Singapore keeps lid on prices
Australian policymakers say efforts to rein in the runaway housing market are working. But on the ground there’s a fresh bidding frenzy, as fibreboard shacks fit for demolition and miles from downtown Sydney go for almost A$ 1 million ( 1.06m).
A lack of houses in and around the city, the epicentre of Australia’s property boom, is pushing up prices again even after banks last year tightened mortgage lending. Some buyers are snapping up homes they’ve never seen, worried it might be their last chance to own a patch of land, said Peter Baldwin, the chief auctioneer at real estate agency Richardson & Wrench for 27 years.
“It’s all guns blazing again,” said Baldwin, who’s never seen fewer properties for sale in spring, a season when home hunters are usually spoilt for choice. The shortage “will just keep this market humming along.”
A three- year surge in Australian home prices paused at the end of 2015 after banks raised mortgage rates to offset the cost of holding more capital. The market is taking off again as a growing population tries to squeeze into too few properties, posing a potential headache for new Reserve Bank of Australia ( RBA) Governor Philip Lowe.
House prices in Sydney are up 14 per cent this year through September, compared with 9 per cent across the nation’s major cities, according to CoreLogic Inc, defying an assessment by real- estate listing firm Domain last year that the boom was over. Dwelling values in Sydney have almost doubled since the end of 2008.
Fewer than 20,000 dwellings are for sale across Sydney, less than half On the surface, the property markets in Singapore and Hong Kong have much in common. The two Asian financial hubs have moved to rein in runaway home prices as they sought to make housing more affordable.
Yet, consider how home values in the cities have diverged. Singapore has been successful in damping buyer demand with curbs ( prices slumped by the most in seven years last month), while restrictions have had little impact on Hong Kong’s gravity- defying market, which is rebounding after a short- lived dip.
Hong Kong’s resurgent property market poses a headache for chief executive Leung Chun- ying, who’s been touting his success cooling property prices ahead of a March vote to determine the city’s leadership for the next five years.
Leung has introduced a raft of measures to cool the housing market since 2012 and his record may weigh on China’s decision to keep backing him.
Demographia last year found Hong Kong housing to be the least affordable it has measured in 11 years of surveying large urban markets. Singapore, while by no the number li sted five years ago, CoreLogic says.
The costs associated with selling a property and buying another, such as agent commissions and government taxes, climb with the value of the home. That’s discouraging ever more homeowners from moving, means a cheap city to own property, ranked 27th with its overall affordability score holding steady. It takes 19 years of median household income to buy a home in Hong Kong, compared with five in Singapore.
Singapore’s public housing model offers one explanation for how the island- city has been able to keep a tight leash on prices. Homes CoreLogic said.
At a sale last week, auctioneer Baldwin took 134 bids for a drab, twobedder in Greenacre, 18 kilometres west of Sydney, before dropping the hammer at A$ 926,000.
That’s 19 per cent more than the median price for that size of property. owned under a programme run by the Housing and Development Board accounted for 80 per cent of all dwellings as of last year.
Hong Kong’s public housing accounts for only about 21 per cent of total home ownership, and there is a waiting list of more than three years to get a government flat. The draw wasn’t the house; it was the chance to knock it down and build anew. Some buyers are saying: “We’d better get in or we’ll never get in,” he said.
Sydney’s population will jump 50 per cent from 2011 levels to 6.42m in 2036, the New South Wales govern- between the two property markets is that in Singapore there is a big public sector,” said Raymond Yeung, chief economist at Australia and New Zealand Banking Group. “Singaporeans don’t need to buy a property unless they want to upgrade and buy in the private sector.”
Another possible explanation for the Hong Kong’s market resilience ment said last month, lifting forecasts made only two years ago. It will need another 726,000 homes between 2016 and 2036, it said.
The nation’s largest city needs a “dramatic increase in affordable land supply” after residential land releases fell in 2015, according to this year’s this year is a resurgence of interest from mainland Chinese buyers. Seeking alternatives amid surging home prices in cities such as Shanghai and Shenzhen, they accounted for 9 per cent of total Hong Kong transactions in the three months ended June 30, compared with 5.8 per cent in the same period last year. State of the Land Report by the Urban Development Institute of Australia. The report described Sydney’s housing shortfall as “chronic” and said there’s little prospect of fulfilling the city’s accommodation needs.
For would- be apartment buyers, at least, the supply crisis is set to ease in the next two years, as a flood of developments spring up in eastern cities such as Sydney and Melbourne. A record 68,390 homes, most of them apartments, will be under construction this year in New South Wales; double the pace from 2012, according to the Housing Industry Association.
Governor Lowe, who succeeded Glenn Stevens last month, noted this week that home- loan standards had improved and some lenders were being more cautious. But he homed in on supply issues, saying that fewer properties were changing hands and “some markets have strengthened recently.”
“The RBA is clearly concerned,” said Felicity Emmett, head of Australian economics at Australia & New Zealand Banking Group Ltd. “There clearly seems to be a strengthening in the housing market. It’s something that really bears quite close watching.”
There’s competition at every price point. There aren’t enough A$ 5m houses or A$ 20m- plus mansions either, said Ken Jacobs, whose luxury property agency i s an affiliate of Christie’s International Real Estate.
“There’s more inquiry than actual properties available,” said Jacobs, who’s selling Oscar- winning actress Cate Blanchett’s trophy home in the Sydney suburb of Hunters Hill.
That gives some on the property ladder a chance to cash in.
In Woolooware, a suburb about 30km south of Sydney, one homeowner turned a garage at the back of the house into a new three- bedroom villa and sectioned it off.
Last month it fetched a reported A$ 1.6m, 43 per cent more than the neighbourhood’s median selling price.
“Supply has been very low,” said David Smith, director of sales for Highland Property Agents, which marketed the Woolooware home.
“Bigger prices have been achieved because there’s been less stock available.”