The previously frantic en bloc sale market has finally ground to a halt. Between April and July, there were a total of 34 successful en bloc deals, but in August there was only one deal struck. In September, it was a complete stand-still. 

The government’s supply-side measure of jacking up the development charges has worked perfectly well to douse an over-heated collective sale market. It seems that, in the next three to six months, only en bloc sale projects with superb qualities and competitive prices will have a realistic chance of finding a buyer. 

In the US, a worsening housing slump and a credit crunch may land the US economy on clutches. New home sales in the US plummeted in August to the lowest ebb in seven years. It is now much harder for home owners in the US to obtain any mortgage loan that is above US$417,000. Financing for larger homes had simply dried up in the aftermath of the sub-prime crisis. 

There is now an even deeper fear that businesses in the US might cut back on spending and investing and in so doing push the economy further into a recession.   

Likewise in Singapore, the local banks are cutting back on home loans. They now scrutinise a borrower’s creditworthiness more closely and treat it as the number one consideration in deciding loan eligibility. 

In fact, there have been 10,000 new home loan applications every month since the property boom last year, however, at this moment only an average of 4,000 applications would be approved each time. This must be interpreted as an alarm bell sounding. It means that if banks continue to be cautious, about 60% of the new condo owners will be unable to obtain financing when their new condos receive TOP next year.

Articles by Sam Gian  

With the financial market woes subsiding, the prospect of landed home sale in Singapore looks much brighter in the near term. 

As it is, there will only be another new 1,872 landed units being added into the market in the next three to four years. Add that to the current 68,360 landed houses in Singapore, there would only be around 70,232 landed homes compared with the total of about 250,000 private properties in the next few years. In short, landed properties would make up only around 28% of the total private property stock.   Unlike the meteoric rise of upscale apartment prices since last year, there are still many good bargains in the landed home market in outlaying areas. The near term should see more upper-middle income earners jostling for a coveted prize of land before the bull-run sets in motion again anytime soon.  From the investment yield perspective, the current rental yield for landed homes is extremely high with some semi-detached houses asking for $8,000 a month in rent. In fact, rents for semi-detached houses have risen by 11.4% year-on-year. 

Detached houses are now dearer to rent with an increase of 13% in the yearly rental index. Rents for terrace houses have gone up by 17.3% compared to last year.  

The push-pull factors of limited supplies and soaring rents should heighten the demand for landed residential properties in the next few months. The current market lull should be cherished by house hunters trying to reach the star. They will do well to grab a house of their choice and not let the opportunity slip. The property bull may be roused anytime from now -  home prices are set to roar again.

Article by Sam Gian