quickly
in the past few years.
We don't want to risk a premature market
rebound.
Lawrence Wong
National Development Minister
But we know that the situation is fluid and

very dynamic...
Economic conditions both externally and within
Singapore are changing, so we are monitoring
the situation very closely and we will adjust
the necessary if and when conditions change.
Source: The Straits Times, 16 October 2015
69
Resale HDB Prices

DOWNWARD CORRECTION
Period
Index
Period
Index
Q3 2005
73.2
Q2 2013
149.4
Q2 2013
149.4
Q3 2015
134.6
Increase
+76.2
Decrease
-14.8
Over 31
Quarters
(7.75 Years)
UP 104%
Over 9
Quarters
(2.25 Years)
DOWN
-9.9%
(Avg 13.4%)
70
Private Property Prices

DOWNWARD CORRECTION
Period
Index
Period
Index
Q2 2009
95.3
Q3 2013
154.6
Q3 2013
154.6
Q2 2015
142.3
Increase
+59.3
Decrease
-12.3
Over 17
Quarters
(4.25 Years)
UP 62%
Over 8
Quarters
(2 Years)
DOWN
-8%
(Avg 14.6%)
71
The Business Times, 6 November 2015
72
Stable, Sustainable Property

Market in Interest of All
Heng Swee Keat

Finance Minister
5 November 2015
"The industry, homeowners & the

government have a shared interest in
ensuring a stable & sustainable property
market.
Indeed, the US subprime debacle & the
ensuing Global Financial Crisis in 2007-08
have reminded us starkly of the perils of
credit & property bubbles, & the risks of
asset markets becoming de-coupled from
the economy's underlying fundamentals.
The consequences have been severe in the
US, as a housing market collapse quickly
cascaded to the financial system and led
to a recession, not just in the US, but in the
rest of the global economy."
73
The Business Times, 28 November 2015
74
75
3-Month SOR Jumps 50%!

76
77
Who are the Buyers?
Singaporeans = 73%; SPRs = 17%;

Foreigners & Companies = 10%
100%
90%
80%
5%
7%
7%
7%
10%
7%
9%
9%
11%
9%
10%
7%
5%
5%
7%
15% 15% 16%
16% 15%
16% 17% 14% 15% 16%
18% 16% 19% 18% 20%
70%
60%
50%
40%
30%
79% 78% 76% 75%

74%
73% 77% 75% 73% 70% 70% 69% 70% 71% 74%
20%
10%
0%
Singaporean
Singapore Permanent Residents (PR)
Foreigner (NPR)
Company
79
Preferred Price Quantum is

< $1.5 million
3500
3000
2500
2000
1500
1000
500
0
less than > $500000 > $1 mil to > $1.5 mil > $2 mil to > $3 mil to > $4 mil to more than
$500000 to $1 mil $1.5 mil to $2 mil
$3 mil
$4 mil
$5 mil
$5 mil
Singaporean
Singapore Permanent Residents (PR)
Foreigner (NPR)
Company
80
HDB Buyers Prefer <$1 million

Private Buyers Prefer <$1.5
million
3000
2500
2000
1500
1000
500
0
Less than $500k to
$500k
$1m
$1m to
$1.5m
$1.5m to
$2m
HDB
$2m to
$3m
$3m to
$4m
$4m to More than

$5m
$5m
Private

81
More Chinese & Malaysian Buyers

100%
90%
80%
70%
60%
50%
40%
30%
20%
28% 26% 25%
15% 13% 16% 15% 18% 18%

21% 19% 21% 20% 18% 20% 22% 17%
18% 17%
8%
5%
23%7%
17% 5% 18% 7%
34%
15% 16%
26%
11% 11%
9%
9%
23%
17%
20%
23%
18% 24%
10%
9%
6% 11%
20%
5% 29%
19%
12% 12%
2%
11%
11% 10%
40%
9% 8% 8% 11% 9% 10%
27%
26% 5%
10% 7%
36% 36%7%
31%
32%
35%
21%
32%
28% 30%
18%
17%
18%
27%
24% 21%
20%
27% 25%
19%
30%
12%
20%
10%
15%
24%
29% 30% 31%
24%
18%
25% 26%
33% 35%
27% 27% 29%
39%
30%
35%
31% 30%
26% 29% 31%
28% 24%
0%
China
Malaysia
India
Indonesia
Others
82
USA Buyers
(same treatment as Singaporeans for ABSD)

50
45
40
35
30
25
20
15
10
5
0
30
28
20
17
13
SEA*
USA
Prime districts (1,2,9,10,11)
United Kingdom
Others

*Brunei, Cambodia, Laos, Myanmar Philippines, Thailand, Vietnam
83
Preferred Price Range

less than $500000 $1 mil to $1.5 mil $2 mil to $3 mil to $4 mil to more than
Total
$500000 to $1 mil $1.5 mil to $2 mil $3 mil
$4 mil
$5 mil
$5 mil
Singapore
China
Malaysia
Indonesia
India
Others
147
3909
4075
1623
838
189
71
72
10924
10
488
432
141
121
45
26
50
1313
22
701
324
123
75
11
17
1280
143
159
94
63
24
19
22
527
179
171
49
52
22
491
215
294
235
164
63
46
74
1351

84
The Business Times, 30 Nov 2015
85
Learning Points:
Proximity to MRT station & reputable schools
Attractive price quantum
The units sold were evenly distributed among

all unit types:
1-bedroom units: 33%,
2-bedroom units: 36%
3 & 4 bedroom units: 31%
Singaporeans formed 98% of buyers.

86
LONGER TERM PERSPECTIVE
REMAINS FANTASTIC!
87
The Straits Times, 1 December 2015
88
The Straits Times, 30 September 2015
89
90
Singapore gets Lions Share of

Investments from Major Powers
Source: The Business Times, 16 September 2015
91
92
94
95
96
98

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Where is the Residential

HDB Resale Market

Source: HDB, ERA Research

Rate of Price Decline

Source: HDB, ERA Research

Rate of Price Decline Has

Source: HDB, ERA Research

The Straits Times, 24 October 2015

Source: The Straits Times, 5 November 2015

Resale HDB Prices

Source: SRX, ERA Research

For Month of November 2015:

Overall Resale Flat Prices: UP 0.4%

Mature HDB Estates Hold Better

Non-Mature Estates (as defined by HDB):

Resale Prices in Mature Estates

Mature Estates: UP 0.4%

Non-Mature Estates: UP 0.3%

Median HDB Transaction

Source: SRX, ERA Research

2014 Resale HDB Volume

Source: HDB, ERA Research

1st 3Q 2015 Resale Transactions

compared with 1st 3Q 2014

Source: HDB, ERA Research

Resale Volume DOWN 15.9%

Source: SRX, ERA Research

Source: The Business Times, 5 November 2015

Resale Transactions likely to

Source: HDB, ERA Research

Resale HDB Prices

Source: HDB, ERA Research

Source: HDB, ERA Research

No One is Selling a Loss

The Business Times, 28 April 2015

The Straits Times 27 May 2015

The Straits Times, 20 November 2015

HDB Outlook for 2016

Main impact on Resale HDB Market:

HDB Subletting Market

Average HDB Sub-letting Volume

units per Quarter

Source: HDB, ERA Research

HDB Rentals STABLE

Source: SRX, ERA Research

SUSTAINED Higher Volume

Subletting transactions likely to increase as more

COMPETITION from Private Market

With private rentals falling due to the supply of

Private Property Prices

Prime (CCR) Property Prices Taking

Source: URA, ERA Research

Overall Price Decline Has

Source: URA, ERA Research

Rate of Price Decline Has

Source: URA, ERA Research

The Straits Times, 12 November 2015

Price Decline to CONTINUE into 2016

Price decline expected to continue into

Extent of decline depends on:

New Project Sales depends on

2662 4545 4358

Source: URA REALIS, ERA Research