#2: Property Market Crash or Shift Prediction in 2023 (Part 2)

Melvin Lim
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Welcome back to Nuggets On The Go Season 3, Episode 2.

Melvin Lim
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We’re right now in 2023, and we’re gonna talk about Part 2

Melvin Lim
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of where we left off in Episode 1.

Melvin Lim
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So if you have not watched Episode 1, do head back to

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click on this link and that will bring you to

Melvin Lim
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the onset of our discussion on 2023 Property Crash or Shift.

Melvin Lim
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So for today’s episode we’re gonna talk about

Melvin Lim
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seven property trends that we think

Melvin Lim
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might evolve right now in the year 2023. Let’s go.

Melvin Lim
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So for Part 2, I’m gonna dive straight into

Melvin Lim
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some of the key highlights of property news

Melvin Lim
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that have sprouted over the last two to three months.

Melvin Lim
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So let’s have a look at this very first news,

Melvin Lim
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which is talking about the rental rate,

Melvin Lim
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in terms of volume that happened in December.

Melvin Lim
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And later we’re gonna talk about one of the trending

Melvin Lim
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because this is a hot topic for this year

Melvin Lim
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because rental rates have burst through the roof.

Melvin Lim
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And of course that has been favourable for landlords,

Melvin Lim
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but unfavourable for tenants.

Melvin Lim
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And we’re gonna talk about what will likely

Melvin Lim
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be trending in the next 12 to 24 months.

Melvin Lim
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Will rental rates continue to rise,

Melvin Lim
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in conjunction with what’s gonna happen now?

Melvin Lim
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So this news just came out yesterday

Melvin Lim
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talking about record employment in the whole year of 2022.

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And though 2022 was the year of the black swan

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with Ukraine war, with crypto crash, with stock crashing,

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with tax stocks crashing, as well as interest rate rising

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for seven rounds by Federal Reserve.

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And of course Singapore’s interest rate right now

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averages is at about 4% to 4.2%.

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This of course came as a surprising news

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that our unemployment rates have dipped.

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And employment is actually

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in a very healthy range right now.

Melvin Lim
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And of course we do see condo resale volumes

Melvin Lim
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drop 14% in December.

Melvin Lim
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However, this is something to do with

Melvin Lim
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probably what we call a revenge traveling kind of trending

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that came out over the last quarter of last year

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because everybody was so busy traveling.

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If you look at your social media feed,

Melvin Lim
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everything is about your friends traveling to Korea,

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to Japan, to Taiwan, to like, you know,

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Switzerland, and everybody was busy traveling

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over the last season.

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And I think that has contributed to a drop in

Melvin Lim
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the volume itself.

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But of course I think the key thing was

Melvin Lim
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because of the rising mortgage interest rates

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has caused probably fear among property buyers

Melvin Lim
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that want to wait on the sidelines to time the market.

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Now this has also been a hot topic because

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our government is currently in the season

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whereby they need to talk about

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the affordability of public housing,

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the cost of constructing BTOs,

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and this of course will go on for the next couple of months.

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Let’s wait and see on what is the expected

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kind of debate on this.

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Home prices on the whole of Q4 still went up by 8.6%

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and of course this was the hot topic

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that I talked about in Part 1,

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about the holding power and behaviour

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kind of changes and mindset of existing people

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that are holding onto properties,

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whether do they hold one, two?

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Or for example foreign investors

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holding three to four properties.

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What is going through their mindset now,

Melvin Lim
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and what is their thinking about

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whether should they fire-sale the property?

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Is there a need to even do that,

Melvin Lim
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or what is actually their threshold

Melvin Lim
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for holding on to their properties?

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And of course I’ve answered that in Part 1

Melvin Lim
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whereby there’s technically no need for people

Melvin Lim
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to fire-sale their property

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because their mindset has been so different

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with so many round of cooling measures

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already pre-built in the pricing.

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Everybody has technically very high holding power.

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They enter into a property with a mindset

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that they will hold for mid to long-term

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and they have already locked in rates

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last time with probably 2% rates or 3% interest rates

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and there’s no need for them to fire-sale their property.

Melvin Lim
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Unless we have a very prolonged recession in Singapore,

Melvin Lim
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which technically there’s currently,

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we’re not even in a recession at all.

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And even in the US, technically, although a lot of people say that

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they are already in a recession,

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but you need two negative quarters of GDP growth

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to be technically called a technical recession,

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but it’s still not happening yet.

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Inflation, China’s reopening, US’ possible recession

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might define what will happen this year.

Melvin Lim
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And at the same time, confusing news is that

Melvin Lim
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we are at a 15-year low in terms of our

Melvin Lim
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unsold housing stock.

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At the same time you also see prices still creeping up

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on a month-to-month, quarter-to-quarter basis.

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SGD being the most resilient currency.

Melvin Lim
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And then last but not least,

Melvin Lim
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there’s gonna be quite a fair bit of new launches

Melvin Lim
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that will happen this year,

Melvin Lim
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possibly about 47 different new launches.

Melvin Lim
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And I’m gonna move on to this first graph

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before I head on to the seven property trends for 2023

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that we think will happen this year.

Melvin Lim
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Stay tuned with all our upcoming episode

Melvin Lim
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for how it’s gonna go, because for 2023 we’re gonna ramp up

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as well, in terms of our episodes

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and I think you’re gonna see at least

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two to three episodes per month.

Melvin Lim
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And this is my passion to talk to you about

Melvin Lim
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what is gonna happen in the next 12 to 24 months

Melvin Lim
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because I myself am very excited on the trendings

Melvin Lim
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that might possibly happen.

Melvin Lim
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So the first graph is to look at this.

Melvin Lim
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Why is there this upward movement

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even though we had this slight glitch of recession

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that happened during the COVID season.

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And of course for the past two rounds of recession,

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depicted by this period of recession orange graph here,

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we had a dip of about 6% to 10%.

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There was this even sharper dip on 19% to 26%

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during this period.

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But something to note during this two seasons is that

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when we look at price dips in Singapore,

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we have to see whether did cooling measures

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come in during that season?

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So I talk about this in a lot of episodes before is that,

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three things to note.

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When we see this during a period of recession,

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in the past, during the dot-com bubble,

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during the Lehman Brothers crisis,

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how many cooling measures were there

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in our Singapore property price index?

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Because ever since 2009 until now,

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we are close to about 14 rounds of cooling measures

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compared to the past where there were almost like

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no cooling measures at all.

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Secondly, is to note that during this period right here,

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what is the volume of transactions during that season?

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Because in Singapore we have to note that

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our property price behaviour is very different

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from what happens globally.

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Singaporeans have 90% homeownership rates

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as long as they can service their monthly mortgage,

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as long as they have jobs to pay for the monthly instalment.

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And let me just share with you,

Melvin Lim
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a lot of you have very different kind of perspectives

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in terms of holding onto the property.

Melvin Lim
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If times are bad, homeowners sometimes they’ll tell me that

Melvin Lim
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they can always rent out one room, or two rooms

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to room tenants just to support

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the mortgage a little bit.

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When times are bad, they’ll take another 6

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to maybe 12 months to find a job,

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but they have some level of savings in their CPF.

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And sometimes when you look at

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different kinds of perspectives, you tend to understand that

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it is because 90% of Singaporeans own their own homes.

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That is why there is actually much less motivation

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for them to fire-sale their property,

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unless both husband and wife are in

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a jobless situation for a very, very long time.

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So when we track back to this graph, October 2008 season,

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you’ll notice that this is the volume graph.

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Volume tends to be low during the recession period

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when prices dip at that time.

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Now this is correlated to the behaviour

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of existing homeowners in the market.

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Because naturally speaking,

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if you currently have two properties

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and if you are in no need to sell,

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you will only sell your property

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and make tweaks to your current property portfolio

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when prices are going up.

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So the human tendency of property owners

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and property investors that have properties is that

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they will only sell when prices are going up,

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or if they think that the price has peaked.

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And then they’ll wanna exit and buy something else,

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exit and reinvest into other bigger or more properties,

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or maybe divest and invest in other kinds of

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assets and equities.

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When prices are going down,

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the natural behaviour of human beings is that

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we will then pull ourselves out of the market.

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If I have a couple of properties that I’m holding on,

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I’ll just continue to rent them until times become better.

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This is a natural human kind of inclination

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is that people will only sell when prices are good.

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People who sell during this season have two behaviour flows.

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Number one, is that they are really in need of selling.

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Number two, is that they saw something that is bigger

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and better in terms of property asset

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and they think that it is okay for them to exit

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their current property in order to enjoy a bigger gain

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by switching their property in a down season

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like this period, during the Lehman Brothers crisis

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that season.

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So let’s come back to this season is that now we are here,

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and if we look at 2020 where there was a slight recession

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but prices was still going up,

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look back at our previous episode where we talk about the fact

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that Singapore is currently now a safe haven,

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plus there are so many cooling measures

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pre-built into the price.

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And that will then bring us to this first trend that

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we wanna discuss in this episode.

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So seven trends that might happen in 2023

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in our private residential property market.

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So take note, therefore, today’s focus, we’ll talk about

Melvin Lim
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private residential property market and

Melvin Lim
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we’ll focus more on condos and apartments.

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We’ll not talk about HDB apartments.

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We’ll not talk about HDB properties today.

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We will not talk about landed residential today.

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So trend number one is that there will be

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plus-minus about 26 different properties,

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in terms of condos and apartments,

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that will hit their completion date this year.

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That means, in short,

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is that they will receive their temporary occupation permit,

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we call it the TOP date.

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So there will be likely of a plus-minus 26 projects

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that will TOP this year.

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And what might happen is that some of these owners

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that have bought into these properties about three years ago

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because take note that some of these properties

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being launched in the 2019, 2020 season,

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and of course some properties have

Melvin Lim
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a little bit of delayed completion because of the COVID period.

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So a lot of all these owners

Melvin Lim
00:08:44,560 –> 00:08:47,640
actually bought into the properties in around 2019,

Melvin Lim
00:08:47,640 –> 00:08:50,280
and then 2020, and now it has TOP-ed.

Melvin Lim
00:08:50,280 –> 00:08:53,160
And naturally all these owners, most of them,

Melvin Lim
00:08:53,160 –> 00:08:55,200
if they’re not buying the balance inventory,

Melvin Lim
00:08:55,200 –> 00:08:56,960
say last year or the year before,

Melvin Lim
00:08:56,960 –> 00:08:59,160
most of them to a certain extent,

Melvin Lim
00:08:59,160 –> 00:09:00,800
and I will say that is a very high percentage,

Melvin Lim
00:09:00,800 –> 00:09:02,960
they have already completed their three years

Melvin Lim
00:09:02,960 –> 00:09:05,120
Seller’s Stamp Duty.

Melvin Lim
00:09:05,120 –> 00:09:06,320
So what will happen is that,

Melvin Lim
00:09:06,320 –> 00:09:08,240
if they were to put this property in the market,

Melvin Lim
00:09:08,240 –> 00:09:09,880
they will definitely ask for high prices.

Melvin Lim
00:09:09,880 –> 00:09:11,720
And high prices in this context is that

Melvin Lim
00:09:11,720 –> 00:09:14,280
they will not ask for the same price

Melvin Lim
00:09:14,280 –> 00:09:15,360
that they bought into last time.

Melvin Lim
00:09:15,360 –> 00:09:17,560
So for example, if you look at Stirling Residences,

Melvin Lim
00:09:17,560 –> 00:09:19,080
on average, everybody bought into the property

Melvin Lim
00:09:19,080 –> 00:09:21,400
at $1,600 PSF, $1,800 PSF.

Melvin Lim
00:09:21,400 –> 00:09:23,360
It TOP-ed just a couple months ago.

Melvin Lim
00:09:23,360 –> 00:09:26,280
And now everybody is asking this current pricing.

Melvin Lim
00:09:26,280 –> 00:09:30,040
And then this is what I deem as they’ll ask for high prices

Melvin Lim
00:09:30,040 –> 00:09:31,840
in the sense that they’ll ask for a higher price than what

Melvin Lim
00:09:31,840 –> 00:09:33,160
they have entered in the past.

Melvin Lim
00:09:33,160 –> 00:09:36,040
So how much are Stirling Residences’ owners asking for?

Melvin Lim
00:09:36,040 –> 00:09:38,720
And now they’re asking for between $2,200+ PSF,

Melvin Lim
00:09:38,720 –> 00:09:40,480
all the way to $2,500 PSF.

Melvin Lim
00:09:40,480 –> 00:09:42,920
And that is what I categorise as high prices

Melvin Lim
00:09:42,920 –> 00:09:45,360
in the sense that they will definitely ask for higher prices

Melvin Lim
00:09:45,360 –> 00:09:47,120
than the PSF that they entered

Melvin Lim
00:09:47,120 –> 00:09:48,800
because it doesn’t make sense for them to sell back

Melvin Lim
00:09:48,800 –> 00:09:51,040
at $1,700 PSF, $1,800 PSF,

Melvin Lim
00:09:51,040 –> 00:09:52,280
or even at $2,000 PSF.

Melvin Lim
00:09:52,280 –> 00:09:53,760
A lot of owners are finding that

Melvin Lim
00:09:53,760 –> 00:09:55,240
it doesn’t make sense for them to exit.

Melvin Lim
00:09:55,240 –> 00:09:57,440
They might as well just rent it out, or they might just

Melvin Lim
00:09:57,440 –> 00:09:59,840
continue to live in this brand new beautiful property

Melvin Lim
00:09:59,840 –> 00:10:00,760
that has just completed.

Melvin Lim
00:10:00,760 –> 00:10:02,280
And they’ve waited for so long

Melvin Lim
00:10:02,280 –> 00:10:03,640
within the last three years.

Melvin Lim
00:10:03,640 –> 00:10:05,360
This is trend number one.

Melvin Lim
00:10:05,360 –> 00:10:07,320
It means that if you’re hunting for a property

Melvin Lim
00:10:07,320 –> 00:10:09,000
in the market, you don’t wanna go for new launches,

Melvin Lim
00:10:09,000 –> 00:10:10,160
you don’t wanna go for resale,

Melvin Lim
00:10:10,160 –> 00:10:12,320
you wanna go for this hybrid category,

Melvin Lim
00:10:12,320 –> 00:10:14,560
which is what we call TOP-ed projects.

Melvin Lim
00:10:14,560 –> 00:10:16,920
Because these properties are fresh out of the oven,

Melvin Lim
00:10:16,920 –> 00:10:19,400
they have just been completed, nobody has lived in them before.

Melvin Lim
00:10:19,400 –> 00:10:20,640
They’re brand new, brand new.

Melvin Lim
00:10:20,640 –> 00:10:22,320
It’s just that you will be the second owner

Melvin Lim
00:10:22,320 –> 00:10:23,400
because you’re buying from the first owner

Melvin Lim
00:10:23,400 –> 00:10:24,720
to have waited for three years.

Melvin Lim
00:10:24,720 –> 00:10:27,320
You’ll definitely need to pay for the TOP prices

Melvin Lim
00:10:27,320 –> 00:10:30,200
because this is in exchange for the time and opportunity

Melvin Lim
00:10:30,200 –> 00:10:32,680
cost that the first owner has waited beforehand.

Melvin Lim
00:10:32,680 –> 00:10:34,480
So this is what we call, and thus

Melvin Lim
00:10:34,480 –> 00:10:37,000
this is the trend number one is that there will be

Melvin Lim
00:10:37,000 –> 00:10:38,760
around 26 projects that will hit the market.

Melvin Lim
00:10:38,760 –> 00:10:41,160
This is a fresh level of inventory

Melvin Lim
00:10:41,160 –> 00:10:42,880
that’s available for buyers to choose from.

Melvin Lim
00:10:42,880 –> 00:10:45,040
And naturally the owners that have bought in the past,

Melvin Lim
00:10:45,040 –> 00:10:47,840
because they have bought in the previous benchmark pricing

Melvin Lim
00:10:47,840 –> 00:10:48,680
of new launches,

Melvin Lim
00:10:48,680 –> 00:10:50,800
they are not gonna sell back at those kind of pricing.

Melvin Lim
00:10:50,800 –> 00:10:52,320
They’ll ask for this new range of price

Melvin Lim
00:10:52,320 –> 00:10:55,240
which will all be in the $2,000+ PSF range

Melvin Lim
00:10:55,240 –> 00:10:56,440
for RCR projects.

Melvin Lim
00:10:56,440 –> 00:10:57,800
And if you wanna have a look at this article

Melvin Lim
00:10:57,800 –> 00:10:59,440
there’s this very nice article that came out

Melvin Lim
00:10:59,440 –> 00:11:00,280
on PropertyGuru.

Melvin Lim
00:11:00,280 –> 00:11:02,200
So I’ll attach the link right below for you as well.

Melvin Lim
00:11:02,200 –> 00:11:03,280
And if you were to look at this chart

Melvin Lim
00:11:03,280 –> 00:11:04,920
that will also give you an indication

Melvin Lim
00:11:04,920 –> 00:11:08,560
of roughly how many units will TOP in the year 2024.

Melvin Lim
00:11:08,560 –> 00:11:09,960
Because if you look at 2023,

Melvin Lim
00:11:09,960 –> 00:11:12,240
this entire chart talks about the number of condos and ECs

Melvin Lim
00:11:12,240 –> 00:11:14,280
that will be completed on a year-to-year basis.

Melvin Lim
00:11:14,280 –> 00:11:16,680
And of course don’t be deceived by this graph line.

Melvin Lim
00:11:16,680 –> 00:11:19,080
And why do I say that there’s no need to be deceived

Melvin Lim
00:11:19,080 –> 00:11:20,760
because this is not the price index,

Melvin Lim
00:11:20,760 –> 00:11:22,920
this is basically the number of condos and ECs

Melvin Lim
00:11:22,920 –> 00:11:24,000
that will be completed.

Melvin Lim
00:11:24,000 –> 00:11:25,200
So when you look at this,

Melvin Lim
00:11:25,200 –> 00:11:27,680
these two years have one of the most numbers of properties

Melvin Lim
00:11:27,680 –> 00:11:29,880
that will be completed in terms of

Melvin Lim
00:11:29,880 –> 00:11:31,320
number of properties that will TOP.

Melvin Lim
00:11:31,320 –> 00:11:32,640
And what does this mean is that

Melvin Lim
00:11:32,640 –> 00:11:35,640
there’s gonna be a fresh supply hitting the resale market.

Melvin Lim
00:11:35,640 –> 00:11:38,280
This means that buyers can have a little bit more choices

Melvin Lim
00:11:38,280 –> 00:11:39,520
to look at TOP-ed projects,

Melvin Lim
00:11:39,520 –> 00:11:42,360
but provided you’re comfortable to go for the pricing.

Melvin Lim
00:11:42,360 –> 00:11:43,840
But these are also home buyers that wants to buy

Melvin Lim
00:11:43,840 –> 00:11:45,800
properties that nobody has lived in before.

Melvin Lim
00:11:45,800 –> 00:11:49,000
So with that, that will bring us to trend number two

Melvin Lim
00:11:49,000 –> 00:11:50,680
because maybe a lot of you are asking

Melvin Lim
00:11:50,680 –> 00:11:54,240
what is gonna happen to the high exorbitant rental rates

Melvin Lim
00:11:54,240 –> 00:11:55,920
that have happened over the past 12 months.

Melvin Lim
00:11:55,920 –> 00:11:59,920
Right now rental rates are extremely, extremely crazy.

Melvin Lim
00:11:59,920 –> 00:12:01,640
And of course it’s good for landlords

Melvin Lim
00:12:01,640 –> 00:12:04,000
because your rental use is gonna be high.

Melvin Lim
00:12:04,000 –> 00:12:05,880
But landlords are also battling with

Melvin Lim
00:12:05,880 –> 00:12:07,840
higher mortgage interest rates, right?

Melvin Lim
00:12:07,840 –> 00:12:10,000
If they happen to have just refinanced,

Melvin Lim
00:12:10,000 –> 00:12:11,880
they’ll have to refinance at maybe 4%

Melvin Lim
00:12:11,880 –> 00:12:13,360
for the next one year or two years.

Melvin Lim
00:12:13,360 –> 00:12:15,800
And of course a lot of tenants are asking,

Melvin Lim
00:12:15,800 –> 00:12:17,760
will rental rates continue to be this high

Melvin Lim
00:12:17,760 –> 00:12:18,880
for the next 24 months?

Melvin Lim
00:12:18,880 –> 00:12:19,920
Based on this tool,

Melvin Lim
00:12:19,920 –> 00:12:22,640
there’s likely going to be about 30,000 units

Melvin Lim
00:12:22,640 –> 00:12:24,600
hitting the resale market

Melvin Lim
00:12:24,600 –> 00:12:26,800
because these are properties that will TOP.

Melvin Lim
00:12:26,800 –> 00:12:29,680
And that might mean that rental rates will come down

Melvin Lim
00:12:29,680 –> 00:12:30,840
in 2024.

Melvin Lim
00:12:30,840 –> 00:12:32,520
So I don’t think it will happen in 2023,

Melvin Lim
00:12:32,520 –> 00:12:34,600
I think it will start to happen in 2024.

Melvin Lim
00:12:34,600 –> 00:12:37,760
But I don’t think it will drop below previous baselines.

Melvin Lim
00:12:37,760 –> 00:12:40,960
That means we will be at a new range of rental rates,

Melvin Lim
00:12:40,960 –> 00:12:43,920
but it will taper off to a more stable level

Melvin Lim
00:12:43,920 –> 00:12:46,560
in the sense that it will be slightly easier

Melvin Lim
00:12:46,560 –> 00:12:49,600
for tenants to look for private residential condo rentals.

Melvin Lim
00:12:49,600 –> 00:12:52,920
But also have to factor in that this new TOP-ed projects

Melvin Lim
00:12:52,920 –> 00:12:54,800
will also have a high percentage of

Melvin Lim
00:12:54,800 –> 00:12:56,320
owners moving into the projects.

Melvin Lim
00:12:56,320 –> 00:12:57,440
Because they’ve waited for three years,

Melvin Lim
00:12:57,440 –> 00:12:59,320
they actually bought these properties for own stay

Melvin Lim
00:12:59,320 –> 00:13:02,000
and they might wanna move in and live in those properties.

Melvin Lim
00:13:02,000 –> 00:13:03,800
But there will be a category, for example,

Melvin Lim
00:13:03,800 –> 00:13:05,280
maybe 1- or 2-bedders,

Melvin Lim
00:13:05,280 –> 00:13:07,480
that will purchase for investment and

Melvin Lim
00:13:07,480 –> 00:13:09,640
these homeowners that have bought into new launches

Melvin Lim
00:13:09,640 –> 00:13:11,400
in this category might want to rent it out.

Melvin Lim
00:13:11,400 –> 00:13:13,840
That might also mean that existing owners,

Melvin Lim
00:13:13,840 –> 00:13:15,440
that are currently renting,

Melvin Lim
00:13:15,440 –> 00:13:17,800
while waiting for these projects to hit TOP,

Melvin Lim
00:13:17,800 –> 00:13:20,840
will then end their leases once it expires.

Melvin Lim
00:13:20,840 –> 00:13:22,840
Maybe they have signed a 1-, 2-, or 3-year lease

Melvin Lim
00:13:22,840 –> 00:13:25,720
and once it ends, they will then collect their keys,

Melvin Lim
00:13:25,720 –> 00:13:28,160
move into these properties after they’ve renovated,

Melvin Lim
00:13:28,160 –> 00:13:30,240
and those units that they were occupying previously,

Melvin Lim
00:13:30,240 –> 00:13:31,280
will then be available.

Melvin Lim
00:13:31,280 –> 00:13:32,760
So in combination,

Melvin Lim
00:13:32,760 –> 00:13:34,920
people who have been renting for 1-2, or 3 years,

Melvin Lim
00:13:34,920 –> 00:13:36,600
moving into their TOP-ed projects,

Melvin Lim
00:13:36,600 –> 00:13:38,880
these units will then be freed up in the market

Melvin Lim
00:13:38,880 –> 00:13:41,240
for- to satisfy a little bit more rental demand.

Melvin Lim
00:13:41,240 –> 00:13:43,920
TOP-ed projects over 2022, 2023,

Melvin Lim
00:13:43,920 –> 00:13:45,920
will also have a little bit more fresh supply

Melvin Lim
00:13:45,920 –> 00:13:46,760
in terms of rental,

Melvin Lim
00:13:46,760 –> 00:13:48,240
will then satisfy a little bit more demand.

Melvin Lim
00:13:48,240 –> 00:13:50,240
In task, we think that in totality,

Melvin Lim
00:13:50,240 –> 00:13:53,080
rental rates will start to taper off to a more stable level.

Melvin Lim
00:13:53,080 –> 00:13:54,840
But I don’t think it will drop drastically,

Melvin Lim
00:13:54,840 –> 00:13:57,720
I just think that you will be a little bit more affordable.

Melvin Lim
00:13:57,720 –> 00:14:01,080
Trend number three is that this is the year of new launches.

Melvin Lim
00:14:01,080 –> 00:14:03,520
Now just have a look at this graph again.

Melvin Lim
00:14:03,520 –> 00:14:06,520
This graph tells us the appetite of developers.

Melvin Lim
00:14:06,520 –> 00:14:10,160
That was why in 2021, 2022, you saw en bloc happening,

Melvin Lim
00:14:10,160 –> 00:14:12,920
you saw more aggressive bidding for land.

Melvin Lim
00:14:12,920 –> 00:14:15,960
And that is why in the first half of 2023,

Melvin Lim
00:14:15,960 –> 00:14:17,520
government has released a little bit more

Melvin Lim
00:14:17,520 –> 00:14:19,920
government land sales to satisfy the demand

Melvin Lim
00:14:19,920 –> 00:14:22,920
because our government cannot allow excessive bidding

Melvin Lim
00:14:22,920 –> 00:14:24,240
for lower supply of land

Melvin Lim
00:14:24,240 –> 00:14:26,880
because that will then jack up the price of GLS too much.

Melvin Lim
00:14:26,880 –> 00:14:28,720
So they have to come in with more land

Melvin Lim
00:14:28,720 –> 00:14:30,240
to satisfy the demand of developers.

Melvin Lim
00:14:30,240 –> 00:14:31,920
And a lot of these projects that were bidded

Melvin Lim
00:14:31,920 –> 00:14:33,920
over 2021, 2022,

Melvin Lim
00:14:33,920 –> 00:14:36,320
are going to be launched in this and next year.

Melvin Lim
00:14:36,320 –> 00:14:38,960
And of course developers have five years to complete selling

Melvin Lim
00:14:38,960 –> 00:14:41,040
their properties before they’re taxed with ABSD.

Melvin Lim
00:14:41,040 –> 00:14:43,240
And thus these two years is considered

Melvin Lim
00:14:43,240 –> 00:14:44,960
the year of the new launches.

Melvin Lim
00:14:44,960 –> 00:14:46,880
So take a look at this article from EdgeProp is that

Melvin Lim
00:14:46,880 –> 00:14:49,760
there’s approximately plus-minus about 40-over projects

Melvin Lim
00:14:49,760 –> 00:14:52,000
that will be launched likely this year.

Melvin Lim
00:14:52,000 –> 00:14:53,760
And I think it is a very exciting year

Melvin Lim
00:14:53,760 –> 00:14:56,160
because if you are somebody that loves to buy new launches,

Melvin Lim
00:14:56,160 –> 00:14:58,440
you’re gonna have a lot more choices to choose from.

Melvin Lim
00:14:58,440 –> 00:15:01,360
However, we also need to move to trend number four,

Melvin Lim
00:15:01,360 –> 00:15:05,040
is that new launches is in a new five year season.

Melvin Lim
00:15:05,040 –> 00:15:06,880
And we have to get used to the new

Melvin Lim
00:15:06,880 –> 00:15:08,560
new launch benchmark pricing.

Melvin Lim
00:15:08,560 –> 00:15:10,120
And what is this five year season?

Melvin Lim
00:15:10,120 –> 00:15:13,400
So we talk about this during the early part of 2022,

Melvin Lim
00:15:13,400 –> 00:15:16,600
I released an episode to share with our audience

Melvin Lim
00:15:16,600 –> 00:15:19,760
to go and buy up all the balance inventory

Melvin Lim
00:15:19,760 –> 00:15:22,360
of the balanced stock of new launches

Melvin Lim
00:15:22,360 –> 00:15:24,440
that was launched pre-2022.

Melvin Lim
00:15:24,440 –> 00:15:26,160
If you have seen that episode, you would then understand

Melvin Lim
00:15:26,160 –> 00:15:27,480
what I was talking about previously,

Melvin Lim
00:15:27,480 –> 00:15:29,400
because in my opinion at the start of 2022,

Melvin Lim
00:15:29,400 –> 00:15:30,480
just about 12 months back,

Melvin Lim
00:15:30,480 –> 00:15:32,280
I shared that all these balanced units

Melvin Lim
00:15:32,280 –> 00:15:34,200
will be cleared off very, very soon.

Melvin Lim
00:15:34,200 –> 00:15:36,120
And the rationale was because back then,

Melvin Lim
00:15:36,120 –> 00:15:39,520
last year in 2022 and the previous year in 2021,

Melvin Lim
00:15:39,520 –> 00:15:44,000
we were at a starting phase of this new five year season.

Melvin Lim
00:15:44,000 –> 00:15:46,640
There seems to be this five years kind of movement

Melvin Lim
00:15:46,640 –> 00:15:49,160
in my own opinion, and every five year,

Melvin Lim
00:15:49,160 –> 00:15:51,680
this cycle push up the new launch PSF pricing

Melvin Lim
00:15:51,680 –> 00:15:54,200
by about $400 PSF to $500 PSF.

Melvin Lim
00:15:54,200 –> 00:15:56,040
That is of course a combination of reasons

Melvin Lim
00:15:56,040 –> 00:16:00,200
and one of the reasons is because developers tend to

Melvin Lim
00:16:00,200 –> 00:16:02,080
have a little bit more cash on hand.

Melvin Lim
00:16:02,080 –> 00:16:03,720
When you see seasons like this,

Melvin Lim
00:16:03,720 –> 00:16:05,760
in the sense that they’re going to hand over

Melvin Lim
00:16:05,760 –> 00:16:07,840
a lot of the projects that are going to complete.

Melvin Lim
00:16:07,840 –> 00:16:09,960
And thus, they have more buying power

Melvin Lim
00:16:09,960 –> 00:16:12,360
and they become more hungry to bid up new land.

Melvin Lim
00:16:12,360 –> 00:16:14,640
Developers of course have to keep bidding for land

Melvin Lim
00:16:14,640 –> 00:16:16,680
and to create new products for the market,

Melvin Lim
00:16:16,680 –> 00:16:18,480
and they cannot just not bid for land.

Melvin Lim
00:16:18,480 –> 00:16:21,000
And thus, whenever you see trending like this going upwards.

Melvin Lim
00:16:21,000 –> 00:16:22,840
It shows that developers are going to complete

Melvin Lim
00:16:22,840 –> 00:16:23,680
most of the projects,

Melvin Lim
00:16:23,680 –> 00:16:25,080
and when the project is being completed,

Melvin Lim
00:16:25,080 –> 00:16:26,880
developers will call for progressive payment

Melvin Lim
00:16:26,880 –> 00:16:27,800
towards the last stage,

Melvin Lim
00:16:27,800 –> 00:16:29,360
and that means that they have more buffer

Melvin Lim
00:16:29,360 –> 00:16:30,640
within their cash holdings,

Melvin Lim
00:16:30,640 –> 00:16:33,040
and then they’ll then bid for more land

Melvin Lim
00:16:33,040 –> 00:16:36,040
in anticipation of their land bank depleting.

Melvin Lim
00:16:36,040 –> 00:16:37,320
So coming back to trend number four,

Melvin Lim
00:16:37,320 –> 00:16:38,640
before I sidetrack even further,

Melvin Lim
00:16:38,640 –> 00:16:41,760
this five years trending tells us that

Melvin Lim
00:16:41,760 –> 00:16:44,280
there is a movement possibly

Melvin Lim
00:16:44,280 –> 00:16:46,160
based on a lot of underlying factors,

Melvin Lim
00:16:46,160 –> 00:16:48,720
developers’ appetite to bid for new land.

Melvin Lim
00:16:48,720 –> 00:16:52,080
And because land cost is always increasing year-on-year,

Melvin Lim
00:16:52,080 –> 00:16:53,960
and with inflation, construction costs,

Melvin Lim
00:16:53,960 –> 00:16:57,000
there’s gonna be more cost price into

Melvin Lim
00:16:57,000 –> 00:16:58,200
the government land sales,

Melvin Lim
00:16:58,200 –> 00:17:01,040
as well as the final bidding price plus the final

Melvin Lim
00:17:01,040 –> 00:17:03,800
output of PSF that will be translated

Melvin Lim
00:17:03,800 –> 00:17:06,480
into the actual new launch pricing for consumers.

Melvin Lim
00:17:06,480 –> 00:17:08,880
This shows us where we are at right now.

Melvin Lim
00:17:08,880 –> 00:17:11,520
So for 2023 we are in this price bracket,

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00:17:11,520 –> 00:17:14,200
and we have to unfortunately get use to this new level.

Melvin Lim
00:17:14,200 –> 00:17:15,560
And of course, just have a look at the

Melvin Lim
00:17:15,560 –> 00:17:18,280
last transacted pricing at Lentor Modern has done very well.

Melvin Lim
00:17:18,280 –> 00:17:19,560
We are at this level.

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00:17:19,560 –> 00:17:22,600
so RCR is at a range of $2,200 PSF to $2,800 PSF.

Melvin Lim
00:17:22,600 –> 00:17:24,320
OCR is at at $1,800 PSF to $2,200 PSF,

Melvin Lim
00:17:24,320 –> 00:17:27,120
or maybe even slightly higher towards the end of the year.

Melvin Lim
00:17:27,120 –> 00:17:29,960
CCR is between $2,600 PSF all the way towards $3,500 PSF

Melvin Lim
00:17:29,960 –> 00:17:32,400
or maybe even $3,600 PSF and $3,800 PSF in the future.

Melvin Lim
00:17:32,400 –> 00:17:35,880
And we have already moved past this pricing

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00:17:35,880 –> 00:17:39,560
from 2015 to 2020, and we have to get used to the fact that

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00:17:39,560 –> 00:17:41,120
right now when you look at new launches,

Melvin Lim
00:17:41,120 –> 00:17:42,600
it’s all at this level.

Melvin Lim
00:17:42,600 –> 00:17:45,360
Sooner or later, everything is above $2,000 PSF

Melvin Lim
00:17:45,360 –> 00:17:46,800
and then $2,500 PSF.

Melvin Lim
00:17:46,800 –> 00:17:47,920
We have to get used to it because

Melvin Lim
00:17:47,920 –> 00:17:49,880
Singapore is right now a global city.

Melvin Lim
00:17:49,880 –> 00:17:52,600
There’s a lot of liquidity flooding into the market

Melvin Lim
00:17:52,600 –> 00:17:55,680
from foreign investors because we are seen as a safe haven.

Melvin Lim
00:17:55,680 –> 00:17:58,160
Based on what is happening in the ASEAN region,

Melvin Lim
00:17:58,160 –> 00:17:59,960
a lot of people favour Singapore.

Melvin Lim
00:17:59,960 –> 00:18:04,200
This is an entire deck of 2023’s upcoming new launch pricing

Melvin Lim
00:18:04,200 –> 00:18:08,880
with an estimated launch price, estimated breakeven price.

Melvin Lim
00:18:08,880 –> 00:18:13,240
And we also inputted the land PPR PSF right here as well.

Melvin Lim
00:18:13,240 –> 00:18:14,680
So there’s three colour codings,

Melvin Lim
00:18:14,680 –> 00:18:17,280
and this has been faithfully done by our PLB Research Team

Melvin Lim
00:18:17,280 –> 00:18:19,880
and this is made available, if you’re watching this episode,

Melvin Lim
00:18:19,880 –> 00:18:21,640
you just need to click on the link right down below.

Melvin Lim
00:18:21,640 –> 00:18:23,400
Also, if you like what we are doing,

Melvin Lim
00:18:23,400 –> 00:18:24,720
in terms of our work in real estate,

Melvin Lim
00:18:24,720 –> 00:18:26,280
give us a thumbs up on this video

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00:18:26,280 –> 00:18:28,160
as well as leave us a comment to encourage us,

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00:18:28,160 –> 00:18:30,560
or maybe to give us improvement to improve as well.

Melvin Lim
00:18:30,560 –> 00:18:32,760
Or to just type in some of the key topics

Melvin Lim
00:18:32,760 –> 00:18:34,560
that you wanna hear for the rest of 2023,

Melvin Lim
00:18:34,560 –> 00:18:36,200
and I’ll do my best to create the content

Melvin Lim
00:18:36,200 –> 00:18:38,040
in order to share and discuss here with you.

Melvin Lim
00:18:38,040 –> 00:18:38,840
And of course, do remember

Melvin Lim
00:18:38,840 –> 00:18:40,760
to subscribe to our YouTube channel if you have not done so.

Melvin Lim
00:18:40,760 –> 00:18:42,160
Now just click on the link down below.

Melvin Lim
00:18:42,160 –> 00:18:43,720
You’ll be brought to a page where you just need to

Melvin Lim
00:18:43,720 –> 00:18:45,120
key in your name and email address

Melvin Lim
00:18:45,120 –> 00:18:47,080
and then you will be able to download this

Melvin Lim
00:18:47,080 –> 00:18:49,360
in high resolution just for your own reference,

Melvin Lim
00:18:49,360 –> 00:18:52,000
in case you are hunting for a new launch in the market.

Melvin Lim
00:18:52,000 –> 00:18:53,120
Now, trend number five is that,

Melvin Lim
00:18:53,120 –> 00:18:54,240
properties that are 3- or 4-bedders

Melvin Lim
00:18:54,240 –> 00:18:56,560
that are below $2 mil the resale market,

Melvin Lim
00:18:56,560 –> 00:18:59,240
I believe they will be snapped up very, very quickly

Melvin Lim
00:18:59,240 –> 00:19:01,040
for the rest of 2023.

Melvin Lim
00:19:01,040 –> 00:19:01,880
And why is that so?

Melvin Lim
00:19:01,880 –> 00:19:03,240
It’s because if you were to look at

Melvin Lim
00:19:03,240 –> 00:19:06,080
the new launch average transacted pricing for 2022,

Melvin Lim
00:19:06,080 –> 00:19:09,800
OCR is at $1,893 PSF on average

Melvin Lim
00:19:09,800 –> 00:19:12,120
in terms of median PSF transacted,

Melvin Lim
00:19:12,120 –> 00:19:14,880
we’re talking about transacted for the last 12 months.

Melvin Lim
00:19:14,880 –> 00:19:16,880
RCR is at $2,336 PSF.

Melvin Lim
00:19:16,880 –> 00:19:18,560
CCR is at $2,876 PSF.

Melvin Lim
00:19:19,440 –> 00:19:22,320
However, when you look at resale, OCR new launches

Melvin Lim
00:19:22,320 –> 00:19:24,720
was averagely done at $1,800+ PSF,

Melvin Lim
00:19:24,720 –> 00:19:27,240
but OCR resale was averagely done

Melvin Lim
00:19:27,240 –> 00:19:28,800
at about $1,300+ PSF.

Melvin Lim
00:19:28,800 –> 00:19:31,400
So there’s a disparity of close to about $500 PSF here.

Melvin Lim
00:19:31,400 –> 00:19:34,840
RCR averagely done at about $2,300+ PSF,

Melvin Lim
00:19:34,840 –> 00:19:37,360
resale RCR, $1,600+ PSF.

Melvin Lim
00:19:37,360 –> 00:19:39,960
Another $600 PSF to $700 PSF disparity in between.

Melvin Lim
00:19:39,960 –> 00:19:43,720
CCR averagely done at about $2,800 PSF for new launch,

Melvin Lim
00:19:43,720 –> 00:19:47,160
resale averagely done at about $2,180-over PSF.

Melvin Lim
00:19:47,160 –> 00:19:49,280
Averagely, $600 PSF to $700 PSF disparity.

Melvin Lim
00:19:49,280 –> 00:19:53,160
This disparity will translate in a heavier fashion

Melvin Lim
00:19:53,160 –> 00:19:55,640
in the OCR market, in my perspective.

Melvin Lim
00:19:55,640 –> 00:19:57,480
The rationale is because in the OCR market,

Melvin Lim
00:19:57,480 –> 00:20:01,400
in this island map, OCR is out of central region.

Melvin Lim
00:20:01,400 –> 00:20:06,000
It also has the largest population of HDB housing estates

Melvin Lim
00:20:06,000 –> 00:20:07,840
and that means that it has the largest population

Melvin Lim
00:20:07,840 –> 00:20:09,960
of HDB upgrading families.

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00:20:09,960 –> 00:20:11,200
And HDB upgrading families

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00:20:11,200 –> 00:20:13,320
that are aspiring to move from their HDB properties,

Melvin Lim
00:20:13,320 –> 00:20:15,640
that has made them a positive return

Melvin Lim
00:20:15,640 –> 00:20:17,400
into the private residential market.

Melvin Lim
00:20:17,400 –> 00:20:19,080
They will have a very high demand

Melvin Lim
00:20:19,080 –> 00:20:21,120
for at least a 3-bedroom, or 4-bedroom,

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00:20:21,120 –> 00:20:23,440
or even bigger than a 4-bedder like a penthouse.

Melvin Lim
00:20:23,440 –> 00:20:26,680
So what I forecast, in my personal opinion,

Melvin Lim
00:20:26,680 –> 00:20:28,120
of course when you watch our Nuggets On The Go,

Melvin Lim
00:20:28,120 –> 00:20:30,520
we always put this disclaimer at the top bar here

Melvin Lim
00:20:30,520 –> 00:20:31,520
just to share with you that

Melvin Lim
00:20:31,520 –> 00:20:33,000
property investment is a huge investment.

Melvin Lim
00:20:33,000 –> 00:20:34,560
Do talk to your consultant. Of course,

Melvin Lim
00:20:34,560 –> 00:20:36,000
you can come to PropertyLimBrothers

Melvin Lim
00:20:36,000 –> 00:20:38,080
and have a consult session with us as well.

Melvin Lim
00:20:38,080 –> 00:20:41,120
Just click on the link right here to key in your name

Melvin Lim
00:20:41,120 –> 00:20:43,320
for a consult session, and our team will contact you.

Melvin Lim
00:20:43,320 –> 00:20:45,120
So for a non-obligation consult session

Melvin Lim
00:20:45,120 –> 00:20:47,120
to strategise your property portfolio

Melvin Lim
00:20:47,120 –> 00:20:49,280
and also to give you advice on purchase and sale as well.

Melvin Lim
00:20:49,280 –> 00:20:53,040
So coming back is that, this disparity is going to create

Melvin Lim
00:20:53,040 –> 00:20:55,720
a demand in the OCR market for 3- and 4-bedders.

Melvin Lim
00:20:55,720 –> 00:20:59,480
So anything that is below $2 mil will be heavily demanded

Melvin Lim
00:20:59,480 –> 00:21:01,960
over the next 12 to 18 months.

Melvin Lim
00:21:01,960 –> 00:21:04,200
And we think that this category of properties

Melvin Lim
00:21:04,200 –> 00:21:06,720
are gonna move very fast and are going to happen.

Melvin Lim
00:21:06,720 –> 00:21:10,120
And what is the likely outlook in 18 months’ time is that

Melvin Lim
00:21:10,120 –> 00:21:12,360
when you search on the property portals,

Melvin Lim
00:21:12,360 –> 00:21:14,520
you might find that it’s increasingly difficult

Melvin Lim
00:21:14,520 –> 00:21:17,440
to find properties below $2 mil in OCR

Melvin Lim
00:21:17,440 –> 00:21:18,760
that are 3- and 4-bedders.

Melvin Lim
00:21:18,760 –> 00:21:20,080
This is something that might happen.

Melvin Lim
00:21:20,080 –> 00:21:23,280
And trend number six is that, if Fed in US

Melvin Lim
00:21:23,280 –> 00:21:26,160
does reduce interest rates in 2024,

Melvin Lim
00:21:26,160 –> 00:21:27,520
what do you think will happen

Melvin Lim
00:21:27,520 –> 00:21:29,880
to our property prices in 2024?

Melvin Lim
00:21:29,880 –> 00:21:32,320
And of course if you look at some of the trending,

Melvin Lim
00:21:32,320 –> 00:21:34,040
some of the projections and news as well,

Melvin Lim
00:21:34,040 –> 00:21:37,160
very likely a lot of analysts are forecasting that

Melvin Lim
00:21:37,160 –> 00:21:38,880
Fed is gonna bring down the interest rate

Melvin Lim
00:21:38,880 –> 00:21:41,320
during 2024 season and 2025 season.

Melvin Lim
00:21:41,320 –> 00:21:42,840
And if that does happen,

Melvin Lim
00:21:42,840 –> 00:21:45,800
naturally, our mortgage rates in Singapore

Melvin Lim
00:21:45,800 –> 00:21:47,400
is gonna adjust accordingly, as well.

Melvin Lim
00:21:47,400 –> 00:21:49,400
Because we pack our rates very closely

Melvin Lim
00:21:49,400 –> 00:21:51,000
to the US federal funds rate.

Melvin Lim
00:21:51,000 –> 00:21:52,520
And if that happens,

Melvin Lim
00:21:52,520 –> 00:21:54,360
what do you think is gonna happen to our property prices?

Melvin Lim
00:21:54,360 –> 00:21:57,400
Naturally, developers, existing homeowners,

Melvin Lim
00:21:57,400 –> 00:22:00,480
that intend to sell, they will not sell low.

Melvin Lim
00:22:00,480 –> 00:22:02,840
They will definitely raise their asking prices

Melvin Lim
00:22:02,840 –> 00:22:05,760
because they now know that buyers have more buying power.

Melvin Lim
00:22:05,760 –> 00:22:07,480
And of course there’s a lot of couple of articles

Melvin Lim
00:22:07,480 –> 00:22:09,040
that you can search online that

Melvin Lim
00:22:09,040 –> 00:22:12,120
a lot of people are expecting rates to come down in 2024.

Melvin Lim
00:22:12,120 –> 00:22:13,680
And that means that it might happen

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00:22:13,680 –> 00:22:14,720
in the next 12 months.

Melvin Lim
00:22:14,720 –> 00:22:17,040
And thus, it will also mean that

Melvin Lim
00:22:17,040 –> 00:22:18,920
if somebody’s waiting at the sidelines down,

Melvin Lim
00:22:18,920 –> 00:22:20,440
and you already know that rates are gonna come down

Melvin Lim
00:22:20,440 –> 00:22:21,360
in 12 months time,

Melvin Lim
00:22:21,360 –> 00:22:23,520
then if rates are gonna come in 12 months time,

Melvin Lim
00:22:23,520 –> 00:22:25,160
and prices are gonna start going upwards

Melvin Lim
00:22:25,160 –> 00:22:26,680
in terms of seller’s expectation,

Melvin Lim
00:22:26,680 –> 00:22:29,040
then does it make sense to continue to wait out

Melvin Lim
00:22:29,040 –> 00:22:31,680
until next year to purchase next year?

Melvin Lim