Issue 160

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CONTENTS
p2 Can You Afford Your Home? A Simple
Affordability Test
p6 Singapore Property News This Week
p10 Resale Property Transactions
(May 28 June 4 )
Welcome to the 160
th
edition of the
Singapore Property Weekly.
Hope you like it!
Mr. Propwise
FROM THE
EDITOR
SINGAPORE PROPERTY WEEKLY Issue 160
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Daniel is a single in his mid-thirties. He is
staying with his parents now but is considering
moving out on his own. He has a savings of
$120,000 and is drawing a monthly income of
$6,000. He is eyeing a studio unit in a newly-
launched private residential project downtown
as his bachelors pad.
Joshua and Esther are newly-weds. They have
been looking for their ideal home for some time.
They want to buy a three-bedroom flat in a
condominium near to where Esthers parents
stay. They have a combined salary of $10,000
and savings of $150,000.
Can You Afford Your Home? A Simple Affordability Test
SINGAPORE PROPERTY WEEKLY Issue 160
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Both parties write in about buying their dream
home, and drop the big question at the end:
Is our money enough to buy the property?
When buying properties, most people only
focus on whether they have sufficient funds to
settle the downpayment. But they miss the
more important aspect of whether they are
able to service the housing mortgage in the
future.
The 3-3-5 rule
There are some general guidelines to check
whether a property is affordable to you. For
the sake of easy memorization, lets call it the
3-3-5 rule.
Rule 1: 30% of property price
Your initial capital should at least be 30
percent of the propertys asking price, in order
to pay for the downpayment, transaction
costs and other miscellaneous expenses.
Rule 2: 1/3 of monthly salary
Your monthly mortgage payment should not
exceed one-third of your monthly salary.
Rule 3: 5 times of annual income
The purchase price of the property cannot
exceed five times of your annual income.
Using the 3-3-5 rule, the property purchasing
power of my two groups of readers can be
summarized in the table below.
SINGAPORE PROPERTY WEEKLY Issue 160
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Table 1.1 Calculating property purchasing
power using the 3-3-5 rule
For Daniel, he can only afford to buy a
property priced below $360,000. Since he
relies only on a single income to support his
property, he has higher risk than the couple.
His approach should be more conservative.
As for Joshua and Esther, their budget cannot
go beyond $500,000 because of the limitation
in their initial capital. If they want to increase
their budget, they should find ways to save
more before plunging into the market.
Why you need to be conservative?
Sounds tough, doesnt it?
But so far for all my property purchases, I
have been able to stick to the 3-3-5 rule.
To buy an investment property, youd rather
be conservative than aggressive. To support
your home, youd better be safe than sorry.
SINGAPORE PROPERTY WEEKLY Issue 160
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If you have problems even paying for 30
percent of the property, you cant really
afford it.
If the value of your target property far
exceeds five times of your annual income,
you are either buying an overpriced
property or buying a property out of your
reach financially.
Many people buy their home without thinking
carefully. They are tempted to use the
government housing grant or subsidy for first-
time buyers.
You may not aware of the fact that this small
amount of subsidy, say, $30,000 or $40,000,
can easily be offset by the fall in your
propertys value when the bear market comes
after your purchase. You are left to pay the
outstanding loan from an overpriced property.
Interest rates can go up. Property prices can
go south. Jobs can be lost.
Do you have the holding power to go through
the next property cycle? Would you still be
able to service your housing mortgage under
all circumstances? Do you have the cash
reserve to top up the difference in case your
propertys value drops below the market
price?
If you cant give a definite answer, you are not
ready yet.
By guest contributor Property Soul, a
successful property investor, blogger, and
author of the newly released No B.S. Guide to
Property Investment.
SINGAPORE PROPERTY WEEKLY Issue 160
Singapore Property This Week
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Residential
Private home vacancies climbing
Figures from URA show that the number of
vacant private homes has climbed from
18,003 at the end of Q4 2013 to 19,285 by
the end of Q1 2014. Vacancy rate increased
from 5.2 per cent at end-Q1 2013 to 6.2 per
cent in Q4 2013 and 6.6 per cent by end-Q1
2014. According to DTZ regional head (SEA)
research, Lee Lay Keng, more private home
units are left empty. After the global crisis,
real estate demand grew among investors.
This led to some investor hoarding the
apartments, without occupying it. On the
other hand, some other units were left
unoccupied as investors were unable to find
tenants as the labour policies have slowed
the inflow of expatriates. Also, the competitive
rental market has pushed rental prices down,
thus making it unattractive for property
owners to rent out their apartments.
Furthermore, the recent increase in supply of
private homes could contribute to increased
vacancies. According to analysts, suburban
locations are most likely to suffer from the
climbing vacancy rates, since the supply of
private homes is greatest in those regions.
(Source: Business Times)
SINGAPORE PROPERTY WEEKLY Issue 160
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Experts: vacant property will deteriorate
quicker
Private homes are increasingly vacant. Ku
Swee Yong, Century 21 chief executive said
that a vacant property will deteriorate quicker
than one that is occupied, hence home
owners should find ways to find a tenant
quickly. Mr Ku said that home owners can
provide rental discounts or lower their capital
appreciation expectation and sell the
property. Ong Kah Seng from RST Research
also urged investors who are holding on to
completed suburban condos to consider
selling their property. This is because Mr Ong
believes that suburban condo projects are
less unique and have limited resale value in
the longer run.
(Source: Business Times)
Mays resale condo volume and price are
falling
According to flash figures by Singapore Real
Estate Exchange, the number of condo units
resold in May fell 7.5 per cent month-on-
month to 421 units. This is 42.6 per cent
lower than the 734 units resold in May 2013.
Resale prices were also down by 0.3 per cent
in May. This fall in resale transactions and
prices of non-landed private homes in May
could be due to loan-restriction measures and
buyers stamp duties. Analysts also believe
that demand for resale property fell because
developers have offered huge discounts for
new units. Not only so, weak leasing
conditions could also affect the resale market.
According to SLP International, rental
volumes rose slightly by 3.7 per cent to 3,120
whole units from Aprils 3,010 transactions.
SINGAPORE PROPERTY WEEKLY Issue 160
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However, rental prices are slipping since last
year. From January 2013 till this month, rental
prices have fallen by 6 per cent.
(Source: Business Times)
Lorong Puntong and Tampines Road land
parcel popular among developers
In the H2 Government Land Sales (GLS)
Programme, private housing sites at Lorong
Puntong in Upper Thomson area and
Tampines Road are among developers
favourites, said property consultants. These
two housing sites are the latest to be added
onto the confirmed list for the GLS
Programme. Located near the upcoming
Bright Hill MRT Station, the site at Lorong
Puntong will launch for tender in August,
while the other site at Tampines Road will
launch a month later. The land parcel at
Lorong Puntong is expected to generate 280
homes, and is expected to draw bids that are
at least $650 to $700 per square foot per plot
ratio (psf ppr), according to CBRE head of
Singapore research, Desmond Sim. Christine
Li from Orange Tee predicts that the site will
fetch a price of $720 to $745 psf ppr. On the
other hand, Ms Li predicts that the land parcel
at Tampines Road, near Kovan MRT Station,
will cost around $690 to $720 psf ppr, while
Mr Sim estimates the winning bid to be
around $650 to $700 psf ppr. The site is
predicted to yield 340 homes.
(Source: Business Times)
Commercial
New commercial and residential sites
released
New commercial and residential sites were
released in the confirmed and reserve lists for
SINGAPORE PROPERTY WEEKLY Issue 160
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the Government Land Sales programme in
H2 2014. The Urban Redevelopment
Authority (URA) will launch the tender of a
commercial and residential development site
in Holland Village in December. This site will
accelerate development of the existing urban
village in that area according to the Ministry of
National Development. Commercial sites near
Paya Lebar MRT Station will also be up for
tender, according to URA, to drive the
development of commercial hubs within that
area. However, market watchers believe that
only big players will participate in this tender
as the gross floor area is expected to be
almost 1.8 million square feet.
(Source: Business Times)
Landscape renewal policy extended to
include more sites
The Urban Redevelopment Authority (URA)s
Landscaping for Urban Spaces and High
Rises (LUSH) Programme, which aims to
develop more green spaces, has undergone
new enhancements. Under the LUSH 2.0
plan, the landscape replacement policy will
now cover more areas. At least 40 per cent of
developments in strategic areas must be
planting areas and the remaining 60 per cent
must be landscaped communal areas. The
policy was also extended to cover all
residential, commercial, hotel and mixed-use
developments that are outside the identified
strategic areas. Depending on the gross plot
ratio, developments have to replace 30 to 40
per cent of the full site area with planting
areas, with effect from September 12 this
year.
(Source: Business Times)
SINGAPORE PROPERTY WEEKLY Issue 160
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Non-Landed Residential Resale Property Transactions for the Week of May 28 Jun 4
Postal
District
Project Name
Area
(sqft)
Transacted
Price ($)
Price
($ psf)
Tenure
1 MARINA BAY RESIDENCES 710 1,650,000 2,323 99
4 CARIBBEAN AT KEPPEL BAY 1,464 2,450,000 1,674 99
4 MOUNT FABER LODGE 1,173 1,770,000 1,509 FH
5 BLUE HORIZON 1,184 1,260,000 1,064 99
5 VISTA PARK 926 820,000 886 99
8 CITY SQUARE RESIDENCES 570 910,000 1,595 FH
8 CITYLIGHTS 678 1,075,000 1,585 99
9 SCOTTS 28 1,733 3,600,000 2,077 FH
9 THE BAYRON 872 1,515,000 1,738 FH
9 CAIRNHILL PLAZA 2,293 3,800,000 1,657 FH
9 RESIDENCES AT 338A 1,163 1,850,000 1,591 FH
9 VILLE ROYALE 1,884 2,665,000 1,415 FH
9 WILKIE 87 1,281 1,600,000 1,249 FH
10 BOTANIC GARDENS VIEW 1,410 2,700,000 1,915 FH
10 THE TOMLINSON 2,347 4,450,000 1,896 FH
10 GARDENVILLE 1,615 2,838,000 1,758 FH
10 THE HERMITAGE 818 1,390,600 1,700 FH
10 CASABELLA 1,281 2,100,000 1,639 FH
10 CASABELLA 1,776 2,768,000 1,559 FH
10 GLENTREES 1,345 1,670,000 1,241 999
11 NOVENA LODGE 958 1,448,000 1,511 FH
11 MANDALE HEIGHTS 818 1,033,000 1,263 FH
12 THE ARTE 1,625 2,339,900 1,440 FH
14 LE CRESCENDO 915 1,010,000 1,104 FH
Postal
District
Project Name
Area
(sqft)
Transacted
Price ($)
Price
($ psf)
Tenure
14 SUNFLOWER VIEW 1,012 950,000 939 FH
15 PEBBLE BAY 2,626 4,128,000 1,572 99
15 AALTO 2,024 3,050,000 1,507 FH
15 THE MAKENA 1,615 2,100,000 1,301 FH
15 SANCTUARY GREEN 1,711 2,000,000 1,169 99
15 DUNMAN VIEW 1,184 1,218,888 1,029 99
15 CHELSEA LODGE 1,195 1,150,000 963 FH
15 NEPTUNE COURT 1,636 1,460,000 892 99
15 LAGUNA PARK 1,615 1,330,000 824 99
15 K-LODGE 1,841 1,460,000 793 FH
16 THE BAYSHORE 980 915,000 934 99
16 EASTWOOD CENTRE 1,367 1,050,000 768 99
16 KEW GREEN 3,057 2,000,000 654 99
19 SUNGLADE 1,163 1,323,000 1,138 99
22 PARC OASIS 1,076 1,030,000 957 99
22 PARK VIEW MANSION 1,335 820,000 614 99
25 ROSEWOOD SUITES 1,227 1,020,000 831 99
25 THE WOODGROVE 893 725,000 811 99
26 SEASONS PARK 1,066 988,800 928 99
NOTE: This data only covers non-landed residential resale property
transactions with caveats lodged with the Singapore Land Authority.
Typically, caveats are lodged at least 2-3 weeks after a purchaser
signs an OTP, hence the lagged nature of the data.