How much has your property appreciated by?

Property Appreciation: it’s all a question of Return on Investment – and we have taken a look at the past so that we may shed some light on the future

In land-scarce Singapore, investing in the right property can provide you with handsome returns. Location plays a key role in the capital appreciation of property, which comprises factors like: accessible amenities, proximity to the MRT, an unblocked view and the presence of popular primary schools in the area. With property prices being so depressed, now may be the best time for those looking to invest in a home. First up is the primer on various property types in Singapore.

Government-Subsidised Public Housing

Managed by the Housing Development Board (HDB), these residential units are grouped into 26 self-sustainable HDB towns consisting of well-established transportation networks and accessible amenities. Government subsidies in the form of CPF Housing Grants are available for Singaporean buyers of all HDB flats, including Design, Build & Sell Scheme (DBSS) and Executive Condos (ECs).

Potential investors of public housing should take note of the following restrictions imposed on homebuyers:

1. Only Singapore Citizens are eligible to purchase a flat.
2. Unless you are 35 years old and older, you cannot possess sole ownership over a flat.
3. You need to live in your HDB flat for the Minimum Occupation Period (MOP) of 5 years before you can sell or rent out your whole flat. It is illegal to rent it out before the MOP.
4. You and your co-owner have to fulfill the Income Ceiling, shown in the table below:

Source: HDBinfoWEB

If you are in the ‘sandwiched class’ – higher income buyers who can neither afford private property or qualify for the BTO scheme due to the Income Ceiling, you may consider investing in alternatives like ECs or flats under the DBSS.

Below is a table summarising the main features and differences between DBSS flats and ECs.

Private Property

Private property in Singapore can be classified into Condominiums (Non-executive) and Landed Property:

• Bungalow/Detached House – Free standing house that does not share any common wall or roofing with other separate dwellings.

• Semi-Detached House – A pair of landed house joined by a common wall but not to any other dwellings.

• Terrace House – Three or more houses joined side by side together.

Foreigners can only purchase private condominiums and ECs which are 10 years and older. Approval from the government is required if they wish to purchase landed properties.

Additionally, the Seller Stamp Duty (SSD) applies should you sell your property within the first four years of purchase. The SSD Rates are as follows:

Source: Iras

Should you invest and where?

Based on data from URA’s Master Plan 2014, Singapore government has begun constructing commercial growth areas in the Western and Northern regions of Singapore. These future work-life precincts – Woodlands Regional Centre and Jurong Lake District – are slated to be completed in the next 10 to 15 years. With the development and increasing popularity of these future hubs, we believe that there will be a marked increase in property prices in these regions.

If the Additional Buyers Stamp Duty (ABSD) is indeed revised as expected, the private condominiums stand to be the biggest gainer. We thus believe that investing in the Northern and Western districts may provide the highest returns.

Based on the average psf of private condominiums from sale transactions on Nationproperty’s website, the private condominiums in District 25 (Woodgrove, Kranji, Woodlands, Admiralty) have increased by 38.3% since Jan 2013, when the ABSD was last raised. In District 22 (Lakeside, Jurong, Boonlay, Tuas), prices have also increased by 6% from Jan 2013.

Similarly, landed properties in the same districts also saw an increase in psf. Properties in District 25 increased by 19.5% while those in District 22 increased by 24.4%.

Other regions with the largest increase in prices are District 10 ( Sims, Geylang, Paya Lebar and Eunos) and District 14 (Tanglin Road, Farrer, Holland, Bukit Timah, Ardmore).  Private condominiums increased by 12.6% and 11.7% for Districts 10 and  14 respectively, while landed properties increased by 4.7% for District 14.

District 23 (CCK, Bukit Batok, Dairy Farm, Hillview, Bukit Panjang) also saw a significant psf increase of 17.4% for the transaction of landed properties.

We don’t expect a lot of movement in the prices of HDBs and ECs. Based on our analysis, we would expect these properties to remain slightly bearish in the near future. However, for those of you who are looking to buy a HDB Flat, you may want to look into the central areas. If you are a HDB owner in the other regions, sit tight!

If you enjoyed this article, you might be interested in Launch of 99.co’s Commercial Portal – More reach for real estate agents and The 7 deadly sins of Singapore property buyers.

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