Home vacancy rates breach 8% as owners hope to cash in on sale frenzy

Developers and property owners are selling their homes with the hopes of scoring a bargain.

Home vacancy rates in Singapore rose to elevated levels or above 8% as a growing number of homebuyers and developers are selling their properties in the hopes of cashing in on the latest sale frenzy to grip the housing market, Winston Lee, Regional Head, Special Projects at PropertyGuru Group told Singapore Business Review.

Vacancy rates are even higher at 11% in the Core Central Region in Q4 as homebuyers pin their hopes on the recovering property market to absorb the properties they put up for sale. 

After bottoming out in mid-2017, Singapore’s property market is roaring back to life as more than fifteen projects have been launched for collective sale in just the first two months of the year with as much as 16 to 22 expected new launches from land sales this year including The Tapestry at Tampines Avenue 10 and Twin View at West Coast Vale, Lee added.

Against a rosier backdrop, it comes as no surprise that market sentiment has been increasingly bullish to the extent that some homebuyers believe that some of the government’s cooling measures can be relaxed to spur more leasing and sales activity.

“Buyer sentiment towards the Singapore residential property market has improved greatly, especially for the HDB market. The intention to buy over the next six months is strong, with the majority of respondents planning to buy a condominium in District 15 or 11,” Lee said.

Developers are similarly riding the growing market optimism by raising asking prices and aggressively bidding for land sites to answer growing demand as Lee notes that the number of available homes actually fell significantly in Q4 because sellers deliberately held back project launches in anticipation of higher selling prices this year.

The bullishness translates to record-high property prices with benchmarks smashing five year records such as the the New Futura which reached S$3000+ per square feet, Forth Avenue government land sales which sold to Allgreen properties for S$533 million, said Paul Ho, chief mortgage consultant at icompareloan.

“PropertyGuru is seeing a strong demand on our platform for properties in the mature District 15 (East Coast and Marine Parade), which suggests that prices in this area might increase faster than the rest of the market in 2018. The developing District 19 (Hougang, Punggol and Sengkang) is also expected to see keen interest from buyers, with Rivercove Residences EC at Anchorvale expected to launch soon. This is likely to be the only EC to be launched in 2018,” Lee added.

Amidst soaring property prices, homebuyers can still turn to landed properties as smaller condominiums are increasingly growing more expensive. “The value hunters will start to look at Landed Properties. As the sales proceeds start to come in from the En bloc sales completion from now till 2019, landed properties, especially the Inter-terrace segment will hot up,” added Ho.

However, analysts are quick to dash rumors of a housing bubble even as speculation-fueled buying spree puts Singapore in risk territory as home prices have only risen slightly and conditions are nowhere near close to bubble territory. 

“The overall transaction volume in 2017 and January-February 2018 is still much lower than the previous peaks. Various pre-emptive measures like the TDSR and Seller’s Stamp Duty are in place to stabilise the market while factors that fuelled the property bubbles in 2007 and 2010 are notably absent – high volume of sub-sales, many overstretched borrowers and influx of foreign buyers,” OrangeTee Research and Consultancy Christine Sun said.