Property

Private residential property sales in Singapore dropped to their lowest level in five months in May, as persistent global trade tensions continued to weigh on buyer sentiment and market confidence in the trade-reliant city-state. According to data released by the Urban Redevelopment Authority (URA) on Monday, developers sold just 311 new private residential units last month, marking the third consecutive monthly decline in sales. The subdued activity reflects broader concerns over global economic conditions and a more cautious market environment. The slowdown comes amid escalating global tariff threats, including moves by US President Donald Trump, which have contributed to growing fears of a downturn in international trade. Singapore’s economy contracted in the first quarter of the year, adding to domestic unease. In May, no major residential projects were launched for sale, underscoring the cautious approach developers are taking in the face of heightened uncertainty. The absence of new launches further constrained sales volumes. A recent first-quarter survey of senior real estate executives revealed that nearly 90 per cent viewed a global economic slowdown as the most significant risk to the property market. Concerns over potential job losses and a weakening domestic economy also featured prominently. Singapore may face increased recessionary risks due to the negative impact of tariffs on its export-driven economy, according to a recent report by Bloomberg Economics analyst Tamara Henderson. Reflecting the cautious sentiment, the government has reduced its land supply for private housing. In the second half of the year, land released for development is expected to yield approximately 4,725 private housing units — a six per cent decrease compared to the first half. Authorities have also placed a greater emphasis on the reserve list, where sites are only made available for tender if there is sufficient developer interest. The residential market is likely to remain sluggish through June, a traditionally quieter period due to school holidays. One development in eastern Singapore saw fewer than 10 per cent of its 107 freehold units sold during its launch weekend earlier this month. -Bloomberg

Loyang Valley, a resort-style condominium located in Changi, will be relaunched for collective sale on 8 July, this time with a reduced reserve price of S$880 million. The figure marks a S$100 million reduction from its previous asking price in 2022, which marketing agent Huttons Asia describes as “a realistic and achievable figure given current market conditions”. The 362-unit development, completed in 1985 and spanning 840,648 sq ft, sits on a 99-year leasehold site with 56 years remaining. The estate’s substantial land area and proximity to the upcoming Loyang MRT station on the Cross Island Line enhance its redevelopment potential, said Terence Lian, Head of Investment Sales at Huttons Asia. The project’s last tender closed without bids in December 2022 after the reserve price had been increased from an initially proposed S$880 million to S$980 million in response to demands for higher returns. This time, however, Lian and his team have secured the requisite 80% consensus among homeowners to proceed with the sale. Lian noted a significant shift in owner expectations, with many recognising the opportunity to unlock asset value in the face of lease decay, mounting maintenance costs, and considerations around legacy planning. He also cited the confirmed MRT connectivity as a catalyst for renewed interest. The revised reserve translates to potential payouts of approximately S$1.67 million for owners of the smallest two-bedroom units (1,001 sq ft), and up to S$3.9 million for the largest four-bedroom configurations. One long-term resident, who purchased a 1,500 sq ft unit for under S$300,000 in 1985, estimates he could receive over S$2 million. He plans to downsize, travel, and preserve the remainder of the proceeds. The potential easing of height restrictions around Changi Airport, while not yet officially confirmed, could further bolster developer interest. Details are expected to be clarified when the Urban Redevelopment Authority unveils the Draft Master Plan 2025 on 25 June, which will update zoning and gross plot ratio guidance. Under the current 2019 Master Plan, the site is zoned for residential use with a gross plot ratio of 1.6, allowing for approximately 1.35 million sq ft of gross floor area and an estimated 1,249 units, subject to planning approvals. Alan Cheong, Executive Director of Research and Consultancy at Savills Singapore, described the S$880 million reserve as reasonable, given the land size. However, he cautioned that developers would need to weigh the risks of launching a large-scale development of over 1,200 units. He suggested two supportive factors: first, a likely scarcity of new launches in the Loyang area until at least 2027, which could result in pent-up demand; second, the strategic location adjacent to the future MRT station, a feature developers could leverage to drive sales at higher prices. According to Lian, developer interest in sizeable leasehold sites in the east has been measured but is gradually increasing, aided by improvements in market conditions. He attributed the lack of traction in the 2022 tender to factors including rising interest rates, surging construction costs, and policy-related risks such as additional buyer’s stamp duties. These headwinds have since moderated. Easing interest rates, along with infrastructure upgrades like the upcoming Changi Airport Terminal 5, are expected to bolster confidence among developers and investors. Loyang Valley’s first collective sale attempt in 2018, priced at S$750 million, failed to secure sufficient backing. Its 2022 exercise saw greater support, driven by improved connectivity and heightened redevelopment awareness, but the high reserve remained a sticking point. With momentum now shifting and a more calibrated price expectation, homeowners remain cautiously optimistic that the third attempt may finally succeed. -The Strait Times

China is drawing on a substantial government-run savings scheme totalling 10.9 trillion yuan (US$1.5 trillion or RM6.43 trillion) in an effort to stabilise its struggling housing sector, providing citizens with a financing alternative amid a tightening banking landscape. The Housing Provident Fund — a policy originally modelled after Singapore’s system more than three decades ago — has grown in significance as commercial banks grapple with squeezed margins, slowing profits and increasing non-performing loans. The fund, which requires monthly contributions from both employees and employers, offers mortgage loans often at lower rates than commercial institutions. In 2023, outstanding mortgages through the fund reached 8.1 trillion yuan, outpacing lending by banks. “It’s a frontrunner among policies used to support the housing market,” said Chen Wenjing, Research Director at China Index Holdings Ltd. “The housing market has seen lingering pressure, and many local governments have leveraged this policy to reduce the mortgage burden.” President Xi Jinping has reaffirmed his administration’s commitment to revive the property sector and mitigate the impact of external economic shocks, a topic that gained renewed attention after recent US-China tensions over trade commitments resurfaced. As confidence in the housing market remains weak, easing access to affordable mortgage financing has become critical. According to Bloomberg Intelligence analyst Kristy Hung, the top 100 Chinese developers are projected to experience a further 10% drop in contracted sales this year, totalling just 3.4 trillion yuan — less than a third of the 2020 peak. Residential sales continued their downward trajectory in May, with a 28% month-on-month decline in sales reported by the embattled Country Garden Holdings Co, highlighting persistent buyer caution across the sector. Previously underutilised due to strict conditions, the Housing Provident Fund has seen growing uptake following a wave of regulatory relaxations. Traditionally, borrowers would combine a larger, higher-interest bank loan with a smaller, cheaper loan from the fund. However, the scope of access to provident fund loans was constrained by variables such as deposit levels and marital status, and downpayment usage was often restricted. Since 2023, at least 50 cities and municipalities have relaxed these limitations, including raising withdrawal limits and expanding eligible usage. Shenzhen, one of China’s most expensive housing markets, recently permitted residents to tap into their provident fund accounts for downpayments. This follows major reforms in March which nearly doubled the city’s mortgage loan quotas compared to 2023. In Beijing, the fund financed 33% of residential mortgages in 2023, up from 29.4% in 2020, indicating a steady shift in borrower preference. The People’s Bank of China has also reduced interest rates for provident fund mortgages, making them 0.9 percentage points cheaper than those offered by banks. While the resulting 3% decrease in borrowing costs may offer limited short-term impact on overall sales volumes, it underscores continued government intervention. “It signals the government’s efforts,” said Liu Jieqi, a property analyst at UOB Kay Hian in Hong Kong. “But in the end, a broad property recovery hinges on effective implementation and an improved economic outlook.” Data show that outstanding home loans through the fund grew by 3.4% in 2024, even as commercial bank lending declined by 1.3%. With 180 million contributing employers and employees nationwide, the fund is well-capitalised to expand its role further. Its 10.9 trillion yuan balance significantly exceeds its outstanding mortgage loan commitments. For buyers such as Eli Zhang, a 30-year-old computer science researcher in Beijing, the programme offers much-needed relief. Zhang purchased a 700-square-foot suburban property in 2023 and now uses the fund to help manage her 4 million yuan (US$550,000 or RM2.33 million) mortgage. “The housing provident loans are getting cheaper and cheaper,” she noted, paying a competitive 2.85% interest rate. “With its help, my mortgage is quite affordable.” -Bloomberg