#24 En Bloc Fever is Back? Will New Launch Pricing Continue to Rise? | Nuggets On The Go E24 | Melvin

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– Okay, great.

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HAHAHAHAHAHAHA

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It happened once before with Faruuq

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after like 20 minutes.

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HAHAHAHAHAHAHA

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HAHAHAHAHAHAHA

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Okay, let’s continue.

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All right, welcome back to Nuggets On The Go.

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Today we’re going to talk about en bloc,

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as well as developers saying

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that prices will rise further in 2022, towards 2023.

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Let’s go.

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All right, so you have been seeing a lot

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of different kinds of news.

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Let me just flash some of the news

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that has been happening recently.

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So, you have a couple of GLSes that has been released

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by our government, seven new sites

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unveiled in the second half of this year,

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and later we’re going to chat more about that.

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Most importantly is that we want to look

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at all these en bloc news that have been happening.

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For example, you have Lakeside Apartments

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successfully being en bloc.

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Kensington Park, launching their en bloc.

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Thompson View up for collective sale.

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Golden Mile has been successfully sold.

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New launches doing very well,

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for Piccadilly, as well as LIV@MB.

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If you were to look at this news here,

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Jansen Mansions at Kovan, third attempt,

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Euro-Asia Apartments up for en bloc sale attempt as well.

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And of course on the ground, we’re seeing a lot

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of activities being picked up by projects attempting

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en bloc in the second half of this year.

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So looking back at this article,

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seven sites are being unveiled

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in the second half of the GLS program.

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Okay, so we have a combination of the confirmed list

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as well as the reserve list,

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but let’s have a look at the confirmed list.

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And what does this mean for everybody?

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So in the first place,

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why do our government want to announce

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new sites under the GLS scheme?

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This is a very clear indicator

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because our government, of course,

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they are very prudent, in terms of timing

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when should they release new land

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in order not to overflood the market with brand new supply,

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as well as to ensure that the market is not overheated

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because of a lot of pent-up demand.

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So our government’s job is to ensure

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that in terms of supply and demand,

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it’s very well balanced,

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so that we don’t overkill the market with too much supply.

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And we also don’t allow prices to run up too quickly

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because of a lack of supply.

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Controlling of government land sales is extremely important.

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This is one of the clear signals

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that developers’ land bank is drying up.

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And if you were to come back to this chart again

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that we have shown everybody.

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This is basically what is happening right now

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because developers are running out of land.

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Why they are running out of land, it’s

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because they will be handing over a lot

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of projects hitting TOP in the next two to three years.

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When projects are being handed over,

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they need to top up their land bank.

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If you’ve seen this chart that we’ve released before,

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these two years are the period that a lot

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of land banks are being depleted.

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2022 basically, I’m not sure whether

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if this is actually happening now,

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but on the ground, I think more or less,

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this is already happening.

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So, resale prices inch up,

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resale home sellers are asking for future prices.

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So if you’re hunting for properties

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via the property portals,

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you’ll see that a lot of the asking prices

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have already moved up.

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So when this happens, when you look at the particular project

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and you look at a transacted caveat prices,

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vis-à-vis what is the asking price on property portals.

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You’ll see that there’s like a huge gap happening.

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And this happens because existing home sellers

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will have this fear that they will have nothing to buy,

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or they are not sure what to buy,

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or because prices are all going up everywhere else,

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they also want to raise their current asking prices.

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And we are talking typically about a few types

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of very hot favourite properties.

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Namely 3-bedders, 4-bedders

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and namely a lot of these properties belong to

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the quantum play properties.

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Meaning, if you are talking about

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mass market in the OCR region,

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properties below $2 mil are extreme hot favourite.

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If you go to RCR properties

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in the range of $2.5 mil are hot favourites.

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If you go to CCR of course, properties in the range

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of $2 mil to $4 mil are moving very well as well.

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So when you come back to this chart,

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what might possibly happen is that by 2023,

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new launches will hit new benchmark PSF.

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Resale will continue to move again

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because resale will then act

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as an alternative option,

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compared to new launches, very high PSF level.

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A lot of buyers might then fall back on resale properties

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because of a lower quantum, because of a lower PSF.

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And in the year 2024, resale will then start

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to look very far apart from new launch PSF.

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Recently, in one of our seminars,

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we talk about this chart as well

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and I want to bring it to your attention.

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So this chart shows the movement and growth rate

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of brand new launches PSF, from 2019 to date,

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vis-à-vis resale growth rate from 2019 until Q2 of 2022.

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So in terms of the percentage growth,

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new launches have grown by 26%,

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resale has grown by 5%.

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And what does this mean

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is that if you look back in the year 2020,

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their difference apart is only about ~10%,

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but right now it’s close

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to about 21% growth rate difference.

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This might present an opportunity for resale to move up

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in order to reach back an equilibrium,

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in terms of their core differences, in terms of growth rate.

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Because what we can deduce from this graph is

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that new launch PSF might have grown too quickly

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over the past three years.

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And now it’s time for resale to catch up.

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Of course, you will then come back and look at

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articles like this because we also reviewied

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one of the latest news articles that popped up

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on some of the very popular mediums.

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Talking about a property market sentiment survey

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that was being done,

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and a lot of developers are forecasting

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that because of inflation of construction prices,

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manpower labour crunch, materials crunch,

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new launches PSF are going to be more

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and more expensive in the near future.

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Do we agree with that?

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And by the end of the article, we do agree with that as well

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because of the fact of a lot of inflation push factors,

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$PSF level of brand new launches will definitely

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see a new high, challenging a new benchmark.

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Our article actually states,

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when are all these going to end?

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Because with prices of resale moving up

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over the past two-and-a-half years,

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new launches also moved up

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over the past two-and-a-half years,

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landed properties also moved up, rental rates also moved up,

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and then before we can even take a breather,

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now en bloc season came back,

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even though interest rates are set to rise,

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but it seems like everything else is

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going to jack up once again.

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So let’s have a look at the current balance launches.

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Most of the launches have already reached its 70% clearance mark.

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And that will also mean

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that developers will be more confident not to lower prices.

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Developers will also be more confident

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to raise prices as well,

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because they’re already at the tail end

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with balance units on the table,

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there’s no need for them to sell the properties

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at a discount level.

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So in terms of the balanced new launches from 2020 and 2021,

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we’re not going to see a drop in pricing.

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In terms of the brand new ones

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that are going to come up at the second half

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of next year, we’re going to see a raise in benchmark prices.

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So I think all of us will need to brace ourselves

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and of course get used to the fact

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that everything is touching $2,000 PSF.

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But that will also mean that a disparity will start

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to occur among the resale market.

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Resale market right now, in our personal opinion,

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is one of the best times to go in.

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Because, if somebody would to still try to continue to time the market,

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existing resale sellers, once they have

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the motivation to move and they head out

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and see that new launches are already at $2,000 PSF

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and above, and all other resale properties,

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other resale sellers are also asking at future prices,

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they themselves will want to ask for future prices as well.

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So of course right now, if there’s a quantum play available

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for larger units, 3-, 4-bedders,

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then we’ll suggest that as far as you can,

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try not to time the market.

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Now let’s have a look at the performance

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if we were to track back further over the past seven years.

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So from 2015 until today, in the past seven years

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the average price growth rate of new launch

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private condominiums and apartments has been at 51%.

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And average price growth rate of resale properties

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over the past seven years is at 17%.

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So here, as we track back even further

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because the first graph that we’ve shown you just now,

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the one over here, it’s only a three years calculation.

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But if we were to stretch back to seven years,

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we can even see a faster growth rate

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in terms of new launch at 51%, vis-à-vis 17%.

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So these two years are pretty crucial for resale properties.

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It might be set to rise

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and if you’re hunting for resale,

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we think that you should go ahead

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and head in right now.

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So right now for the second part of this

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Nuggets On The Go, we want to talk about

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some of the interesting charts that we have charted

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00:08:49,240 –> 00:08:50,680
over the past two weeks.

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00:08:50,680 –> 00:08:53,440
The amount of BTO flats are reaching MOP

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00:08:53,440 –> 00:08:56,120
over the next three years, is set to drop.

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00:08:56,120 –> 00:08:59,520
The highest amount is actually 31,000, which is this year.

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00:08:59,520 –> 00:09:02,320
And if you look at entirety of all the MOP properties,

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00:09:02,320 –> 00:09:03,880
this is the exhaustive list.

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00:09:03,880 –> 00:09:07,280
If you come back to 2023 and 2024, there’s going to be a dip

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00:09:07,280 –> 00:09:10,680
in the amount of MOP flats that are available in the market.

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00:09:10,680 –> 00:09:11,800
Actually, what does this mean

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00:09:11,800 –> 00:09:13,600
for the private property market?

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00:09:13,600 –> 00:09:15,280
So what does this chart tells us?

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00:09:15,280 –> 00:09:16,800
Basically, this chart tells us

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00:09:16,800 –> 00:09:19,760
how many BTO flats are going to reach MOP.

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00:09:19,760 –> 00:09:23,040
Why do people always want to monitor these numbers

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00:09:23,040 –> 00:09:23,880
year after year?

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00:09:23,880 –> 00:09:27,280
It’s because MOP property owners have the highest amount

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00:09:27,280 –> 00:09:30,120
of motivation to exit from their BTO flat

236 [Melvin Lim]
00:09:30,120 –> 00:09:31,920
that hit their five years mark. Because of the fact

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00:09:31,920 –> 00:09:34,840
that most BTO flats will see a very healthy paper gain

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00:09:34,840 –> 00:09:36,280
after staying there for five years.

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00:09:36,280 –> 00:09:38,600
This will mean that these are also the families

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00:09:38,600 –> 00:09:41,040
with the most locked-up profit sitting under

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00:09:41,040 –> 00:09:43,440
their HDB properties, and they’re usually the group

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00:09:43,440 –> 00:09:45,880
that has the capacity to upgrade to private properties.

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00:09:45,880 –> 00:09:47,440
So, seeing a dip like this

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00:09:47,440 –> 00:09:49,680
technically also doesn’t mean a lot of things,

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00:09:49,680 –> 00:09:52,880
because not all owners that are living in BTO flats

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00:09:52,880 –> 00:09:54,120
will want to sell their properties

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00:09:54,120 –> 00:09:55,040
at the fifth years mark.

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00:09:55,040 –> 00:09:56,680
Sometime s they sell it at its six years mark,

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00:09:56,680 –> 00:09:59,640
seven year mark, eight, or even 10 to 15 years mark.

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00:09:59,640 –> 00:10:01,720
And a lot of the owners that hit their MOP

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00:10:01,720 –> 00:10:05,040
from 2015 until 2022, they are still staying

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00:10:05,040 –> 00:10:07,680
in their BTO properties and there’s no data

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00:10:07,680 –> 00:10:10,120
to track how many people actually exited

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00:10:10,120 –> 00:10:11,360
from their BTO properties.

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00:10:11,360 –> 00:10:14,240
But on the cumulative fashion, year-on-year,

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00:10:14,240 –> 00:10:18,000
if there’s 10,000+, 20,000 or 30,000 families

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00:10:18,000 –> 00:10:19,560
hitting their MOP status,

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00:10:19,560 –> 00:10:22,920
this presents itself more kinetic energy

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00:10:22,920 –> 00:10:25,480
because there are more people with paper gains

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00:10:25,480 –> 00:10:27,400
that are still living in their MOP properties

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00:10:27,400 –> 00:10:29,320
that might exit and sell,

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00:10:29,320 –> 00:10:31,240
and move out to private properties in future.

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00:10:31,240 –> 00:10:32,360
If you were to look at this,

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00:10:32,360 –> 00:10:34,760
also a very interesting updated chart

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00:10:34,760 –> 00:10:37,000
is that, as income levels move up

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00:10:37,000 –> 00:10:40,000
on a combined income per family level,

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00:10:40,000 –> 00:10:41,600
as it moves up to 10K,

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00:10:41,600 –> 00:10:43,240
12K and 14K,

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00:10:43,240 –> 00:10:46,240
these income category of families are moving away

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00:10:46,240 –> 00:10:48,280
from their existing HDB properties.

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00:10:48,280 –> 00:10:51,840
So meaning that the higher income that a family goes to,

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00:10:51,840 –> 00:10:53,680
the more motivation that they have

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00:10:53,680 –> 00:10:54,880
to sell off their HDB properties,

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00:10:54,880 –> 00:10:56,640
to move up to private properties.

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00:10:56,640 –> 00:10:59,000
And another very interesting chart that we’ve found out

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00:10:59,000 –> 00:11:00,800
is that some of us might be worried that,

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00:11:00,800 –> 00:11:02,440
“Hey, when interest rate rises,

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00:11:02,440 –> 00:11:03,920
will a lot of people dump their properties?”

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00:11:03,920 –> 00:11:06,520
Technically speaking, if we look at what is happening

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00:11:06,520 –> 00:11:07,600
in the market right now,

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00:11:07,600 –> 00:11:09,760
whether a family owns one or two properties,

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00:11:09,760 –> 00:11:11,560
because of the fact that rental rates have increased

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00:11:11,560 –> 00:11:12,480
over the past two years,

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00:11:12,480 –> 00:11:15,760
even if they’re holding onto a second investment property

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00:11:15,760 –> 00:11:17,040
they can easily rent it out.

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00:11:17,040 –> 00:11:18,840
And the rental right now, some of them can even

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00:11:18,840 –> 00:11:20,800
cover the money mortgage and money instalment.

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00:11:20,800 –> 00:11:21,920
Another supporting data that

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00:11:21,920 –> 00:11:24,520
there’s simply no reason for people to fire sale

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00:11:24,520 –> 00:11:25,840
their existing property is that

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00:11:25,840 –> 00:11:29,600
the average net cash, versus the debt per household,

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00:11:29,600 –> 00:11:32,080
has increased over the past two years.

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00:11:32,080 –> 00:11:34,080
So if you see, there was a sharp rise

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00:11:34,080 –> 00:11:36,640
from 2017, 2018, until today.

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00:11:36,640 –> 00:11:40,240
And the sharpest rise was from 2019 until 2020,

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00:11:40,240 –> 00:11:44,800
from 123 index points, all the way to 173 index points.

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00:11:44,800 –> 00:11:46,360
That means there was a rise in terms

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00:11:46,360 –> 00:11:49,640
of net cash per household versus their debt level.

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00:11:49,640 –> 00:11:51,600
This will mean that they have higher holding power

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00:11:51,600 –> 00:11:52,840
of their existing property.

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00:11:52,840 –> 00:11:55,280
And there’s no reason why existing families

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00:11:55,280 –> 00:11:57,520
with properties have to sell their properties

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00:11:57,520 –> 00:11:59,600
and fire sale them into the resale market.

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00:11:59,600 –> 00:12:01,280
One more chart is that we also noticed

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00:12:01,280 –> 00:12:04,000
that the mortgage data shows that more

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00:12:04,000 –> 00:12:07,640
and more people are buying their properties for own stay.

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00:12:07,640 –> 00:12:08,920
Now, the grey bar here,

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00:12:08,920 –> 00:12:12,120
you see a drop in people buying properties for investment.

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00:12:12,120 –> 00:12:14,520
The drop is very minute from 2019 to 2020

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00:12:14,520 –> 00:12:18,160
with like a 2% drop and a 2% rise in the amount

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00:12:18,160 –> 00:12:20,800
of people buying their property for own stay reasons.

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00:12:20,800 –> 00:12:23,440
This actually shows that the more people buying properties

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00:12:23,440 –> 00:12:25,800
for own stay reasons, the less motivation

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00:12:25,800 –> 00:12:28,200
and the less occurrence that they have

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00:12:28,200 –> 00:12:29,800
to dump their properties in the market,

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00:12:29,800 –> 00:12:32,600
through a recession, or maybe through certain kind of event.

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00:12:32,600 –> 00:12:35,160
Because of the fact that when you live in the property,

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00:12:35,160 –> 00:12:36,400
maybe your kids are studying within

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00:12:36,400 –> 00:12:37,840
1km or 2km,

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00:12:37,840 –> 00:12:40,120
There’s no reason for you to fire sale your property.

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00:12:40,120 –> 00:12:41,560
And most families in Singapore,

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00:12:41,560 –> 00:12:43,280
they are dual income families.

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00:12:43,280 –> 00:12:45,160
And thus, holding onto their first property,

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00:12:45,160 –> 00:12:46,520
that is an owner-occupied property,

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00:12:46,520 –> 00:12:50,040
has a lot of motivation for them to continue holding it.

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00:12:50,040 –> 00:12:52,240
And there’s no reason why they need to

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00:12:52,240 –> 00:12:53,920
sell off their properties cheap in the market,

328 [Melvin Lim]
00:12:53,920 –> 00:12:55,600
should there be a rise in interest rate.

329 [Melvin Lim]
00:12:55,600 –> 00:12:58,240
And further on, a lot of families that are buying properties

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00:12:58,240 –> 00:13:00,080
or have bought properties for own stay reasons,

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00:13:00,080 –> 00:13:02,520
have chosen to have fixed rates instead of floating rates.

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00:13:02,520 –> 00:13:04,880
Because most of the time, families going for floating rates

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00:13:04,880 –> 00:13:07,240
are usually people that got into new launches,

334 [Melvin Lim]
00:13:07,240 –> 00:13:08,400
and for new launches they only have

335 [Melvin Lim]
00:13:08,400 –> 00:13:09,680
floating rates to choose from.

336 [Melvin Lim]
00:13:09,680 –> 00:13:11,160
But people that are buying properties

337 [Melvin Lim]
00:13:11,160 –> 00:13:13,440
for resale reasons, or after their new launch hits

338 [Melvin Lim]
00:13:13,440 –> 00:13:15,680
their TOP date, they will usually convert

339 [Melvin Lim]
00:13:15,680 –> 00:13:17,080
to fixed rate packages to lock in the rates

340 [Melvin Lim]
00:13:17,080 –> 00:13:18,960
for the next two to three years.

341 [Melvin Lim]
00:13:18,960 –> 00:13:20,960
Jarring all these reasons together,

342 [Melvin Lim]
00:13:20,960 –> 00:13:23,000
coupled with the latest charts that we found,

343 [Melvin Lim]
00:13:23,000 –> 00:13:24,680
and coupled with the first part

344 [Melvin Lim]
00:13:24,680 –> 00:13:26,480
of this Nuggets On The Go that we share with you

345 [Melvin Lim]
00:13:26,480 –> 00:13:28,200
on en bloc coming back,

346 [Melvin Lim]
00:13:28,200 –> 00:13:29,720
as well as Government Land Sales,

347 [Melvin Lim]
00:13:29,720 –> 00:13:32,480
as well as developers expecting prices to raise further.

348 [Melvin Lim]
00:13:32,480 –> 00:13:33,880
We think that in summary if you look at

349 [Melvin Lim]
00:13:33,880 –> 00:13:35,880
the growth rate of resale

350 [Melvin Lim]
00:13:35,880 –> 00:13:39,600
versus new launches, firstly 2022 to 2023,

351 [Melvin Lim]
00:13:39,600 –> 00:13:41,400
hunt for resale aggressively,

352 [Melvin Lim]
00:13:41,400 –> 00:13:42,840
if you are already in market looking

353 [Melvin Lim]
00:13:42,840 –> 00:13:45,480
for resale property, if not, then of course you have to

354 [Melvin Lim]
00:13:45,480 –> 00:13:48,200
brace yourself for $2,000 PSF upwards

355 [Melvin Lim]
00:13:48,200 –> 00:13:50,400
for all new launches coming on stream

356 [Melvin Lim]
00:13:50,400 –> 00:13:52,120
for the next 6 to 12 months.

357 [Melvin Lim]
00:13:52,120 –> 00:13:53,120
All right, so we have come to the end

358 [Melvin Lim]
00:13:53,120 –> 00:13:54,520
of our Nuggets On The Go episode.

359 [Melvin Lim]
00:13:54,520 –> 00:13:56,160
Thank you for staying tuned with us and

360 [Melvin Lim]
00:13:56,160 –> 00:13:58,880
email [email protected] to get a copy of the

361 [Melvin Lim]
00:13:58,880 –> 00:14:00,960
10 charts mentioned in this episode.

362 [Melvin Lim]
00:14:00,960 –> 00:14:03,000
We hope that this particular episode

363 [Melvin Lim]
00:14:03,000 –> 00:14:04,080
will add value to you.

364 [Melvin Lim]
00:14:04,080 –> 00:14:06,600
We’ll see you on the next one. In the meantime, take care.