Aug 31, 2010
Property: Taming market gyrations
THE property market control measures announced yesterday were not the strongest weapons that could be deployed. In an extreme situation, reviving a property capital gains tax pegged, say, to a five-year sliding scale, would rank high as an option. It is 'neat'. Speculators and investors alike would be left in no doubt that real estate cannot be permitted to develop into a casino play when home ownership is vital. As well, restrictions could be placed on buyers, resident foreigners included, if they purchase a second and subsequent private property. These prescriptions, however, could turn out to be worse than the disease in that they might send the real estate sector into the doldrums. This must be avoided, as few sectors of the economy are as sensitive to consumer perceptions of policy intent.
In the circumstances, the National Development Ministry's survey on the state of the market accompanying the new cooling measures should be read closely. The objective, it says, is a stable and sustainable sector where prices move in line with economic fundamentals. Here is the catch: although they have begun to moderate, prices of private property are up by 11 per cent in the first six months. The price curve has topped the historical high of early 1996. Intending buyers can still recall with a shudder the frenzy that seized the market in 1996-1997. The same anxieties are unnerving upgraders and first-time purchasers of state housing. Real estate people will dispute whether the present trend in price movements and consumer sentiment is out of whack with fundamentals. Nevertheless, National Development Minister Mah Bow Tan's remark yesterday on a property bubble building reminds people that the state of economic health should be seen in toto.
Preventing a property market bust then is the operative phrase. The intervention is timely and measured, to calm nerves. This is the import of the move. It follows on the Prime Minister's disclosure at the National Day Rally of a relaxation in income eligibility for HDB flats among higher earners, and construction being ramped up. Of the intervention steps, extending seller's stamp duty coverage to three years from the present one year, higher downpayment and reduced loan limits are cautious, incremental steps. The 'big bang' comes in the requirement that a private-property owner who buys a resale HDB flat to live in will have to sell his private investment within six months. The intent of checking the resale price spiral answers a consumer grievance, but investors could feel aggrieved. Taken as a package, it is to be hoped the intervention, which Mr Mah described as 'calibrated', will be enough to clear up market froth. It is in nobody's interest if market gyrations get out of hand.
Tuesday, August 31, 2010
BT : Construction payment disputes resolved more efficiently now
Business Times - 31 Aug 2010
Construction payment disputes resolved more efficiently now
By LYNN KAN
THE number of payment dispute cases between building contractors and sub-contractors soared last year on the back of the property and construction boom.
169 cases were lodged with the Singapore Mediation Centre (SMC), the body that administers the adjudication process, compared with 91 cases in 2008.
The number of cases has risen exponentially since the Building and Construction Security of Payment (SOP) Act was enacted in 2005 to ensure projects would not be stalled due to inadequate cash flow.
In 2005, only one case was lodged - but the number has grown to 421 to date. Disputed claims range from $4,900 to $63 million.
SMC aims to resolve disputes quickly. To speed up the process, contractors and sub-contractors can submit claims for adjudication during construction, rather than after a project is completed.
Within a fortnight of the date specified in a contract, one of SMC's 134 independent adjudicators is required to issue a binding determination on the issue. The amount, if any, must then be paid by a specified due date.
The chief executive of the Building and Construction Authority (BCA), John Keung, said 'reducing the incidence of firms facing financial difficulties that could disrupt projects makes for a healthier and more productive construction industry'.
Because of growing interest, details of how some disputes have been resolved have been published in the second volume of the Singapore Construction Adjudication Review. Launched yesterday, Volume 2 contains 87 selected decisions made in 2008, adding to the first volume's 46 cases and decisions from 2005 to 2007.
Both volumes were edited by experienced adjudicators: former Changi Airports International chief executive Chow Kok Fong, WongPartnership partner Christopher Chuah, and MPillay managing partner Mohan R Pillay.
Justice Andrew Ang, a Supreme Court judge and SMC chairman, wrote in a foreword to the first volume that the SOP Act has transformed the dispute resolution landscape in Singapore's construction industry by providing 'very affordable access to the adjudication of payment disputes between parties to a contract while construction work continues on site, and it does so with remarkable economy of time and effort'.
Singapore is one of only four countries that has a legal regime to help contractors and sub-contractors with cash-flow problems. Alongside its administrative operations, SMC trains, certifies and maintains a panel of 134 adjudicators drawn from the construction and related industries and legal specialists in building disputes.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Construction payment disputes resolved more efficiently now
By LYNN KAN
THE number of payment dispute cases between building contractors and sub-contractors soared last year on the back of the property and construction boom.
169 cases were lodged with the Singapore Mediation Centre (SMC), the body that administers the adjudication process, compared with 91 cases in 2008.
The number of cases has risen exponentially since the Building and Construction Security of Payment (SOP) Act was enacted in 2005 to ensure projects would not be stalled due to inadequate cash flow.
In 2005, only one case was lodged - but the number has grown to 421 to date. Disputed claims range from $4,900 to $63 million.
SMC aims to resolve disputes quickly. To speed up the process, contractors and sub-contractors can submit claims for adjudication during construction, rather than after a project is completed.
Within a fortnight of the date specified in a contract, one of SMC's 134 independent adjudicators is required to issue a binding determination on the issue. The amount, if any, must then be paid by a specified due date.
The chief executive of the Building and Construction Authority (BCA), John Keung, said 'reducing the incidence of firms facing financial difficulties that could disrupt projects makes for a healthier and more productive construction industry'.
Because of growing interest, details of how some disputes have been resolved have been published in the second volume of the Singapore Construction Adjudication Review. Launched yesterday, Volume 2 contains 87 selected decisions made in 2008, adding to the first volume's 46 cases and decisions from 2005 to 2007.
Both volumes were edited by experienced adjudicators: former Changi Airports International chief executive Chow Kok Fong, WongPartnership partner Christopher Chuah, and MPillay managing partner Mohan R Pillay.
Justice Andrew Ang, a Supreme Court judge and SMC chairman, wrote in a foreword to the first volume that the SOP Act has transformed the dispute resolution landscape in Singapore's construction industry by providing 'very affordable access to the adjudication of payment disputes between parties to a contract while construction work continues on site, and it does so with remarkable economy of time and effort'.
Singapore is one of only four countries that has a legal regime to help contractors and sub-contractors with cash-flow problems. Alongside its administrative operations, SMC trains, certifies and maintains a panel of 134 adjudicators drawn from the construction and related industries and legal specialists in building disputes.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Impact of new measures on loans growth likely to be small
Business Times - 31 Aug 2010
REACTION TO PM LEE'S NATIONAL DAY RALLY SPEECH
Impact of new measures on loans growth likely to be small
Banks see problems in extra checks needed for home loan applications
By CONRAD TAN
(SINGAPORE) New government measures to cool the property market and curb speculation in the resale market for HDB flats could cause headaches for banks here due to the extra checks needed for home-loan applicants, but the impact on loans growth will likely be small, a check by BT shows.
'Banks will certainly run into problems for any pre-existing loans which may have been approved but not drawn down yet, and housing loans not registered at the credit bureau,' said Helen Neo, head of consumer banking at Maybank Singapore. 'Banks may have to request a declaration from customers to confirm that there are no such pre-existing loans.'
Effective yesterday, home buyers with outstanding home loans must pay more cash upfront for a new house, and they may borrow no more than 70 per cent of its value, down from 80 per cent.
Housing loans have been the biggest driver of loan growth for banks here throughout the economic downturn, and the recovery since.
Total housing loans grew 22 per cent over the year to end-June, to $101.1 billion - a third of all Singapore-dollar loans by banks here, Monetary Authority of Singapore data show. Including business loans to the building and construction sector, property-related loans made up $149.7 billion, or 50.5 per cent of all Sing-dollar bank loans outstanding at the end of June.
'I don't think you'll see a collapse in loan growth' due to the new measures, said a banking analyst, who declined to be named. 'Housing loan growth is more correlated to the completions of properties - that's when the loans are drawn down. We've seen record home sales in 2007, 2009 and so far this year; those would underpin completions in the medium term.'
But if home sales slow and banks compete more aggressively to lend on fewer home purchases, that could squeeze their loan margins and hurt profits, the analyst said. 'That's the uncertainty.'
The new rules could also be a problem for people who want to buy a new house to live in, before selling their existing home, if they are still paying off an earlier mortgage, Ms Neo said. Such buyers can no longer borrow more than 70 per cent of the value of the new home from banks, even if they intend to stay in it.
Maybank Singapore had $4.1 billion in housing loans at the end of June. Of those, 'less than three- quarters' were loans for more than 70 per cent of the property's value, a proportion that hasn't changed much over time, Ms Neo said. 'We focus mainly on owner-occupied properties, so there is minimal impact on our home loan portfolio.'
While lending standards by banks here are 'still prudent', there are signs that more housing loans are being made for over 70 per cent of the property's value, the government said yesterday.
At OCBC Bank, 'we have seen an increase in the number of loan applications' asking to borrow more than 70 per cent of the value of the property, said Phang Lah Hwa, head of consumer secured lending. Most of its home loan applications are for owner occupation, but 'we have seen an increase in the number of loan applicants for investment purposes compared to a year ago', she added. The bank is assessing the new measures and their overall impact on its home loan business, she said.
'The new measures are likely to affect HDB upgraders and investors who would have to commit higher cash amounts for their down payments' if they have outstanding home loans, a DBS Group spokesman said, adding that the bank has 'robust underwriting criteria' for its loans.
'There may be some near term impact on property sentiment. But in the long run, this is good for the market,' said Chia Siew Cheng, loans division head at United Overseas Bank.
The new rules could also mean it takes longer to process home loan applications. Banks must check with the Housing & Development Board - in addition to their usual checks on a borrower's credit record with Credit Bureau (Singapore) - to see if a home-loan applicant has a home loan outstanding.
'If HDB is willing to enrol with the Credit Bureau as a member, the checks can be made more efficient in the processing of applications,' Ms Neo said.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
REACTION TO PM LEE'S NATIONAL DAY RALLY SPEECH
Impact of new measures on loans growth likely to be small
Banks see problems in extra checks needed for home loan applications
By CONRAD TAN
(SINGAPORE) New government measures to cool the property market and curb speculation in the resale market for HDB flats could cause headaches for banks here due to the extra checks needed for home-loan applicants, but the impact on loans growth will likely be small, a check by BT shows.
'Banks will certainly run into problems for any pre-existing loans which may have been approved but not drawn down yet, and housing loans not registered at the credit bureau,' said Helen Neo, head of consumer banking at Maybank Singapore. 'Banks may have to request a declaration from customers to confirm that there are no such pre-existing loans.'
Effective yesterday, home buyers with outstanding home loans must pay more cash upfront for a new house, and they may borrow no more than 70 per cent of its value, down from 80 per cent.
Housing loans have been the biggest driver of loan growth for banks here throughout the economic downturn, and the recovery since.
Total housing loans grew 22 per cent over the year to end-June, to $101.1 billion - a third of all Singapore-dollar loans by banks here, Monetary Authority of Singapore data show. Including business loans to the building and construction sector, property-related loans made up $149.7 billion, or 50.5 per cent of all Sing-dollar bank loans outstanding at the end of June.
'I don't think you'll see a collapse in loan growth' due to the new measures, said a banking analyst, who declined to be named. 'Housing loan growth is more correlated to the completions of properties - that's when the loans are drawn down. We've seen record home sales in 2007, 2009 and so far this year; those would underpin completions in the medium term.'
But if home sales slow and banks compete more aggressively to lend on fewer home purchases, that could squeeze their loan margins and hurt profits, the analyst said. 'That's the uncertainty.'
The new rules could also be a problem for people who want to buy a new house to live in, before selling their existing home, if they are still paying off an earlier mortgage, Ms Neo said. Such buyers can no longer borrow more than 70 per cent of the value of the new home from banks, even if they intend to stay in it.
Maybank Singapore had $4.1 billion in housing loans at the end of June. Of those, 'less than three- quarters' were loans for more than 70 per cent of the property's value, a proportion that hasn't changed much over time, Ms Neo said. 'We focus mainly on owner-occupied properties, so there is minimal impact on our home loan portfolio.'
While lending standards by banks here are 'still prudent', there are signs that more housing loans are being made for over 70 per cent of the property's value, the government said yesterday.
At OCBC Bank, 'we have seen an increase in the number of loan applications' asking to borrow more than 70 per cent of the value of the property, said Phang Lah Hwa, head of consumer secured lending. Most of its home loan applications are for owner occupation, but 'we have seen an increase in the number of loan applicants for investment purposes compared to a year ago', she added. The bank is assessing the new measures and their overall impact on its home loan business, she said.
'The new measures are likely to affect HDB upgraders and investors who would have to commit higher cash amounts for their down payments' if they have outstanding home loans, a DBS Group spokesman said, adding that the bank has 'robust underwriting criteria' for its loans.
'There may be some near term impact on property sentiment. But in the long run, this is good for the market,' said Chia Siew Cheng, loans division head at United Overseas Bank.
The new rules could also mean it takes longer to process home loan applications. Banks must check with the Housing & Development Board - in addition to their usual checks on a borrower's credit record with Credit Bureau (Singapore) - to see if a home-loan applicant has a home loan outstanding.
'If HDB is willing to enrol with the Credit Bureau as a member, the checks can be made more efficient in the processing of applications,' Ms Neo said.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : UIC pays $160m in DC to redevelop UIC Building
Business Times - 31 Aug 2010
UIC pays $160m in DC to redevelop UIC Building
By FELDA CHAY
UNITED Industrial Corp (UIC) yesterday said that it has paid a development charge of $160.1 million to the Urban Redevelopment Authority (URA) for the redevelopment of UIC Building.
Located at 5 Shenton Way, the building will be redeveloped based on a 60 per cent residential and 40 per cent commercial scheme with a gross floor area of about 926,589 sq ft, said UIC in a statement.
It added that the redevelopment will be financed by internal funds and bank borrowings, and is not expected to have any material impact on the net tangible assets and earnings per share of the group for the current financial year ending Dec 31.
The news comes after the company said in February that it had won in-principle approval from the URA to convert the building into a mainly residential development.
It was undecided on how exactly to redevelop the property at that time, with UOL group chief executive Gwee Lian Kheng saying that it was assessing all alternatives to ensure the best use for the property.
Its announcement in February came at a time which saw numerous property developers opting to convert office buildings in the central business district for residential use amid climbing luxury home prices, and falling office rents - though the office rental market is now on the mend.
Standard Chartered Bank's head of Asean property research Regina Lim said to BT earlier this month that the average monthly Grade A office rental value will end the year at about $10.20 per square foot, up 26 per cent from end-2009.
Earlier this month, UIC reported that net profit rose to $79.1 million for the second quarter from a net loss of $251.8 million a year ago.
Revenue rose 7 per cent to $291.8 million from $271.5 million in the corresponding period last year.
The quarter saw it book fair-value gains of $19.8 million on investment properties held by subsidiaries, as opposed to fair-value losses of $526.1 million a year earlier.
Yesterday, UIC's counter closed one cent lower at $2.18.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
UIC pays $160m in DC to redevelop UIC Building
By FELDA CHAY
UNITED Industrial Corp (UIC) yesterday said that it has paid a development charge of $160.1 million to the Urban Redevelopment Authority (URA) for the redevelopment of UIC Building.
Located at 5 Shenton Way, the building will be redeveloped based on a 60 per cent residential and 40 per cent commercial scheme with a gross floor area of about 926,589 sq ft, said UIC in a statement.
It added that the redevelopment will be financed by internal funds and bank borrowings, and is not expected to have any material impact on the net tangible assets and earnings per share of the group for the current financial year ending Dec 31.
The news comes after the company said in February that it had won in-principle approval from the URA to convert the building into a mainly residential development.
It was undecided on how exactly to redevelop the property at that time, with UOL group chief executive Gwee Lian Kheng saying that it was assessing all alternatives to ensure the best use for the property.
Its announcement in February came at a time which saw numerous property developers opting to convert office buildings in the central business district for residential use amid climbing luxury home prices, and falling office rents - though the office rental market is now on the mend.
Standard Chartered Bank's head of Asean property research Regina Lim said to BT earlier this month that the average monthly Grade A office rental value will end the year at about $10.20 per square foot, up 26 per cent from end-2009.
Earlier this month, UIC reported that net profit rose to $79.1 million for the second quarter from a net loss of $251.8 million a year ago.
Revenue rose 7 per cent to $291.8 million from $271.5 million in the corresponding period last year.
The quarter saw it book fair-value gains of $19.8 million on investment properties held by subsidiaries, as opposed to fair-value losses of $526.1 million a year earlier.
Yesterday, UIC's counter closed one cent lower at $2.18.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Subsidiary of Roxy- Pacific buys Bukit Timah site
Business Times - 31 Aug 2010
Subsidiary of Roxy- Pacific buys Bukit Timah site
By FELDA CHAY
AN associated firm of Roxy-Pacific Holdings has bought the freehold Toh Tuck Apartment site for $33.9 million.
Mequity, which is 45 per cent owned by Roxy-Pacific's wholly owned subsidiary Roxy Land, will finance the purchase internally and through bank borrowings.
Roxy-Pacific said yesterday the acquisition is not expected to have a material impact on its consolidated earnings and net tangible assets per share this financial year.
The site - in the Bukit Timah area - is 40,449 square feet in area and has a plot ratio of 1.4, which allows it to be rebuilt to five storeys.
The amount Mequity paid equates to $687 per sq ft per plot ratio, including an estimated $5 million development charge.
The seller is Aik Hwa Trading, formerly a small-time developer but now in the building materials business. The existing project comprises 13 units in a four-storey block. The average size of each unit is 2,400 sq ft.
Jeff Goh, head of investment sales for HSR, which marketed the site, said that including the additional 10 per cent gross floor area allowance for balconies, 75 units ranging in size from 590 sq ft to 1,660 sq ft can be built on the site.
'A new apartment could fetch an average of $1,300 psf,' he said.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Subsidiary of Roxy- Pacific buys Bukit Timah site
By FELDA CHAY
AN associated firm of Roxy-Pacific Holdings has bought the freehold Toh Tuck Apartment site for $33.9 million.
Mequity, which is 45 per cent owned by Roxy-Pacific's wholly owned subsidiary Roxy Land, will finance the purchase internally and through bank borrowings.
Roxy-Pacific said yesterday the acquisition is not expected to have a material impact on its consolidated earnings and net tangible assets per share this financial year.
The site - in the Bukit Timah area - is 40,449 square feet in area and has a plot ratio of 1.4, which allows it to be rebuilt to five storeys.
The amount Mequity paid equates to $687 per sq ft per plot ratio, including an estimated $5 million development charge.
The seller is Aik Hwa Trading, formerly a small-time developer but now in the building materials business. The existing project comprises 13 units in a four-storey block. The average size of each unit is 2,400 sq ft.
Jeff Goh, head of investment sales for HSR, which marketed the site, said that including the additional 10 per cent gross floor area allowance for balconies, 75 units ranging in size from 590 sq ft to 1,660 sq ft can be built on the site.
'A new apartment could fetch an average of $1,300 psf,' he said.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Private home-owners can't play HDB chip any more
Business Times - 31 Aug 2010
Private home-owners can't play HDB chip any more
String of steps to douse speculation; prices and sales of mass-market private homes may be hit
By UMA SHANKARI
(SINGAPORE) The Prime Minister had hinted on Sunday that major moves were afoot to cool the property market. Even so, when the Ministry of National Development (MND) spelt out the measures yesterday, several market-watchers did a double-take. Many of them expect private home prices and sales to be hit.
Of all of MND's new measures, analysts pegged the move to disallow concurrent ownership of HDB flats and private residential properties within the minimum occupation period (MOP) as the most significant. The MOP is the time that buyers are required to stay in their flats before they can sell.
Private property owners who buy an HDB flat now have to dispose of their private homes within six months. National Development Minister Mah Bow Tan, who announced the measures, said that right now, around half of private property owners who buy an HDB flat sell their private properties. The rest hold onto both.
The MOP for non-subsidised flats was also increased to 5 years from 3 years.
PropNex chief executive Mohamed Ismail said that the mandate to dispose of one's private property when purchasing an HDB flat will have 'great ramifications' for the industry. Based on his firm's records, about 10 per cent of all HDB resale purchases are by private property dwellers.
'These may be investors who will now not be able to purchase HDB flats and keep their private property for investment purposes,' he said.
MND also targeted potential buyers of second homes with two policy changes. Those who hold an existing mortgage can now only borrow up to 70 per cent of a property's value for the second home, down from 80 per cent previously. They must also pay 10 per cent in cash, up from 5 per cent.
And owners who sell houses and apartments less than three years after buying them will also have to pay a seller's stamp duty. Previously, the seller's stamp duty was only imposed on those who sell their homes within one year of purchasing.
The Real Estate Developers' Association of Singapore (Redas) said in a statement that while the latest measures may affect affordability due to higher upfront cash component, they will not impact genuine home buyers.
But at least one developer BT spoke to felt that the measures would hit sales of mass market private homes as HDB upgraders will have to cough out 10 per cent cash and can only borrow up to 70 per cent of the property's value.
'Genuine upgraders could be turned off as they will have to sell their HDB flats and settle that loan before buying a new property,' the developer said. 'Now, the practice is to buy units from developers at new launches and then wait for their new property to be built before selling existing homes.'
CBRE Research executive director Li Hiaw Ho also pointed out that the pool of HDB upgraders looking to buy private properties will shrink as this group will now have to wait for five years instead of three.
The government acted as Singapore's strong economic growth, low interest rates and high liquidity continued to push home prices up in 2010 - sparking concerns of a property bubble. Private home prices were up 38 per cent year on year as of end Q2, while HDB resale prices climbed 15 per cent over the same period.
'If the current momentum in the market continues, what will likely happen is that a property bubble will form,' said Mr Mah. 'And when the bubble bursts - not if, but when it bursts - there will be severe implications for individuals as well as for the economy as a whole. Furthermore, the very low interest rates we are seeing today are not sustainable in the long run.'
Analysts said that the new measures will hit private home prices and sales volumes.
Colliers International's director for research and advisory Tay Huey Ying said that developers' sale volume for September to December 2010 is now predicted to come in at the lower range of her earlier forecast of between 800-1,000 units a month.
She also revised her earlier forecast of up to 5 per cent growth in the official residential property price index for Q4 2010 downwards to 'at most 2 per cent'.
HDB prices are also expected to moderate as the government plans to release up to 22,000 new build-to-order flats in 2011, up from the more than 16,000 in 2010. It will also release more land for executive condominium projects and design, build and sell scheme (DBSS) flats next year.
Yesterday's measures follow earlier demand-side measures introduced in February.
Then, the government first implemented a seller's stamp duty for all residential properties sold within one year from the date of purchase. It also lowered the loan-to-value limit to 80 per cent from 90 per cent for all housing loans provided by MAS-regulated financial institutions.
But Prime Minister Lee Hsien Loong said on Sunday that previous measures had failed to keep prices from rising.
Looking ahead, collective sales and bidding for government land sales are expected to slow down for the rest of the year as developers monitor the market and the strength of recovery in the US and European economies, said DTZ's head of South-east Asia research Chua Chor Hoon.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Private home-owners can't play HDB chip any more
String of steps to douse speculation; prices and sales of mass-market private homes may be hit
By UMA SHANKARI
(SINGAPORE) The Prime Minister had hinted on Sunday that major moves were afoot to cool the property market. Even so, when the Ministry of National Development (MND) spelt out the measures yesterday, several market-watchers did a double-take. Many of them expect private home prices and sales to be hit.
Of all of MND's new measures, analysts pegged the move to disallow concurrent ownership of HDB flats and private residential properties within the minimum occupation period (MOP) as the most significant. The MOP is the time that buyers are required to stay in their flats before they can sell.
Private property owners who buy an HDB flat now have to dispose of their private homes within six months. National Development Minister Mah Bow Tan, who announced the measures, said that right now, around half of private property owners who buy an HDB flat sell their private properties. The rest hold onto both.
The MOP for non-subsidised flats was also increased to 5 years from 3 years.
PropNex chief executive Mohamed Ismail said that the mandate to dispose of one's private property when purchasing an HDB flat will have 'great ramifications' for the industry. Based on his firm's records, about 10 per cent of all HDB resale purchases are by private property dwellers.
'These may be investors who will now not be able to purchase HDB flats and keep their private property for investment purposes,' he said.
MND also targeted potential buyers of second homes with two policy changes. Those who hold an existing mortgage can now only borrow up to 70 per cent of a property's value for the second home, down from 80 per cent previously. They must also pay 10 per cent in cash, up from 5 per cent.
And owners who sell houses and apartments less than three years after buying them will also have to pay a seller's stamp duty. Previously, the seller's stamp duty was only imposed on those who sell their homes within one year of purchasing.
The Real Estate Developers' Association of Singapore (Redas) said in a statement that while the latest measures may affect affordability due to higher upfront cash component, they will not impact genuine home buyers.
But at least one developer BT spoke to felt that the measures would hit sales of mass market private homes as HDB upgraders will have to cough out 10 per cent cash and can only borrow up to 70 per cent of the property's value.
'Genuine upgraders could be turned off as they will have to sell their HDB flats and settle that loan before buying a new property,' the developer said. 'Now, the practice is to buy units from developers at new launches and then wait for their new property to be built before selling existing homes.'
CBRE Research executive director Li Hiaw Ho also pointed out that the pool of HDB upgraders looking to buy private properties will shrink as this group will now have to wait for five years instead of three.
The government acted as Singapore's strong economic growth, low interest rates and high liquidity continued to push home prices up in 2010 - sparking concerns of a property bubble. Private home prices were up 38 per cent year on year as of end Q2, while HDB resale prices climbed 15 per cent over the same period.
'If the current momentum in the market continues, what will likely happen is that a property bubble will form,' said Mr Mah. 'And when the bubble bursts - not if, but when it bursts - there will be severe implications for individuals as well as for the economy as a whole. Furthermore, the very low interest rates we are seeing today are not sustainable in the long run.'
Analysts said that the new measures will hit private home prices and sales volumes.
Colliers International's director for research and advisory Tay Huey Ying said that developers' sale volume for September to December 2010 is now predicted to come in at the lower range of her earlier forecast of between 800-1,000 units a month.
She also revised her earlier forecast of up to 5 per cent growth in the official residential property price index for Q4 2010 downwards to 'at most 2 per cent'.
HDB prices are also expected to moderate as the government plans to release up to 22,000 new build-to-order flats in 2011, up from the more than 16,000 in 2010. It will also release more land for executive condominium projects and design, build and sell scheme (DBSS) flats next year.
Yesterday's measures follow earlier demand-side measures introduced in February.
Then, the government first implemented a seller's stamp duty for all residential properties sold within one year from the date of purchase. It also lowered the loan-to-value limit to 80 per cent from 90 per cent for all housing loans provided by MAS-regulated financial institutions.
But Prime Minister Lee Hsien Loong said on Sunday that previous measures had failed to keep prices from rising.
Looking ahead, collective sales and bidding for government land sales are expected to slow down for the rest of the year as developers monitor the market and the strength of recovery in the US and European economies, said DTZ's head of South-east Asia research Chua Chor Hoon.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Govt keeps heavy guns aside, but who will take a hit?
Business Times - 31 Aug 2010
COMMENTARY
Govt keeps heavy guns aside, but who will take a hit?
By KALPANA RASHIWALA
THE government has just announced the latest instalment in its gentle therapy of a series of calibrated measures to try and rein in the acceleration in home prices.
Is this strategy working? Or should we revisit the sledgehammer approach of May 1996 when a whole slew of anti-speculation measures were rolled out at one go?
Thus far, the measures introduced since September last year do not seem to have had their intended impact.
Last September saw the scrapping of the interest absorption scheme, which had fuelled speculation. In February this year, the government reintroduced the seller's stamp duty and lowered the loan-to-value (LTV) limit on housing loans.
On the supply side, the government is selling a record volume of land for private housing development this year in a bid to tame property prices. So far, developers - many of whose landbanks have been dried up by strong housing sales last year - have demonstrated a voracious appetite for land and continue to drive land prices up.
Yesterday, the government announced steps which property consultants say will contain prices of HDB resale flats, a key pillar supporting the entry-level, mass-market private condo market.
In the private housing market, the sellers' stamp duty is being extended to those who sell residential properties within three years of purchase; the shorter the holding period, the higher the stamp duty. Market watchers say this is directed at specuvestors.
For those already servicing one or more outstanding housing loans, the cash payment for a new property purchase will be doubled and the LTV limit lowered to 70 per cent. This also applies to HDB flat buyers who are taking loans from financial institutions.
Genuine first-time home buyers should not be affected. 'Deep-pocketed investors with a longer-time investment horizon will also not be affected,' says Knight Frank managing director (residential services) Peter Ow, who also advises individual property investors.
Weaker investors
The categories of buyers that will be affected are likely to be HDB upgraders along with speculators and weaker investors. 'Some buyers may not be speculators but tend to really stretch themselves to invest in a second or subsequent property. If the property market were to tumble or interest rates shoot up, they could be in deep trouble,' Mr Ow points out.
Such buyers could find it difficult to service their loans, and stand to lose their properties, while banks could chalk up non-performing loans.
The series of measures could temper demand at least for mass-market private housing. In addition, according to Mr Ow, investment demand for shoebox and other smallish apartments may be dented from first-time home buyers who were also planning to buy HDB resale flats for their own occupation since this is no longer allowed.
By most counts, residential property prices should start to moderate. Developers will hopefully tame land bids, knowing they cannot keep on expecting to sell their end products at higher and higher prices.
Supposing the market picks up again after an initial knee-jerk reaction, the government can still summon other ammunition from its arsenal - such as further raising cash downpayments and lowering LTV ratios, treating gains from selling properties within say three years of purchase as taxable income, banning subsales of properties bought from developers until the project is completed.
The calibrated approach may not create much bang though. An alternative would be to simply package everything together for greater impact - like in May 1996. The danger of such an approach is that the market can enter a tailspin if there is a confluence of negative factors. This can then be very difficult to reverse and spark economic, social and political problems. Looking back, the May 1996 anti-speculation measures were exacerbated by the onslaught of the Asian Financial Crisis, and later on the fallout from the dotcom bubble bust, Sept 11 terrorist attacks in the US and the 2003 Sars crisis in Singapore. This marked a long property slump until around 2004 - although there was a respite between 1999 and mid 2000.
Taming the property market - without killing it - is the challenge ahead for the authorities.
One may also ask to what extent Singapore's property prices can really be subdued given high liquidity and a lack of alternative investment options to appeal to the average investor. And then there's the government's stated objective of increasing Singapore's population vis-a-vis our limited land resources.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
COMMENTARY
Govt keeps heavy guns aside, but who will take a hit?
By KALPANA RASHIWALA
THE government has just announced the latest instalment in its gentle therapy of a series of calibrated measures to try and rein in the acceleration in home prices.
Is this strategy working? Or should we revisit the sledgehammer approach of May 1996 when a whole slew of anti-speculation measures were rolled out at one go?
Thus far, the measures introduced since September last year do not seem to have had their intended impact.
Last September saw the scrapping of the interest absorption scheme, which had fuelled speculation. In February this year, the government reintroduced the seller's stamp duty and lowered the loan-to-value (LTV) limit on housing loans.
On the supply side, the government is selling a record volume of land for private housing development this year in a bid to tame property prices. So far, developers - many of whose landbanks have been dried up by strong housing sales last year - have demonstrated a voracious appetite for land and continue to drive land prices up.
Yesterday, the government announced steps which property consultants say will contain prices of HDB resale flats, a key pillar supporting the entry-level, mass-market private condo market.
In the private housing market, the sellers' stamp duty is being extended to those who sell residential properties within three years of purchase; the shorter the holding period, the higher the stamp duty. Market watchers say this is directed at specuvestors.
For those already servicing one or more outstanding housing loans, the cash payment for a new property purchase will be doubled and the LTV limit lowered to 70 per cent. This also applies to HDB flat buyers who are taking loans from financial institutions.
Genuine first-time home buyers should not be affected. 'Deep-pocketed investors with a longer-time investment horizon will also not be affected,' says Knight Frank managing director (residential services) Peter Ow, who also advises individual property investors.
Weaker investors
The categories of buyers that will be affected are likely to be HDB upgraders along with speculators and weaker investors. 'Some buyers may not be speculators but tend to really stretch themselves to invest in a second or subsequent property. If the property market were to tumble or interest rates shoot up, they could be in deep trouble,' Mr Ow points out.
Such buyers could find it difficult to service their loans, and stand to lose their properties, while banks could chalk up non-performing loans.
The series of measures could temper demand at least for mass-market private housing. In addition, according to Mr Ow, investment demand for shoebox and other smallish apartments may be dented from first-time home buyers who were also planning to buy HDB resale flats for their own occupation since this is no longer allowed.
By most counts, residential property prices should start to moderate. Developers will hopefully tame land bids, knowing they cannot keep on expecting to sell their end products at higher and higher prices.
Supposing the market picks up again after an initial knee-jerk reaction, the government can still summon other ammunition from its arsenal - such as further raising cash downpayments and lowering LTV ratios, treating gains from selling properties within say three years of purchase as taxable income, banning subsales of properties bought from developers until the project is completed.
The calibrated approach may not create much bang though. An alternative would be to simply package everything together for greater impact - like in May 1996. The danger of such an approach is that the market can enter a tailspin if there is a confluence of negative factors. This can then be very difficult to reverse and spark economic, social and political problems. Looking back, the May 1996 anti-speculation measures were exacerbated by the onslaught of the Asian Financial Crisis, and later on the fallout from the dotcom bubble bust, Sept 11 terrorist attacks in the US and the 2003 Sars crisis in Singapore. This marked a long property slump until around 2004 - although there was a respite between 1999 and mid 2000.
Taming the property market - without killing it - is the challenge ahead for the authorities.
One may also ask to what extent Singapore's property prices can really be subdued given high liquidity and a lack of alternative investment options to appeal to the average investor. And then there's the government's stated objective of increasing Singapore's population vis-a-vis our limited land resources.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
ST : Property stocks hit
Aug 31, 2010
n-day rally reactions
Property stocks hit
By Harsha Jethnani
DEVELOPERS took a hit on the share market yesterday following the announcement of new measures aimed at cooling the real estate boom.
It was far from a bloodbath - shares dipped around 4 to 5 per cent although Allgreen Properties dived 7 per cent - but experts are uncertain where the market is headed.
Analysts expect downward pressure on shares to continue in the short term.
Although similar cooling measures have been introduced over recent months, yesterday's steps are more broad-based and possibly of greater magnitude, said CIMB analyst Donald Chua.
Mr Brandon Lee, an analyst at DMG & Partners, added that much will depend on how the real estate market dynamics play out and how sales fare and markets perform.
Companies like CapitaLand and Keppel Land are expected to be less susceptible to the effects of the measures given their diversified business models and geographic exposure, Kim Eng analyst Wilson Liew noted in a report yesterday.
Real estate investment trusts or Reits with exposure to retail and commercial assets are also expected to fare better.
Market observers note that the new steps can heighten uncertainty about the market's stability.
Although the measures come across as a 'mild warning from the Government', a report from Daiwa Capital Markets stated, if price increases persist, things could be different.
If prices continue to rise by over 5 per cent per quarter, Daiwa expects more 'severe' measures could come our way.
On the shares front, Allgreen closed at $1.06 while City Developments, Singapore's biggest property developer after CapitaLand, slumped 50 cents or 4.18 per cent to $11.46. Wing Tai was down 4.6 per cent to $1.65, while the Ho Bee Group was off 3.77 per cent to $1.53.
Losses were smaller elsewhere. CapitaLand shares dropped just half a per cent to $3.98, Keppel Land kept losses to 2 per cent at $3.85 and UOL lost only 1.26 per cent to $3.93. Luxury property developer SC Global fell 1.25 per cent to $1.58.
n-day rally reactions
Property stocks hit
By Harsha Jethnani
DEVELOPERS took a hit on the share market yesterday following the announcement of new measures aimed at cooling the real estate boom.
It was far from a bloodbath - shares dipped around 4 to 5 per cent although Allgreen Properties dived 7 per cent - but experts are uncertain where the market is headed.
Analysts expect downward pressure on shares to continue in the short term.
Although similar cooling measures have been introduced over recent months, yesterday's steps are more broad-based and possibly of greater magnitude, said CIMB analyst Donald Chua.
Mr Brandon Lee, an analyst at DMG & Partners, added that much will depend on how the real estate market dynamics play out and how sales fare and markets perform.
Companies like CapitaLand and Keppel Land are expected to be less susceptible to the effects of the measures given their diversified business models and geographic exposure, Kim Eng analyst Wilson Liew noted in a report yesterday.
Real estate investment trusts or Reits with exposure to retail and commercial assets are also expected to fare better.
Market observers note that the new steps can heighten uncertainty about the market's stability.
Although the measures come across as a 'mild warning from the Government', a report from Daiwa Capital Markets stated, if price increases persist, things could be different.
If prices continue to rise by over 5 per cent per quarter, Daiwa expects more 'severe' measures could come our way.
On the shares front, Allgreen closed at $1.06 while City Developments, Singapore's biggest property developer after CapitaLand, slumped 50 cents or 4.18 per cent to $11.46. Wing Tai was down 4.6 per cent to $1.65, while the Ho Bee Group was off 3.77 per cent to $1.53.
Losses were smaller elsewhere. CapitaLand shares dropped just half a per cent to $3.98, Keppel Land kept losses to 2 per cent at $3.85 and UOL lost only 1.26 per cent to $3.93. Luxury property developer SC Global fell 1.25 per cent to $1.58.
ST : UIC Building's conversion firmed up
Aug 31, 2010
UIC Building's conversion firmed up
PLANS to redevelop UIC Building have materialised after United Industrial Corp (UIC) yesterday paid an estimated development charge of $160.1 million to the Urban Redevelopment Authority (URA) to intensify the use of the land.
The building at 5 Shenton Way will be torn down to make way for a mixed development project comprising 60 per cent residential and 40 per cent commercial space, with a gross floor area of 926,589 sq ft.
According to an earlier report, the residential component may yield 593 units.
Analysts expect the residential units to be well received. Units at nearby One Shenton, which is 93 per cent sold, have regularly transacted at above the $2,000 per sq ft mark.
In February, UOL group chief executive Gwee Lian Kheng disclosed that UIC had won in-principle approval from the URA to convert UIC Building into a mainly residential development.
No firm decision was made then as the UIC board was assessing all alternatives to ensure the best use for the property.
UIC is a 32 per cent-owned associate of UOL.
In its statement yesterday, UIC said the redevelopment of the Shenton Way building will be financed by internal funds and bank borrowings.
UIC shares, which are thinly traded, eased one cent to $2.18 on a turnover of 98,000 units.
UOL shares fell five cents to $3.93 on a turnover of 471,000 units.
UIC Building's conversion firmed up
PLANS to redevelop UIC Building have materialised after United Industrial Corp (UIC) yesterday paid an estimated development charge of $160.1 million to the Urban Redevelopment Authority (URA) to intensify the use of the land.
The building at 5 Shenton Way will be torn down to make way for a mixed development project comprising 60 per cent residential and 40 per cent commercial space, with a gross floor area of 926,589 sq ft.
According to an earlier report, the residential component may yield 593 units.
Analysts expect the residential units to be well received. Units at nearby One Shenton, which is 93 per cent sold, have regularly transacted at above the $2,000 per sq ft mark.
In February, UOL group chief executive Gwee Lian Kheng disclosed that UIC had won in-principle approval from the URA to convert UIC Building into a mainly residential development.
No firm decision was made then as the UIC board was assessing all alternatives to ensure the best use for the property.
UIC is a 32 per cent-owned associate of UOL.
In its statement yesterday, UIC said the redevelopment of the Shenton Way building will be financed by internal funds and bank borrowings.
UIC shares, which are thinly traded, eased one cent to $2.18 on a turnover of 98,000 units.
UOL shares fell five cents to $3.93 on a turnover of 471,000 units.
ST : Top cop to police real estate agencies
Aug 31, 2010
Top cop to police real estate agencies
CPIB director to be seconded to help head new regulatory body
By Lester Kok
A TOP cop will help helm the new Council for Estate Agencies (CEA) - a regulatory body which is tasked to regulate the property agents.
Mr Soh Kee Hean, director of the Corrupt Practices Investigation Bureau (CPIB) since 2005, will be seconded to the Ministry of National Development (MND) to take up the position of deputy executive director (designate) of the CEA.
The new statutory board will be formed later this year and will take over the Inland Revenue Authority of Singapore's (Iras) role in licensing real estate agencies and their agents.
CEA will have the power to investigate consumer complaints against housing agents and agencies, and will have the authority to mete out penalties, such as suspensions and fines.
Rogue housing agents have plagued the property market of late, with the Consumers Association of Singapore (Case) receiving an average of over 1,000 complaints a year.
In the first four months of this year, Case received 358 complaints. Last year, 1,079 cases were brought to its attention, while the figure was 1,100 in 2008.
Complaints ranged from agents failing to give proper advice and using misleading sales tactics, to the non-honouring of agreements. There were other questionable practices, such as agents taking commissions from both buyers and sellers of flats.
There are about 25,000 real estate agents and 1,700 agencies in Singapore.
When contacted, local real estate companies welcomed the news.
ERA Asia-Pacific associate director Eugene Lim felt that Mr Soh's new appointment will benefit the industry, by weeding out the crooks.
He said that as 'Mr Soh comes from a background dealing with corrupt practices', he believed the intention was to tackle the problem of 'shady agents'.
Likewise, PropNex chief executive Mohamed Ismail felt that this move showed the determination of the MND in ensuring that the new council 'will work effectively in upgrading the professionalism of the real estate industry'.
Mr Soh, a former deputy director of the Criminal Investigation Department (CID) as well as a former commander of the Geylang Police Division, will be replaced by Mr Eric Tan Chong Sian.
Mr Tan, the commissioner of the Immigration and Checkpoints Authority (ICA), will relinquish his current position tomorrow and will take office as CPIB director on Oct 1.
When contacted, both Mr Soh and Mr Tan declined to comment as they have yet to take up their new roles.
Taking over Mr Tan will be Mr Clarence Yeo Gek Leong, the current deputy commissioner (operations) of ICA.
lesterk@sph.com.sg
Top cop to police real estate agencies
CPIB director to be seconded to help head new regulatory body
By Lester Kok
A TOP cop will help helm the new Council for Estate Agencies (CEA) - a regulatory body which is tasked to regulate the property agents.
Mr Soh Kee Hean, director of the Corrupt Practices Investigation Bureau (CPIB) since 2005, will be seconded to the Ministry of National Development (MND) to take up the position of deputy executive director (designate) of the CEA.
The new statutory board will be formed later this year and will take over the Inland Revenue Authority of Singapore's (Iras) role in licensing real estate agencies and their agents.
CEA will have the power to investigate consumer complaints against housing agents and agencies, and will have the authority to mete out penalties, such as suspensions and fines.
Rogue housing agents have plagued the property market of late, with the Consumers Association of Singapore (Case) receiving an average of over 1,000 complaints a year.
In the first four months of this year, Case received 358 complaints. Last year, 1,079 cases were brought to its attention, while the figure was 1,100 in 2008.
Complaints ranged from agents failing to give proper advice and using misleading sales tactics, to the non-honouring of agreements. There were other questionable practices, such as agents taking commissions from both buyers and sellers of flats.
There are about 25,000 real estate agents and 1,700 agencies in Singapore.
When contacted, local real estate companies welcomed the news.
ERA Asia-Pacific associate director Eugene Lim felt that Mr Soh's new appointment will benefit the industry, by weeding out the crooks.
He said that as 'Mr Soh comes from a background dealing with corrupt practices', he believed the intention was to tackle the problem of 'shady agents'.
Likewise, PropNex chief executive Mohamed Ismail felt that this move showed the determination of the MND in ensuring that the new council 'will work effectively in upgrading the professionalism of the real estate industry'.
Mr Soh, a former deputy director of the Criminal Investigation Department (CID) as well as a former commander of the Geylang Police Division, will be replaced by Mr Eric Tan Chong Sian.
Mr Tan, the commissioner of the Immigration and Checkpoints Authority (ICA), will relinquish his current position tomorrow and will take office as CPIB director on Oct 1.
When contacted, both Mr Soh and Mr Tan declined to comment as they have yet to take up their new roles.
Taking over Mr Tan will be Mr Clarence Yeo Gek Leong, the current deputy commissioner (operations) of ICA.
lesterk@sph.com.sg
ST : Stamping out short-term speculation
Aug 31, 2010
new property rules
Stamping out short-term speculation
By Esther Teo
BARELY seven months after the Government imposed stamp duty for residential property sellers, the policy is being tweaked to further quell speculation.
Experts say that while this measure might increase costs for short-term speculators, it would have a limited impact on genuine long-term investors.
The Ministry of National Development (MND) announced yesterday that stamp duty will be imposed on those who sell properties within three years of purchase, up from one year previously.
This charge will be imposed in a staggered manner, with those selling their property sooner having to pay more.
The full duty, imposed for a sale within one year, is 1 per cent for the first $180,000, 2 per cent for the second $180,000, and 3 per cent for the balance.
A sale in the third year would be one-third of those charges.
CBRE Research executive director Li Hiaw Ho said raising the sellers' stamp duty period to three years reflects the Government's intention to cut the volume of short-term speculation without overly affecting medium and long-term investors.
ERA Asia-Pacific associate director Eugene Lim said, however, that this measure is not the most effective and significant of those unveiled yesterday.
'Over three years, if the economy is good, the price of your property should appreciate by more than the sellers' stamp duty that you have to pay.'
The sellers' stamp duty seems to be a modification of the capital gains tax introduced in 1996 to curb speculation in the property market, Mr Lim said.
Back then, the Government imposed - and later lifted in 2001 - income tax on gains which individuals made from selling properties within three years of purchase.
PropNex chief executive Mohamed Ismail said that the impact of the sellers' stamp duty will be 'marginal' since many buyers had already gone into the market with a mid-term perspective.
As a result, the one-year sellers' stamp duty, introduced in February this year, had failed to have much impact, he said.
'It sends a strong signal not to speculate and provides more of a psychological impact that would help dampen sentiments... Some investors might still buy after doing their sums,' he said.
OrangeTee head of research and consultancy Tan Kok Keong, however, said that the sellers' stamp duty could be considered the most effective approach to weeding out speculative demand.
However, the measures are most effective when taken together, he said.
'The package in totality would force all buyers to re-assess the timing of their purchase and could lead to buyers taking a longer time to decide. Thus, we could expect some softening in market activities.'
new property rules
Stamping out short-term speculation
By Esther Teo
BARELY seven months after the Government imposed stamp duty for residential property sellers, the policy is being tweaked to further quell speculation.
Experts say that while this measure might increase costs for short-term speculators, it would have a limited impact on genuine long-term investors.
The Ministry of National Development (MND) announced yesterday that stamp duty will be imposed on those who sell properties within three years of purchase, up from one year previously.
This charge will be imposed in a staggered manner, with those selling their property sooner having to pay more.
The full duty, imposed for a sale within one year, is 1 per cent for the first $180,000, 2 per cent for the second $180,000, and 3 per cent for the balance.
A sale in the third year would be one-third of those charges.
CBRE Research executive director Li Hiaw Ho said raising the sellers' stamp duty period to three years reflects the Government's intention to cut the volume of short-term speculation without overly affecting medium and long-term investors.
ERA Asia-Pacific associate director Eugene Lim said, however, that this measure is not the most effective and significant of those unveiled yesterday.
'Over three years, if the economy is good, the price of your property should appreciate by more than the sellers' stamp duty that you have to pay.'
The sellers' stamp duty seems to be a modification of the capital gains tax introduced in 1996 to curb speculation in the property market, Mr Lim said.
Back then, the Government imposed - and later lifted in 2001 - income tax on gains which individuals made from selling properties within three years of purchase.
PropNex chief executive Mohamed Ismail said that the impact of the sellers' stamp duty will be 'marginal' since many buyers had already gone into the market with a mid-term perspective.
As a result, the one-year sellers' stamp duty, introduced in February this year, had failed to have much impact, he said.
'It sends a strong signal not to speculate and provides more of a psychological impact that would help dampen sentiments... Some investors might still buy after doing their sums,' he said.
OrangeTee head of research and consultancy Tan Kok Keong, however, said that the sellers' stamp duty could be considered the most effective approach to weeding out speculative demand.
However, the measures are most effective when taken together, he said.
'The package in totality would force all buyers to re-assess the timing of their purchase and could lead to buyers taking a longer time to decide. Thus, we could expect some softening in market activities.'
ST : Tighter financing regulations will have bite, say experts
Aug 31, 2010
new property rules
Tighter financing regulations will have bite, say experts
By Esther Teo
IF YOU already have a mortgage on a home, you will need more cash on hand to buy a second property - under new rules announced yesterday.
Buyers with one or more outstanding housing loans will now have to stump up a downpayment of 30 per cent of the property's price, up from 20 per cent previously. At least 10 per cent must be in cash - up from 5 per cent before - but the remainder can come from their Central Provident Fund (CPF) accounts.
This means that buyers will now be able to borrow up to only 70 per cent of the property's purchase price, instead of 80 per cent previously.
These new financing rules are more significant measures to cool the housing market, experts said. They added that these moves would weed out speculative activity from the market and prevent buyers from overextending themselves - while leaving first-time buyers unaffected.
The Ministry of National Development said in a statement yesterday that while non-performing loans made up less than 1 per cent of all loans as at the second quarter, there are signs that more borrowers are taking loans of more than 70 per cent of a property's price.
Local banks yesterday told The Straits Times that they have seen an increasing number of home owners investing in multiple properties in recent years.
United Overseas Bank said most of these home buyers took up financing of up to 80 per cent of the purchase price.
OCBC Bank said that while the majority of its loan applications are for home-owner occupation, it has seen an increase in the number of applications for investment purposes - compared with a year ago. An increasing number of home-loan applicants have applied for loans of more than 70 per cent of the property price, it added.
Kim Eng analyst Wilson Liew said the new measures would ensure that banks remain prudent in their lending practices.
DMG & Partners property analyst Brandon Lee said the rules would also effectively force out speculators.
'They would have to think twice before buying as the cash outlay now is reasonably higher... Sales volume will probably be hurt across all segments,' he said.
ERA Asia-Pacific associate director Eugene Lim said the measures would affect demand in the mass-market private property segment.
HSR chief executive Patrick Liew said speculators made up about 20 per cent of the mass-market segment, and that the new measures might flatten the sector for the next two quarters.
Demand could drop by up to 20 per cent in the next few months, as buyers react in a knee-jerk fashion and speculators stay on the sidelines, he said.
However, since economic fundamentals are strong and the market had already been slowing, he does not expect prices to head south.
Instead, Mr Liew thinks prices will hold at current levels before gradually increasing again from the second quarter of next year, because there is still genuine demand in the housing market.
ERA's Mr Lim said that a significant number of mass-market condo buyers live in HDB flats with outstanding mortgages, so demand for such private homes might take a beating now that the required downpayment has been increased.
Mr Colin Tan, research and consultancy director of Chesterton Suntec International, said the steps 'had more bite' than previous ones. It would most affect demand from high-risk buyers who are highly leveraged, he said.
'These measures will help to soak up the liquidity in the market as those who could previously afford three similarly priced homes, fully leveraged... would now be able to afford only two, lessening demand by a third,' he added.
However, owners who are just selling their home to buy another need to get their timing right and ensure the first mortgage is fully paid before taking out a new loan.
If not, they will be allowed to take out only a 70 per cent loan for the new home and would have to pay the remaining 30 per cent upfront.
new property rules
Tighter financing regulations will have bite, say experts
By Esther Teo
IF YOU already have a mortgage on a home, you will need more cash on hand to buy a second property - under new rules announced yesterday.
Buyers with one or more outstanding housing loans will now have to stump up a downpayment of 30 per cent of the property's price, up from 20 per cent previously. At least 10 per cent must be in cash - up from 5 per cent before - but the remainder can come from their Central Provident Fund (CPF) accounts.
This means that buyers will now be able to borrow up to only 70 per cent of the property's purchase price, instead of 80 per cent previously.
These new financing rules are more significant measures to cool the housing market, experts said. They added that these moves would weed out speculative activity from the market and prevent buyers from overextending themselves - while leaving first-time buyers unaffected.
The Ministry of National Development said in a statement yesterday that while non-performing loans made up less than 1 per cent of all loans as at the second quarter, there are signs that more borrowers are taking loans of more than 70 per cent of a property's price.
Local banks yesterday told The Straits Times that they have seen an increasing number of home owners investing in multiple properties in recent years.
United Overseas Bank said most of these home buyers took up financing of up to 80 per cent of the purchase price.
OCBC Bank said that while the majority of its loan applications are for home-owner occupation, it has seen an increase in the number of applications for investment purposes - compared with a year ago. An increasing number of home-loan applicants have applied for loans of more than 70 per cent of the property price, it added.
Kim Eng analyst Wilson Liew said the new measures would ensure that banks remain prudent in their lending practices.
DMG & Partners property analyst Brandon Lee said the rules would also effectively force out speculators.
'They would have to think twice before buying as the cash outlay now is reasonably higher... Sales volume will probably be hurt across all segments,' he said.
ERA Asia-Pacific associate director Eugene Lim said the measures would affect demand in the mass-market private property segment.
HSR chief executive Patrick Liew said speculators made up about 20 per cent of the mass-market segment, and that the new measures might flatten the sector for the next two quarters.
Demand could drop by up to 20 per cent in the next few months, as buyers react in a knee-jerk fashion and speculators stay on the sidelines, he said.
However, since economic fundamentals are strong and the market had already been slowing, he does not expect prices to head south.
Instead, Mr Liew thinks prices will hold at current levels before gradually increasing again from the second quarter of next year, because there is still genuine demand in the housing market.
ERA's Mr Lim said that a significant number of mass-market condo buyers live in HDB flats with outstanding mortgages, so demand for such private homes might take a beating now that the required downpayment has been increased.
Mr Colin Tan, research and consultancy director of Chesterton Suntec International, said the steps 'had more bite' than previous ones. It would most affect demand from high-risk buyers who are highly leveraged, he said.
'These measures will help to soak up the liquidity in the market as those who could previously afford three similarly priced homes, fully leveraged... would now be able to afford only two, lessening demand by a third,' he added.
However, owners who are just selling their home to buy another need to get their timing right and ensure the first mortgage is fully paid before taking out a new loan.
If not, they will be allowed to take out only a 70 per cent loan for the new home and would have to pay the remaining 30 per cent upfront.
ST : Government to ramp up supply of new flats
Aug 31, 2010
new property rules
Government to ramp up supply of new flats
By Jessica Cheam
HOME-buyers can look forward to an unprecedented surge in supply of new Housing Board (HDB) flats this year and next - enough to fill a town as big as Toa Payoh.
The HDB said yesterday it will offer 16,000 new flats this year, and up to 22,000 next year under its build-to-order (BTO) scheme. Taken together, the number surpasses the 35,400 flats in Toa Payoh today.
It will also release more land for tender for executive condominiums (ECs) and its design, build and sell scheme (DBSS), where private sector operators develop public housing projects.
These could yield 7,000 DBSS flats and 8,000 EC units over the next two years if demand is sustained.
In contrast, only 4,000 units have been launched for sale under the DBSS scheme since it started in 2005 and 10,000 flats for ECs in the last 10 years.
The ramp-up of supply follows Prime Minister Lee Hsien Loong's announcement in his National Day Rally speech on Sunday that the $8,000 a month income ceiling will be slightly relaxed for the 'sandwich group' of home-buyers.
Those with a monthly household income of between $8,000 and $10,000 will now also be eligible to buy DBSS flats - where previously their only option apart from private property was EC units.
They will be allowed to buy the flats with a CPF Housing Grant of $30,000.
Speaking at a briefing yesterday, National Development Minister Mah Bow Tan said the increase in supply will ensure that there are enough flats for those who wish to buy. He said this would also dampen prices, although other factors such as the economy, jobs and interest rates would also play a part.
The new DBSS homes will be built in mature towns such as Yishun, Tampines, Bedok, Hougang and Jurong West, said the HDB.
The new EC homes will be spread across new and mature estates such as Sengkang, Yishun, Punggol, Pasir Ris and Bukit Panjang.
Asked if the increase in supply could create a housing supply glut in the future, Mr Mah said that supply could be adjusted to demand based on HDB's BTO system, which builds only when a certain level of demand is reached.
He added that the measures will have an impact on the market but 'it will not cause a great problem... but we still need to watch it'.
Mr Mah also said that the completion time for new flats will be cut from three years to 2-1/2 years for projects launched from the middle of next year onwards. This will be achieved by streamlining HDB's internal processes and awarding the tenders for projects earlier, he said.
CBRE Research executive director Li Hiaw Ho said yesterday that first-time home-buyers 'stand to benefit most from the measures, not only from the increase in supply providing more options, but also from an expected reduction in competition from buyers who are purchasing second and subsequent properties'.
'The main thrust of these revised measures... reiterates the Government's stand that HDB homes are primarily for owner-occupation and should remain so,' he added.
HDB said it will offer 16,000 new flats this year and 22,000 next year under its BTO scheme. The completion time for new flats will be cut from three years to 21/2 years. --BT FILE PHOTO
new property rules
Government to ramp up supply of new flats
By Jessica Cheam
HOME-buyers can look forward to an unprecedented surge in supply of new Housing Board (HDB) flats this year and next - enough to fill a town as big as Toa Payoh.
The HDB said yesterday it will offer 16,000 new flats this year, and up to 22,000 next year under its build-to-order (BTO) scheme. Taken together, the number surpasses the 35,400 flats in Toa Payoh today.
It will also release more land for tender for executive condominiums (ECs) and its design, build and sell scheme (DBSS), where private sector operators develop public housing projects.
These could yield 7,000 DBSS flats and 8,000 EC units over the next two years if demand is sustained.
In contrast, only 4,000 units have been launched for sale under the DBSS scheme since it started in 2005 and 10,000 flats for ECs in the last 10 years.
The ramp-up of supply follows Prime Minister Lee Hsien Loong's announcement in his National Day Rally speech on Sunday that the $8,000 a month income ceiling will be slightly relaxed for the 'sandwich group' of home-buyers.
Those with a monthly household income of between $8,000 and $10,000 will now also be eligible to buy DBSS flats - where previously their only option apart from private property was EC units.
They will be allowed to buy the flats with a CPF Housing Grant of $30,000.
Speaking at a briefing yesterday, National Development Minister Mah Bow Tan said the increase in supply will ensure that there are enough flats for those who wish to buy. He said this would also dampen prices, although other factors such as the economy, jobs and interest rates would also play a part.
The new DBSS homes will be built in mature towns such as Yishun, Tampines, Bedok, Hougang and Jurong West, said the HDB.
The new EC homes will be spread across new and mature estates such as Sengkang, Yishun, Punggol, Pasir Ris and Bukit Panjang.
Asked if the increase in supply could create a housing supply glut in the future, Mr Mah said that supply could be adjusted to demand based on HDB's BTO system, which builds only when a certain level of demand is reached.
He added that the measures will have an impact on the market but 'it will not cause a great problem... but we still need to watch it'.
Mr Mah also said that the completion time for new flats will be cut from three years to 2-1/2 years for projects launched from the middle of next year onwards. This will be achieved by streamlining HDB's internal processes and awarding the tenders for projects earlier, he said.
CBRE Research executive director Li Hiaw Ho said yesterday that first-time home-buyers 'stand to benefit most from the measures, not only from the increase in supply providing more options, but also from an expected reduction in competition from buyers who are purchasing second and subsequent properties'.
'The main thrust of these revised measures... reiterates the Government's stand that HDB homes are primarily for owner-occupation and should remain so,' he added.
HDB said it will offer 16,000 new flats this year and 22,000 next year under its BTO scheme. The completion time for new flats will be cut from three years to 21/2 years. --BT FILE PHOTO
ST : Analysts: Rules will rein in HDB market
Aug 31, 2010
new property rules
Analysts: Rules will rein in HDB market
Private home-owners and speculators effectively shut out
By Jessica Cheam
THE red-hot public housing market is set to cool significantly now that private home-owners including speculators have been effectively shut out of the market.
Market watchers say recent rapid growth in HDB resale prices will moderate as the pool of potential buyers grows smaller, and more flats are put on sale.
The new rules, unveiled yesterday, 'will have great ramifications' on the market, said property agency PropNex's chief executive Mohamed Ismail, as they will 'reduce speculation and short-term investment'.
He predicts that HDB resale transactions will fall in the second half of the year by 10 per cent from the same period last year.
Median values of cash upfront paid by buyers - known as cash-over-valuation - which hit a record $30,000 in the second quarter, may dip 10 per cent by year's end and by 20 per cent next year, he said.
HDB resale flat prices shot up 4.1 per cent in the second quarter, smashing records for the eighth straight quarter, prompting concerns that prices were beyond the reach of Singaporeans.
Jones Lang LaSalle's head of research for Singapore and South-east Asia, Dr Chua Yang Liang, said the new policy was well directed as it is 'more targeted at reducing speculative buying and not affecting (genuine) occupier demand'.
'This would promote a healthier investment climate for the Singapore residential market in the longer term... HDB resale flat prices could moderate to 1 to 2 per cent per quarter,' said Dr Chua.
He also observed that while the Government has maintained its stand about not interfering with the pricing of HDB resale flats, the stricter rules on ownership have now placed these properties firmly in the 'public housing' category.
Some home-seekers had lobbied the Government to cap or remove the cash-over-valuation payments for resale flats, but this aspect 'is more about market transactions, so they've left that to the market', Dr Chua said. 'But when it comes to ownership, I think it's more of a larger policy issue. The Government does not want people to hoard public housing and cause prices to go up.'
National Development Minister Mah Bow Tan said at a briefing yesterday that the new rules were meant to 'ensure equitable treatment' of all flat-owners during the minimum occupation period, which is now five years, up from three years.
He said that the measures will dampen demand for flats, and that combined with an increase in the supply of flats, 'hopefully the market will slow down'.
As prices surged in recent months, some critics had argued that private property owners were speculating on the HDB market as resale flats typically generate healthy rental returns - resulting in a high rental yield. They could also reap gains from a higher eventual sale price.
Mr Mah emphasised that the Government aims to 'pre-empt the overheating of the market' and will 'take whatever steps necessary to stabilise the market'.
'Obviously the intention is not to crash the market, but at the same time, if we don't rein in the market, and the bubble bursts then it will be even worse for everyone concerned, the economy as well as for individual buyers.'
Mr Mah said currently an average one in 10 resale flat-buyers owns private property. The new rules mean the buyers' pool for resale flats will be smaller.
Records indicate that out of the pool of private property owners who buy HDB resale flats, about half sell their private property, while the other half keep it.
Mr Mah said first-timers should welcome the change in policy 'as it means more choice for them' and does not affect those genuine home-buyers.
Assistant accountant Edward Kwa, 27, told The Straits Times that if the new rules mean lower resale prices, it will help in his house hunt.
Mr Kwa, who is getting married next year, has been balloting for build-to-order (BTO) flats since last year but has yet to be offered one. 'I'm glad to hear that there will be more choices and that the wait for a new flat will be shortened,' he said.
jcheam@sph.com.sg
--------------------------------------------------------------------------------
Mr Mah said that the measures will dampen demand for flats, and that combined with an increase in the supply of flats, 'hopefully the market will slow down'.
new property rules
Analysts: Rules will rein in HDB market
Private home-owners and speculators effectively shut out
By Jessica Cheam
THE red-hot public housing market is set to cool significantly now that private home-owners including speculators have been effectively shut out of the market.
Market watchers say recent rapid growth in HDB resale prices will moderate as the pool of potential buyers grows smaller, and more flats are put on sale.
The new rules, unveiled yesterday, 'will have great ramifications' on the market, said property agency PropNex's chief executive Mohamed Ismail, as they will 'reduce speculation and short-term investment'.
He predicts that HDB resale transactions will fall in the second half of the year by 10 per cent from the same period last year.
Median values of cash upfront paid by buyers - known as cash-over-valuation - which hit a record $30,000 in the second quarter, may dip 10 per cent by year's end and by 20 per cent next year, he said.
HDB resale flat prices shot up 4.1 per cent in the second quarter, smashing records for the eighth straight quarter, prompting concerns that prices were beyond the reach of Singaporeans.
Jones Lang LaSalle's head of research for Singapore and South-east Asia, Dr Chua Yang Liang, said the new policy was well directed as it is 'more targeted at reducing speculative buying and not affecting (genuine) occupier demand'.
'This would promote a healthier investment climate for the Singapore residential market in the longer term... HDB resale flat prices could moderate to 1 to 2 per cent per quarter,' said Dr Chua.
He also observed that while the Government has maintained its stand about not interfering with the pricing of HDB resale flats, the stricter rules on ownership have now placed these properties firmly in the 'public housing' category.
Some home-seekers had lobbied the Government to cap or remove the cash-over-valuation payments for resale flats, but this aspect 'is more about market transactions, so they've left that to the market', Dr Chua said. 'But when it comes to ownership, I think it's more of a larger policy issue. The Government does not want people to hoard public housing and cause prices to go up.'
National Development Minister Mah Bow Tan said at a briefing yesterday that the new rules were meant to 'ensure equitable treatment' of all flat-owners during the minimum occupation period, which is now five years, up from three years.
He said that the measures will dampen demand for flats, and that combined with an increase in the supply of flats, 'hopefully the market will slow down'.
As prices surged in recent months, some critics had argued that private property owners were speculating on the HDB market as resale flats typically generate healthy rental returns - resulting in a high rental yield. They could also reap gains from a higher eventual sale price.
Mr Mah emphasised that the Government aims to 'pre-empt the overheating of the market' and will 'take whatever steps necessary to stabilise the market'.
'Obviously the intention is not to crash the market, but at the same time, if we don't rein in the market, and the bubble bursts then it will be even worse for everyone concerned, the economy as well as for individual buyers.'
Mr Mah said currently an average one in 10 resale flat-buyers owns private property. The new rules mean the buyers' pool for resale flats will be smaller.
Records indicate that out of the pool of private property owners who buy HDB resale flats, about half sell their private property, while the other half keep it.
Mr Mah said first-timers should welcome the change in policy 'as it means more choice for them' and does not affect those genuine home-buyers.
Assistant accountant Edward Kwa, 27, told The Straits Times that if the new rules mean lower resale prices, it will help in his house hunt.
Mr Kwa, who is getting married next year, has been balloting for build-to-order (BTO) flats since last year but has yet to be offered one. 'I'm glad to hear that there will be more choices and that the wait for a new flat will be shortened,' he said.
jcheam@sph.com.sg
--------------------------------------------------------------------------------
Mr Mah said that the measures will dampen demand for flats, and that combined with an increase in the supply of flats, 'hopefully the market will slow down'.
ST : 'Targeted' cooling has wider implications
Aug 31, 2010
'Targeted' cooling has wider implications
Home-owners who wish to upgrade, downgrade or move are affected too
By Fiona Chan
THE Hungry Ghost month is almost over, but the property market got a new scare yesterday.
To rein in soaring home prices, National Development Minister Mah Bow Tan unveiled an array of measures to temper demand for both private homes and Housing Board (HDB) flats.
He stressed that the steps, while 'comprehensive', were 'calibrated' to target those who already own a home and are buying another for investment or speculative purposes.
First-time buyers and those buying for their own stay, Mr Mah added, would be generally unaffected by the new rules.
But would this be always the case?
Yes and no. It is true that if you are buying a home for the first time, none of the curbs will directly affect you.
But if you are the average home-owner paying off a mortgage, chances are you could be stuck in your current home for some time.
This is because a genuine home-buyer who already owns a home and wants to upgrade, or downgrade, or simply move house, will have to jump through many more hoops than in the past.
Take the new rule that home-owners with outstanding mortgages must fork out a higher downpayment for a new property. They will now have to pay at least 30 per cent of the purchase price upfront, up from 20 per cent previously.
This restriction is meant to deter property investors or speculators from owning more than one property. But it will also, inadvertently perhaps, make life difficult for people moving house.
Many people buy their dream home first before selling their existing one, to make sure they have plenty of time to move, and banks ease these back-to-back transactions by providing bridging loans.
But now home-owners who still have a mortgage will have to sell well before they buy, if they want to avoid paying the higher downpayment for their new home.
They then have to obtain a bank letter saying their existing home has been sold, and the mortgage will be paid off at a certain date, before they can apply for a loan for their new home - and even then they will get only an in-principle approval.
Because property transactions take about three months to complete, these buyers may have to find somewhere to stay in between selling and buying.
Aspiring upgraders or home-owners who want to buy and live in newly launched private homes, which take about three years to build, will have to stay somewhere else for even longer.
The new rules don't mean that these owner-occupiers cannot buy new homes to live in, but it does make the timing of when they buy and sell their homes absolutely crucial.
One wrong step and they will need to fork out more cash and CPF savings in upfront downpayments. That risk alone will make anyone think twice about swopping their homes for better ones.
But this is not the only curb that casts a wider net than it appears to at first. There is also the new maxim that private property owners must sell their homes within six months if they buy a HDB resale flat.
The aim of this is to dissuade would-be property investors from dabbling in the market for HDB flats - which should be prioritised for owner-occupiers - and pushing up their prices.
But any HDB owner who already owns a private property for investment may now find himself stuck as well.
If he wants to move, say to another HDB flat closer to his parents, he will have to sell his current flat first before buying a new one.
But the moment he sells the flat, he becomes classified as a private property owner because of his investment property. That means that if he then buys another HDB flat, he will have to sell his private property within six months - even though he is just moving house.
In effect, he may now never be able to move to another HDB flat for the rest of his life unless he is willing to sell both his current properties.
This makes private property a particularly risky investment asset for HDB flat-owners, for reasons completely unrelated to affordability.
Even buyers of private properties, while free of HDB restrictions, must now put more thought into their purchases.
Whatever home they buy, they must be prepared to live in it for at least three years - or pay a penalty in the form of a sellers' stamp duty, which can go up to 3 per cent of the purchase price.
This could affect shoebox apartments, many of which are bought as starter or investment homes, to be resold after a year or two.
So however you slice and dice it, it seems that the latest measures really leave only two groups of people completely unaffected.
The first are those rich enough to be unfettered by the new rules. By throwing various obstacles in the way of owning more than one home, the Government is sending a very clear signal that property is an investable asset class - with no restrictions - only for those who can afford it with money to spare.
The other group of people who will view the measures with equanimity are those who plan to buy only one home and stay in it for the rest of their lives.
Indeed, one of the main aims of the measures, said Mr Mah yesterday, is to ensure that all Singaporeans are able to secure a home - not an investment - for themselves. As Prime Minister Lee Hsien Loong has said, 'property is for people to buy to live in', meant as a nest egg and not as an easy way to make a quick buck.
If you subscribe to this view, and also think that property buyers should be a lot more prudent to start with, then the new measures tick all the right boxes.
But if you like the idea of moving from one home to another as your needs and lifestyle change, the slew of curbs would restrict your options, unless you are willing to stump up more upfront cash and accept lower levels of loan financing.
Buying a home will now be more of a long-term commitment than ever, and buyers must really think about their life plans for at least the next few years before taking that leap.
The housing market may become more stable, but it is also likely to be much less vibrant. And with the cooling moves coming just as Singapore's economy is entering an uncertain second half, there is a risk of the property market paling precipitously.
The important thing now is for the Government to closely watch if the impact of the measures turns out to be more widely felt than expected, and adjust them accordingly.
fiochan@sph.com.sg
'Targeted' cooling has wider implications
Home-owners who wish to upgrade, downgrade or move are affected too
By Fiona Chan
THE Hungry Ghost month is almost over, but the property market got a new scare yesterday.
To rein in soaring home prices, National Development Minister Mah Bow Tan unveiled an array of measures to temper demand for both private homes and Housing Board (HDB) flats.
He stressed that the steps, while 'comprehensive', were 'calibrated' to target those who already own a home and are buying another for investment or speculative purposes.
First-time buyers and those buying for their own stay, Mr Mah added, would be generally unaffected by the new rules.
But would this be always the case?
Yes and no. It is true that if you are buying a home for the first time, none of the curbs will directly affect you.
But if you are the average home-owner paying off a mortgage, chances are you could be stuck in your current home for some time.
This is because a genuine home-buyer who already owns a home and wants to upgrade, or downgrade, or simply move house, will have to jump through many more hoops than in the past.
Take the new rule that home-owners with outstanding mortgages must fork out a higher downpayment for a new property. They will now have to pay at least 30 per cent of the purchase price upfront, up from 20 per cent previously.
This restriction is meant to deter property investors or speculators from owning more than one property. But it will also, inadvertently perhaps, make life difficult for people moving house.
Many people buy their dream home first before selling their existing one, to make sure they have plenty of time to move, and banks ease these back-to-back transactions by providing bridging loans.
But now home-owners who still have a mortgage will have to sell well before they buy, if they want to avoid paying the higher downpayment for their new home.
They then have to obtain a bank letter saying their existing home has been sold, and the mortgage will be paid off at a certain date, before they can apply for a loan for their new home - and even then they will get only an in-principle approval.
Because property transactions take about three months to complete, these buyers may have to find somewhere to stay in between selling and buying.
Aspiring upgraders or home-owners who want to buy and live in newly launched private homes, which take about three years to build, will have to stay somewhere else for even longer.
The new rules don't mean that these owner-occupiers cannot buy new homes to live in, but it does make the timing of when they buy and sell their homes absolutely crucial.
One wrong step and they will need to fork out more cash and CPF savings in upfront downpayments. That risk alone will make anyone think twice about swopping their homes for better ones.
But this is not the only curb that casts a wider net than it appears to at first. There is also the new maxim that private property owners must sell their homes within six months if they buy a HDB resale flat.
The aim of this is to dissuade would-be property investors from dabbling in the market for HDB flats - which should be prioritised for owner-occupiers - and pushing up their prices.
But any HDB owner who already owns a private property for investment may now find himself stuck as well.
If he wants to move, say to another HDB flat closer to his parents, he will have to sell his current flat first before buying a new one.
But the moment he sells the flat, he becomes classified as a private property owner because of his investment property. That means that if he then buys another HDB flat, he will have to sell his private property within six months - even though he is just moving house.
In effect, he may now never be able to move to another HDB flat for the rest of his life unless he is willing to sell both his current properties.
This makes private property a particularly risky investment asset for HDB flat-owners, for reasons completely unrelated to affordability.
Even buyers of private properties, while free of HDB restrictions, must now put more thought into their purchases.
Whatever home they buy, they must be prepared to live in it for at least three years - or pay a penalty in the form of a sellers' stamp duty, which can go up to 3 per cent of the purchase price.
This could affect shoebox apartments, many of which are bought as starter or investment homes, to be resold after a year or two.
So however you slice and dice it, it seems that the latest measures really leave only two groups of people completely unaffected.
The first are those rich enough to be unfettered by the new rules. By throwing various obstacles in the way of owning more than one home, the Government is sending a very clear signal that property is an investable asset class - with no restrictions - only for those who can afford it with money to spare.
The other group of people who will view the measures with equanimity are those who plan to buy only one home and stay in it for the rest of their lives.
Indeed, one of the main aims of the measures, said Mr Mah yesterday, is to ensure that all Singaporeans are able to secure a home - not an investment - for themselves. As Prime Minister Lee Hsien Loong has said, 'property is for people to buy to live in', meant as a nest egg and not as an easy way to make a quick buck.
If you subscribe to this view, and also think that property buyers should be a lot more prudent to start with, then the new measures tick all the right boxes.
But if you like the idea of moving from one home to another as your needs and lifestyle change, the slew of curbs would restrict your options, unless you are willing to stump up more upfront cash and accept lower levels of loan financing.
Buying a home will now be more of a long-term commitment than ever, and buyers must really think about their life plans for at least the next few years before taking that leap.
The housing market may become more stable, but it is also likely to be much less vibrant. And with the cooling moves coming just as Singapore's economy is entering an uncertain second half, there is a risk of the property market paling precipitously.
The important thing now is for the Government to closely watch if the impact of the measures turns out to be more widely felt than expected, and adjust them accordingly.
fiochan@sph.com.sg
ST : Govt acts to curb speculators
Aug 31, 2010
Govt acts to curb speculators
New restrictions expected to cool property market; prices tipped to soften
By Joyce Teo
A SERIES of sweeping measures designed to take the heat out of the booming property market and rein in investors and speculators were announced yesterday.
The buy-at-any-cost sentiment that has been boiling away in recent months is expected to take an immediate hit, with prices tipped to soften.
The restrictions, like cooling measures last September and in February, are designed to stop a housing bubble forming.
They target owners who try to sell - or flip - their properties for a quick buck, while those aiming to buy investment properties in addition to their existing home will find it far more costly.
The new rules - which came in yesterday - also make it harder for Housing Board and private home owners to dabble in each other's markets.
National Development Minister Mah Bow Tan, who announced the moves, told a briefing: 'We think that if we do nothing, there's going to be a bubble.'
He said the 'calibrated' steps would stabilise the private property market and prevent it from overheating.
With Singapore's strong economic growth expected to moderate in the second half, a property bubble will likely form if the current momentum in the market continues, said Mr Mah.
'And when the bubble bursts - not if - there will be severe implications for individuals as well as for the economy as a whole,' he said.
'Furthermore, the very low interest rates we are seeing today are not sustainable. And when they eventually rise... there will be severe implications for buyers who have overextended themselves.'
He said the Government had taken several small steps to cool buying sentiment, unlike its 'big-bang approach' in 1996, when tough measures like a capital gains tax caused a market crash.
'All the measures are meant to affect people who intend to buy and sell ... the speculators in the market,' he added. 'If you are a genuine buyer, if you are an owner-occupier, to all intents and purposes, these measures will not affect you.'
Property experts believe the new rules will hit sentiment instantly, with buyers likely to hold back while prices of private homes and resale flats stabilise or even fall over the longer term.
'We may have an extended Hungry Ghost Festival this year,' said Knight Frank chairman Tan Tiong Cheng.
But first-time buyers will have reason to celebrate, as they may find fewer potential buyers competing with them and, possibly, softer prices.
Civil servant Joshua Yap, 28, is one: 'I will definitely resume my house search after putting it on hold for the past few months. I am very thankful for the measures because they will serve to cool the irrational market.'
The Government is also bumping up the supply of public housing, including executive condominiums.
The private housing market has so far resisted two earlier rounds of cooling measures. Private home prices surged 38.2per cent in the year to June, exceeding the historical peak of 1996.
Experts say many local buyers have been maxing out loans, but the new measures may prove a spanner in the works.
Buyers already servicing mortgages must now fork out double the cash amount to buy a second property, so the mass market private homes segment will be hit, say experts.
'The impact will be huge for the mass market as this is where the buyers do not have that much cash,' said a developer, adding that the market for newly-launched, uncompleted private homes will be harder hit.
'For new project sales, I would say that the bulk of the buyers are those getting a second home. Now, upgraders will not be able to buy properties under construction if they don't have the cash and CPF savings for the 10 (per cent) and 20 per cent down payment respectively,' he said.
DTZ's head of South-east Asia research, Ms Chua Chor Hoon, said: 'Developers are likely to lengthen the period of ongoing previews and soft launches to test the market.
'The impact will be felt more in the public resale and mass market segments due to the double whammy of a cutback in demand and increase in supply.'
The Real Estate Developers' Association of Singapore said the new measures may affect affordability due to the higher upfront cash component, but will not hit genuine home buyers.
Cash-over-valuation levels in the HDB resale market are expected to dip, thanks largely to the huge upcoming supply of flats and a move barring private home owners from buying a resale flat while holding on to their private property.
Jones Lang LaSalle's head of research for South-east Asia, Dr Chua Yang Liang, believes yesterday's measures were motivated largely by the unabated rise in public housing prices. But demand should cool for HDB resale flats.
Some property consultants expect price rises for private homes to moderate. Jones Lang LaSalle forecasts that prices will now rise by 2-3 per cent per quarter for the rest of the year.
Others are less optimistic. Ms Chua believes mass-market prices will slip by a few percentage points over the next six months, citing the backdrop of uncertainty in the global economy, slower sales activity and growing price resistance.
Mr Tan added: 'When things are moving fast, there are people who feel that they are priced out of the private market. Now, their opportunity has arrived if prices flatten out or move south.'
Property share prices fell by about 4-5 per cent in reaction to the changes.
Asked if the new measures had to do with the upcoming general election, Mr Mah said: 'Housing has been a hot topic for as long as I can remember. (It is a) hot topic before all elections, and will be a hot topic in the next election, whenever that is.'
joyceteo@sph.com.sg
--------------------------------------------------------------------------------
'All the measures are meant to affect people who intend to buy and sell, ... the speculators in the market. If you are a genuine buyer, if you are an owner-occupier, to all intents and purposes, these measures will not affect you.'
Mr Mah Bow Tan
Govt acts to curb speculators
New restrictions expected to cool property market; prices tipped to soften
By Joyce Teo
A SERIES of sweeping measures designed to take the heat out of the booming property market and rein in investors and speculators were announced yesterday.
The buy-at-any-cost sentiment that has been boiling away in recent months is expected to take an immediate hit, with prices tipped to soften.
The restrictions, like cooling measures last September and in February, are designed to stop a housing bubble forming.
They target owners who try to sell - or flip - their properties for a quick buck, while those aiming to buy investment properties in addition to their existing home will find it far more costly.
The new rules - which came in yesterday - also make it harder for Housing Board and private home owners to dabble in each other's markets.
National Development Minister Mah Bow Tan, who announced the moves, told a briefing: 'We think that if we do nothing, there's going to be a bubble.'
He said the 'calibrated' steps would stabilise the private property market and prevent it from overheating.
With Singapore's strong economic growth expected to moderate in the second half, a property bubble will likely form if the current momentum in the market continues, said Mr Mah.
'And when the bubble bursts - not if - there will be severe implications for individuals as well as for the economy as a whole,' he said.
'Furthermore, the very low interest rates we are seeing today are not sustainable. And when they eventually rise... there will be severe implications for buyers who have overextended themselves.'
He said the Government had taken several small steps to cool buying sentiment, unlike its 'big-bang approach' in 1996, when tough measures like a capital gains tax caused a market crash.
'All the measures are meant to affect people who intend to buy and sell ... the speculators in the market,' he added. 'If you are a genuine buyer, if you are an owner-occupier, to all intents and purposes, these measures will not affect you.'
Property experts believe the new rules will hit sentiment instantly, with buyers likely to hold back while prices of private homes and resale flats stabilise or even fall over the longer term.
'We may have an extended Hungry Ghost Festival this year,' said Knight Frank chairman Tan Tiong Cheng.
But first-time buyers will have reason to celebrate, as they may find fewer potential buyers competing with them and, possibly, softer prices.
Civil servant Joshua Yap, 28, is one: 'I will definitely resume my house search after putting it on hold for the past few months. I am very thankful for the measures because they will serve to cool the irrational market.'
The Government is also bumping up the supply of public housing, including executive condominiums.
The private housing market has so far resisted two earlier rounds of cooling measures. Private home prices surged 38.2per cent in the year to June, exceeding the historical peak of 1996.
Experts say many local buyers have been maxing out loans, but the new measures may prove a spanner in the works.
Buyers already servicing mortgages must now fork out double the cash amount to buy a second property, so the mass market private homes segment will be hit, say experts.
'The impact will be huge for the mass market as this is where the buyers do not have that much cash,' said a developer, adding that the market for newly-launched, uncompleted private homes will be harder hit.
'For new project sales, I would say that the bulk of the buyers are those getting a second home. Now, upgraders will not be able to buy properties under construction if they don't have the cash and CPF savings for the 10 (per cent) and 20 per cent down payment respectively,' he said.
DTZ's head of South-east Asia research, Ms Chua Chor Hoon, said: 'Developers are likely to lengthen the period of ongoing previews and soft launches to test the market.
'The impact will be felt more in the public resale and mass market segments due to the double whammy of a cutback in demand and increase in supply.'
The Real Estate Developers' Association of Singapore said the new measures may affect affordability due to the higher upfront cash component, but will not hit genuine home buyers.
Cash-over-valuation levels in the HDB resale market are expected to dip, thanks largely to the huge upcoming supply of flats and a move barring private home owners from buying a resale flat while holding on to their private property.
Jones Lang LaSalle's head of research for South-east Asia, Dr Chua Yang Liang, believes yesterday's measures were motivated largely by the unabated rise in public housing prices. But demand should cool for HDB resale flats.
Some property consultants expect price rises for private homes to moderate. Jones Lang LaSalle forecasts that prices will now rise by 2-3 per cent per quarter for the rest of the year.
Others are less optimistic. Ms Chua believes mass-market prices will slip by a few percentage points over the next six months, citing the backdrop of uncertainty in the global economy, slower sales activity and growing price resistance.
Mr Tan added: 'When things are moving fast, there are people who feel that they are priced out of the private market. Now, their opportunity has arrived if prices flatten out or move south.'
Property share prices fell by about 4-5 per cent in reaction to the changes.
Asked if the new measures had to do with the upcoming general election, Mr Mah said: 'Housing has been a hot topic for as long as I can remember. (It is a) hot topic before all elections, and will be a hot topic in the next election, whenever that is.'
joyceteo@sph.com.sg
--------------------------------------------------------------------------------
'All the measures are meant to affect people who intend to buy and sell, ... the speculators in the market. If you are a genuine buyer, if you are an owner-occupier, to all intents and purposes, these measures will not affect you.'
Mr Mah Bow Tan
Monday, August 30, 2010
MND : MEASURES TO MAINTAIN A STABLE AND SUSTAINABLE PROPERTY MARKET
Press Releases
MEASURES TO MAINTAIN A STABLE AND SUSTAINABLE PROPERTY MARKET
1 The Government announced today the following measures to maintain a stable and sustainable property market:
Increase the holding period for imposition of Seller’s Stamp Duty (SSD) from the current one year to three years.
For property buyers who already have one or more outstanding housing loans1 at the time of the new housing purchase:
Increase the minimum cash payment from 5% to 10% of the valuation limit2; and
Decrease the Loan-to-Value (LTV) limit for housing loans granted by financial institutions regulated by MAS to these buyers from the current 80% to 70%.
The measures will take immediate effect on 30 August 2010.
2 The Government's objective is to ensure a stable and sustainable property market where prices move in line with economic fundamentals. The property market is currently very buoyant. While the rate of price increase of private residential properties has moderated in the last 3 quarters, prices have still increased significantly by 11% in the first half of 2010, and price levels have now exceeded the historical peak in the second quarter of 1996.
3 While Singapore has enjoyed strong economic growth in the first half of 2010, our economic growth is expected to moderate in the second half of the year. There are also still uncertainties in the global economy. Should economic growth falter and the market corrects, property buyers could face capital losses, with implications on their own finances and the economy as a whole. Moreover, the current low global interest rate environment will not continue indefinitely, and higher interest rates could have severe implications for buyers who have overextended themselves. Therefore, the Government has decided to introduce additional measures now to temper sentiments and encourage greater financial prudence among property purchasers.
Extending the Holding Period for Imposition of Seller’s Stamp Duty (SSD) on Residential Properties Sold from 1 Year to 3 Years
4 The Government imposed in February 2010 a seller’s stamp duty (SSD) for sellers who buy residential properties3 on or after 20 February 2010 and sell them within a year of purchase.
5 For residential properties bought4 on or after 30 August 2010, SSD will be imposed if these properties are sold within three years of purchase. Specifically, the SSD levied on residential properties will be revised to as follows:
Sold within the first year of purchase, i.e. the property is held for 1 year or less from its purchase date – The full SSD rate (1% for the first $180,000 of the consideration, 2% for the next $180,000, and 3% for the balance) will be imposed.
Sold within the second year of purchase, i.e. the property is held for more than 1 year and up to 2 years – 2/3 of the full SSD rate.
Sold within the third year of purchase, i.e. the property is held for more than 2 years and up to 3 years – 1/3 of the full SSD rate.
No SSD will be payable by the vendor if the property is sold more than 3 years after it was bought. Please see Annex for examples of how the SSD will be computed.
6 The extended SSD will not affect HDB lessees as the required Minimum Occupation Period for HDB flats is at least 3 years.
7 IRAS will be releasing an updated e-tax guide on the circumstances under which SSD will apply and the procedures for paying SSD. The e-tax guide will be available at www.iras.gov.sg. Taxpayers with enquiries may call IRAS at 6351 3697 or 6351 3698.
Increase the Minimum Cash Payment from 5% to 10% of the Valuation Limit for Property Purchasers with one or more outstanding Housing Loans
8 Previously, property buyers have to make cash payment of at least 5% of the valuation limit5. With effect from 30 Aug 20106, the cash payment is increased from 5% to 10% of the valuation limit7. This measure is applied only to buyers of private residential properties, Executive Condominiums, HUDC flats and HDB flats (including those under the Design, Build and Sell Scheme, or DBSS flats) who are taking housing loans from financial institutions regulated by MAS and who already have one or more outstanding housing loans at the time of applying for a housing loan for the new property purchase.
Decrease the LTV limit for housing loans granted by financial institutions regulated by MAS from the current 80% to 70% for Property Purchasers with one or more outstanding Housing Loans
9 The LTV limit is lowered from 80% to 70% with effect from 30 Aug 20108 for borrowers who have one or more outstanding housing loans (whether from HDB or a financial institution regulated by MAS) at the time of applying for a housing loan for the new property purchase. Borrowers who do not have any outstanding housing loans continue to have an LTV cap of 80%. These rules apply to housing loans granted by financial institutions for private residential properties, Executive Condominiums, HUDC flats and HDB flats (including DBSS flats).
10 Loans granted by HDB for HDB flats (including DBSS flats) will still have an LTV cap of 90%. HDB loans are offered to eligible first-time flat buyers and second-timers who are right-sizing their flats to meet their housing needs. They are required to utilise all of their CPF Ordinary Account balance before HDB loans will be granted. Furthermore, those taking a second concessionary HDB loan must use the CPF refund and 50% of the cash proceeds from the sale of their previous flat before they are granted an HDB loan. This is in line with HDB's home ownership policy of helping eligible buyers, especially first-time buyers, purchase public housing in a financially prudent manner.
11 Financial institutions' lending standards have remained prudent and the asset quality of housing loans has stayed robust, with the non-performing loans ratio at less than 1% as at Q2 2010. Nonetheless, there are signs that more housing loans are originating at higher LTV bands of above 70%. In line with the objective of ensuring a stable and sustainable property market, lowering the LTV limit sends a clear signal to financial institutions to maintain credit standards, and encourages greater financial prudence among property purchasers already servicing one or more outstanding housing loans.
Adequate Supply in the Pipeline
12 The Government will also continue to ensure that there is adequate supply of housing to meet demand. In the second half 2010 GLS Programme, we have made available sites that can yield about 13,900 private housing units, of which about 8,100 units will be from sites on the Confirmed List. This is the highest potential supply quantum in the history of the GLS Programme. We will inject an even larger supply of private housing in the first half 2011 GLS Programme, if demand continues to be strong.
13 Apart from the supply from the GLS Programme, there are also 61,800 uncompleted units of private housing from projects in the pipeline as at 2Q20109. Of these, 32,600 units were available or could be made available for sale. These comprised units that had been launched for sale by developers, units that had pre-requisite conditions for sale10 and which could be launched for sale immediately, as well as units with planning approvals for which pre-requisite conditions for sale could be obtained quickly from the Government and made available for sale11.
14 The Government will continue to monitor the property market closely and will introduce additional measures if required later, to promote a stable and sustainable property market.
*****
1 Financial institutions are required to conduct checks with HDB and with one or more credit bureaus on whether the buyer has an outstanding housing loan at the time of applying for a housing loan for the new property purchase. For joint buyers, if either buyer has an outstanding housing loan, the joint buyers will be considered as having an outstanding housing loan.
2 This is in addition to the cash over valuation amount that has to be paid in cash.
3 The SSD will apply to the transfer or disposal of interest (including sale and gifts) of residential lands and residential units (whether completed or uncompleted).
4 The date of purchase for computation of the holding period for SSD shall be the date when a buyer (i.e. Buyer A) exercises the option to purchase the property, or signs the sale and purchase agreement, whichever is earlier. The date of resale of the property shall be the date when the subsequent buyer (i.e. Buyer B) exercises the option to purchase the property from Buyer A, or signs the sale and purchase agreement, whichever is earlier.
5 The amount of CPF monies plus housing loan taken for the purchase of the property cannot exceed 95% of the valuation limit (defined as the lower of property value or property price).
6 The 10% minimum cash payment will apply to transactions where the date on which the option to purchase (OTP) was granted falls on or after 30 August 2010; or if there is no OTP, where the date of the sale and purchase agreement falls on or after 30 August 2010.
7 Therefore, the amount of CPF monies plus housing loan that can be used for the purchase of the property will be reduced from 95% to 90%.
8 The 70% LTV limit will apply to transactions where the date on which the option to purchase (OTP) was granted falls on or after 30 August 2010; or if there is no OTP, where the date of the sale and purchase agreement falls on or after 30 August 2010.
9 These refer to new development and redevelopment projects with planning approvals, i.e. either a Provisional Permission (PP) or Written Permission (WP).
10 These refer to private residential developments with Housing Developer Licence and Building Plan Approval. Under the Housing Developer (Control and Licensing) Act, a sale licence must be obtained for a project with more than 4 units, if the developer intends to sell uncompleted residential units in the development. However, the sale of the residential units can only commence with the approval of the building plans of the development.
11 These refer to uncompleted private residential developments without pre-requisites for sale but with WP or PP granted. The sale licences could be obtained within 5 working days and building plan approvals could be obtained within 7 working days from the date of application for cases where clearances from various technical agencies are obtained and relevant documents are in order during formal submissions.
Issued by: Ministry of National Development, Ministry of Finance and Monetary Authority of Singapore
Date: 30 August 2010
MEASURES TO MAINTAIN A STABLE AND SUSTAINABLE PROPERTY MARKET
1 The Government announced today the following measures to maintain a stable and sustainable property market:
Increase the holding period for imposition of Seller’s Stamp Duty (SSD) from the current one year to three years.
For property buyers who already have one or more outstanding housing loans1 at the time of the new housing purchase:
Increase the minimum cash payment from 5% to 10% of the valuation limit2; and
Decrease the Loan-to-Value (LTV) limit for housing loans granted by financial institutions regulated by MAS to these buyers from the current 80% to 70%.
The measures will take immediate effect on 30 August 2010.
2 The Government's objective is to ensure a stable and sustainable property market where prices move in line with economic fundamentals. The property market is currently very buoyant. While the rate of price increase of private residential properties has moderated in the last 3 quarters, prices have still increased significantly by 11% in the first half of 2010, and price levels have now exceeded the historical peak in the second quarter of 1996.
3 While Singapore has enjoyed strong economic growth in the first half of 2010, our economic growth is expected to moderate in the second half of the year. There are also still uncertainties in the global economy. Should economic growth falter and the market corrects, property buyers could face capital losses, with implications on their own finances and the economy as a whole. Moreover, the current low global interest rate environment will not continue indefinitely, and higher interest rates could have severe implications for buyers who have overextended themselves. Therefore, the Government has decided to introduce additional measures now to temper sentiments and encourage greater financial prudence among property purchasers.
Extending the Holding Period for Imposition of Seller’s Stamp Duty (SSD) on Residential Properties Sold from 1 Year to 3 Years
4 The Government imposed in February 2010 a seller’s stamp duty (SSD) for sellers who buy residential properties3 on or after 20 February 2010 and sell them within a year of purchase.
5 For residential properties bought4 on or after 30 August 2010, SSD will be imposed if these properties are sold within three years of purchase. Specifically, the SSD levied on residential properties will be revised to as follows:
Sold within the first year of purchase, i.e. the property is held for 1 year or less from its purchase date – The full SSD rate (1% for the first $180,000 of the consideration, 2% for the next $180,000, and 3% for the balance) will be imposed.
Sold within the second year of purchase, i.e. the property is held for more than 1 year and up to 2 years – 2/3 of the full SSD rate.
Sold within the third year of purchase, i.e. the property is held for more than 2 years and up to 3 years – 1/3 of the full SSD rate.
No SSD will be payable by the vendor if the property is sold more than 3 years after it was bought. Please see Annex for examples of how the SSD will be computed.
6 The extended SSD will not affect HDB lessees as the required Minimum Occupation Period for HDB flats is at least 3 years.
7 IRAS will be releasing an updated e-tax guide on the circumstances under which SSD will apply and the procedures for paying SSD. The e-tax guide will be available at www.iras.gov.sg. Taxpayers with enquiries may call IRAS at 6351 3697 or 6351 3698.
Increase the Minimum Cash Payment from 5% to 10% of the Valuation Limit for Property Purchasers with one or more outstanding Housing Loans
8 Previously, property buyers have to make cash payment of at least 5% of the valuation limit5. With effect from 30 Aug 20106, the cash payment is increased from 5% to 10% of the valuation limit7. This measure is applied only to buyers of private residential properties, Executive Condominiums, HUDC flats and HDB flats (including those under the Design, Build and Sell Scheme, or DBSS flats) who are taking housing loans from financial institutions regulated by MAS and who already have one or more outstanding housing loans at the time of applying for a housing loan for the new property purchase.
Decrease the LTV limit for housing loans granted by financial institutions regulated by MAS from the current 80% to 70% for Property Purchasers with one or more outstanding Housing Loans
9 The LTV limit is lowered from 80% to 70% with effect from 30 Aug 20108 for borrowers who have one or more outstanding housing loans (whether from HDB or a financial institution regulated by MAS) at the time of applying for a housing loan for the new property purchase. Borrowers who do not have any outstanding housing loans continue to have an LTV cap of 80%. These rules apply to housing loans granted by financial institutions for private residential properties, Executive Condominiums, HUDC flats and HDB flats (including DBSS flats).
10 Loans granted by HDB for HDB flats (including DBSS flats) will still have an LTV cap of 90%. HDB loans are offered to eligible first-time flat buyers and second-timers who are right-sizing their flats to meet their housing needs. They are required to utilise all of their CPF Ordinary Account balance before HDB loans will be granted. Furthermore, those taking a second concessionary HDB loan must use the CPF refund and 50% of the cash proceeds from the sale of their previous flat before they are granted an HDB loan. This is in line with HDB's home ownership policy of helping eligible buyers, especially first-time buyers, purchase public housing in a financially prudent manner.
11 Financial institutions' lending standards have remained prudent and the asset quality of housing loans has stayed robust, with the non-performing loans ratio at less than 1% as at Q2 2010. Nonetheless, there are signs that more housing loans are originating at higher LTV bands of above 70%. In line with the objective of ensuring a stable and sustainable property market, lowering the LTV limit sends a clear signal to financial institutions to maintain credit standards, and encourages greater financial prudence among property purchasers already servicing one or more outstanding housing loans.
Adequate Supply in the Pipeline
12 The Government will also continue to ensure that there is adequate supply of housing to meet demand. In the second half 2010 GLS Programme, we have made available sites that can yield about 13,900 private housing units, of which about 8,100 units will be from sites on the Confirmed List. This is the highest potential supply quantum in the history of the GLS Programme. We will inject an even larger supply of private housing in the first half 2011 GLS Programme, if demand continues to be strong.
13 Apart from the supply from the GLS Programme, there are also 61,800 uncompleted units of private housing from projects in the pipeline as at 2Q20109. Of these, 32,600 units were available or could be made available for sale. These comprised units that had been launched for sale by developers, units that had pre-requisite conditions for sale10 and which could be launched for sale immediately, as well as units with planning approvals for which pre-requisite conditions for sale could be obtained quickly from the Government and made available for sale11.
14 The Government will continue to monitor the property market closely and will introduce additional measures if required later, to promote a stable and sustainable property market.
*****
1 Financial institutions are required to conduct checks with HDB and with one or more credit bureaus on whether the buyer has an outstanding housing loan at the time of applying for a housing loan for the new property purchase. For joint buyers, if either buyer has an outstanding housing loan, the joint buyers will be considered as having an outstanding housing loan.
2 This is in addition to the cash over valuation amount that has to be paid in cash.
3 The SSD will apply to the transfer or disposal of interest (including sale and gifts) of residential lands and residential units (whether completed or uncompleted).
4 The date of purchase for computation of the holding period for SSD shall be the date when a buyer (i.e. Buyer A) exercises the option to purchase the property, or signs the sale and purchase agreement, whichever is earlier. The date of resale of the property shall be the date when the subsequent buyer (i.e. Buyer B) exercises the option to purchase the property from Buyer A, or signs the sale and purchase agreement, whichever is earlier.
5 The amount of CPF monies plus housing loan taken for the purchase of the property cannot exceed 95% of the valuation limit (defined as the lower of property value or property price).
6 The 10% minimum cash payment will apply to transactions where the date on which the option to purchase (OTP) was granted falls on or after 30 August 2010; or if there is no OTP, where the date of the sale and purchase agreement falls on or after 30 August 2010.
7 Therefore, the amount of CPF monies plus housing loan that can be used for the purchase of the property will be reduced from 95% to 90%.
8 The 70% LTV limit will apply to transactions where the date on which the option to purchase (OTP) was granted falls on or after 30 August 2010; or if there is no OTP, where the date of the sale and purchase agreement falls on or after 30 August 2010.
9 These refer to new development and redevelopment projects with planning approvals, i.e. either a Provisional Permission (PP) or Written Permission (WP).
10 These refer to private residential developments with Housing Developer Licence and Building Plan Approval. Under the Housing Developer (Control and Licensing) Act, a sale licence must be obtained for a project with more than 4 units, if the developer intends to sell uncompleted residential units in the development. However, the sale of the residential units can only commence with the approval of the building plans of the development.
11 These refer to uncompleted private residential developments without pre-requisites for sale but with WP or PP granted. The sale licences could be obtained within 5 working days and building plan approvals could be obtained within 7 working days from the date of application for cases where clearances from various technical agencies are obtained and relevant documents are in order during formal submissions.
Issued by: Ministry of National Development, Ministry of Finance and Monetary Authority of Singapore
Date: 30 August 2010
ST : More housing options for sandwich class
Aug 30, 2010
NATIONAL DAY RALLY
More housing options for sandwich class
Those with household income of up to $10,000 eligible for certain HDB flats
By Jeremy Au Yong & Esther Teo
THE income requirements for HDB buyers have been relaxed - slightly - to give the 'sandwich group' more housing options.
Those with a monthly household income of between $8,000 and $10,000 will be eligible to buy Housing Board flats built under the Design, Build and Sell Scheme (DBSS).
Previously, their only option - apart from private property - was executive condominium (EC) units, as the income cap for HDB flats is $8,000.
DBSS flats have better finishes than from build-to-order (BTO) ones because private developers are given flexibility in designing, building and pricing the units.
Prime Minister Lee Hsien Loong announced this at the National Day Rally last night, saying it would help those currently caught in the middle.
'I think this group is quite anxious about falling in between, so they are not eligible for HDB and they can't afford private property... And because people are marrying a little bit later, their incomes tend to be a little bit higher, so they worry they will get promoted before they get settled. So we will do more to help them own their homes,' he said.
For the sandwich class, buying a DBSS will become like buying an EC: They will be eligible for a housing grant and have to arrange their own financing.
While the $8,000 ceiling stays, the move opens up thousands of mid-priced flats to the sandwich group. In July, the HDB said there were 2,280 DBSS flats and 2,445 EC units in the pipeline.
A typical four-room BTO flat costs $300,000, a DBSS unit around $500,000 and an EC, around $700,000.
PM Lee added yesterday that more land would be released for such developments.
He also said that the Government would move to cool the private property market but declined to disclose details.
'Otherwise you will remember nothing else about my speech,' he said, to laughter from the audience of 1,500.
The Ministry of National Development will set out the measures today.
On public housing, PM Lee said about 22,000 BTO units would be built next year. 'So if you miss one BTO, don't worry, the next one is coming... There are 22,000 new flats coming along and we don't have 22,000 new couples getting married in Singapore every year.'
He added that the HDB would also do its best to speed up construction. The average waiting time for a flat is three years.
And to drive home the message that HDB flats are for owner occupation, he said the rules for private property owners buying resale flats would be tightened.
The housing changes, one of the highlights at yesterday's rally, are aimed at reassuring Singaporeans that they will be able to afford a home despite the surging property market.
Housing has been a hot-button political issue this year, with many voicing concerns about the spike in prices.
The latest official figures show the prices of HDB resale flats rose 4.1 per cent in the second quarter of this year, the eighth consecutive quarter of growth. The median cash-over-valuation also hit a record high of $30,000.
PM Lee acknowledged that the influx of foreigners had an impact on demand, but said broader economic forces were also at work.
He noted that though Singapore's population hardly changed in the last two years, prices were falling until the 'mood changed' in the middle of last year.
'It's also happening in Hong Kong, in other cities around the region, in China, and therefore there are other broader factors at work. But whatever it is, it's something which we are focusing our minds on,' he said.
Property analysts and house-hunters yesterday welcomed the move to loosen the income criteria for DBSS flats.
PropNex chief executive Mohamed Ismail said the move was especially timely given the growing size of the sandwich group: 'It's a good way to ease demand without allowing the sandwich group to compete with those earning less than $8,000 for BTO flats.'
Medical professional Tay Yuxin, who is planning to marry and is looking for a home, said she was relieved as she and her boyfriend would soon bust the $8,000 cap. Said the 24-year-old: 'There was a lot of pressure to get something so this is great as it allows us to be in less of a rush and apply for something that is affordable. Also, we have more locations to choose from.'
jeremyau@sph.com.sg
esthert@sph.com.sg
--------------------------------------------------------------------------------
'With more double-income families, some couples have had to shy away from promotions or to quit their jobs to try to qualify for BTO flats.'
PropNex chief executive Mohamed Ismail, saying the move to raise the income ceiling to $10,000 for flats built under the Design, Build and Sell Scheme was timely as the sandwich group was growing
NATIONAL DAY RALLY
More housing options for sandwich class
Those with household income of up to $10,000 eligible for certain HDB flats
By Jeremy Au Yong & Esther Teo
THE income requirements for HDB buyers have been relaxed - slightly - to give the 'sandwich group' more housing options.
Those with a monthly household income of between $8,000 and $10,000 will be eligible to buy Housing Board flats built under the Design, Build and Sell Scheme (DBSS).
Previously, their only option - apart from private property - was executive condominium (EC) units, as the income cap for HDB flats is $8,000.
DBSS flats have better finishes than from build-to-order (BTO) ones because private developers are given flexibility in designing, building and pricing the units.
Prime Minister Lee Hsien Loong announced this at the National Day Rally last night, saying it would help those currently caught in the middle.
'I think this group is quite anxious about falling in between, so they are not eligible for HDB and they can't afford private property... And because people are marrying a little bit later, their incomes tend to be a little bit higher, so they worry they will get promoted before they get settled. So we will do more to help them own their homes,' he said.
For the sandwich class, buying a DBSS will become like buying an EC: They will be eligible for a housing grant and have to arrange their own financing.
While the $8,000 ceiling stays, the move opens up thousands of mid-priced flats to the sandwich group. In July, the HDB said there were 2,280 DBSS flats and 2,445 EC units in the pipeline.
A typical four-room BTO flat costs $300,000, a DBSS unit around $500,000 and an EC, around $700,000.
PM Lee added yesterday that more land would be released for such developments.
He also said that the Government would move to cool the private property market but declined to disclose details.
'Otherwise you will remember nothing else about my speech,' he said, to laughter from the audience of 1,500.
The Ministry of National Development will set out the measures today.
On public housing, PM Lee said about 22,000 BTO units would be built next year. 'So if you miss one BTO, don't worry, the next one is coming... There are 22,000 new flats coming along and we don't have 22,000 new couples getting married in Singapore every year.'
He added that the HDB would also do its best to speed up construction. The average waiting time for a flat is three years.
And to drive home the message that HDB flats are for owner occupation, he said the rules for private property owners buying resale flats would be tightened.
The housing changes, one of the highlights at yesterday's rally, are aimed at reassuring Singaporeans that they will be able to afford a home despite the surging property market.
Housing has been a hot-button political issue this year, with many voicing concerns about the spike in prices.
The latest official figures show the prices of HDB resale flats rose 4.1 per cent in the second quarter of this year, the eighth consecutive quarter of growth. The median cash-over-valuation also hit a record high of $30,000.
PM Lee acknowledged that the influx of foreigners had an impact on demand, but said broader economic forces were also at work.
He noted that though Singapore's population hardly changed in the last two years, prices were falling until the 'mood changed' in the middle of last year.
'It's also happening in Hong Kong, in other cities around the region, in China, and therefore there are other broader factors at work. But whatever it is, it's something which we are focusing our minds on,' he said.
Property analysts and house-hunters yesterday welcomed the move to loosen the income criteria for DBSS flats.
PropNex chief executive Mohamed Ismail said the move was especially timely given the growing size of the sandwich group: 'It's a good way to ease demand without allowing the sandwich group to compete with those earning less than $8,000 for BTO flats.'
Medical professional Tay Yuxin, who is planning to marry and is looking for a home, said she was relieved as she and her boyfriend would soon bust the $8,000 cap. Said the 24-year-old: 'There was a lot of pressure to get something so this is great as it allows us to be in less of a rush and apply for something that is affordable. Also, we have more locations to choose from.'
jeremyau@sph.com.sg
esthert@sph.com.sg
--------------------------------------------------------------------------------
'With more double-income families, some couples have had to shy away from promotions or to quit their jobs to try to qualify for BTO flats.'
PropNex chief executive Mohamed Ismail, saying the move to raise the income ceiling to $10,000 for flats built under the Design, Build and Sell Scheme was timely as the sandwich group was growing
ST : More steps to ease housing woes: PM
Aug 30, 2010
More steps to ease housing woes: PM
Govt will announce today measures to cool private property market
By Li Xueying
THE Government will be introducing more measures to ensure public housing remains affordable and to cool the red-hot private property market.
Announcing this in his National Day Rally speech last night, Prime Minister Lee Hsien Loong gave some details of what will be done to make sure HDB flats remain affordable to Singaporeans, including those currently earning more than $8,000 a month.
But he held back on impending measures to rein in runaway private property prices.
Buyers and sellers will not be put on tenterhooks for long though. The announcement by the Ministry of National Development (MND) is due at 8am today.
'I don't want to go into the details tonight, otherwise you will remember nothing else about my speech,' he said, to laughter from the 1,500-strong audience at the University Cultural Centre.
'Tomorrow morning before the market opens, MND will put out their press statement and (MND Minister) Mah Bow Tan will hold a press conference.
'But our purpose is to make sure that in the long term, Singaporeans can own their homes and afford it, and it would be a gradually appreciating asset which will grow as Singapore grows, so that Singaporeans can benefit.'
The announcement was among a range of measures to address Singaporeans' anxiety over the influx of foreigners and immigrants.
The 'very hot topic' took up a major chunk of Mr Lee's three-hour address, delivered in Malay, Mandarin and English.
While acknowledging 'legitimate concerns which we take seriously' - fears over competition, crowding and the changing character of Singapore's society, he also spelled out why it is important for the country to stay open.
It needs to gain talent, garner reinforcements to grow the economy and make up for the population shortfall.
So the challenge is in balancing Singaporeans' concerns with these imperatives. As Mr Lee put it: 'How do we keep the door open while protecting the interest of Singaporeans? How do we welcome citizens while holding to our values?'
There are no ideal or permanent solutions, he acknowledged, and 'we will have to manage, monitor and adjust as we go along'.
He outlined what the Government is trying to do to limit the downsides.
Besides alleviating housing woes, it makes an important distinction between foreign workers and immigrants.
The former are transients who will leave when the job is done, said Mr Lee.
Significantly, he re-adjusted his estimate of the number of extra foreign workers Singapore will need this year. Where earlier he had projected 100,000, last night he revised it down to 80,000.
'We've recalculated, maybe we'll get by with a few less, perhaps 80,000 workers,' he said.
As for immigrants, the number is far smaller, and Singapore is 'very careful' whom it accepts.
Citizens will always come first, he assured his audience.
As a mark of this emphasis, he announced a new $9,000 award for NS men, more details of which will be released tomorrow.
To address complaints of congestion on public transport, Mr Lee reiterated measures already in the works to ease the crunch, such as the purchase of more trains and the building of more rail lines.
All in, these measures will cost $60 billion over the next 10 years.
Turning to education, Mr Lee expanded on the theme of inclusivity that he first brought up in his Rally in 2005: shaping the education system into one that enables students of different talents and abilities to maximise their potential.
Singapore is realising this vision, he said, but 'we can still do better'.
Among the new moves coming up is one to allow Normal (Academic) students to get a 'through-train' to polytechnic, skipping the O levels.
As for Express stream students, those in seven more secondary schools can get to be on the Integrated Programme whereby they go straight on to the A levels.
On the economic front, Mr Lee noted that while Singapore is attaining a spectacular 13 to 15 per cent in growth this year, the figure is 'less spectacular' when seen over the three years from 2008 to this year.
Averaged out, growth becomes 5 per cent a year over these three years.
But this is a 'realistic target'. 'For the next 10 years, if we can make 3 to 5 per cent growth on average every year, I think we're doing well,' he said.
Beyond bread and butter issues, Mr Lee also dwelt on the intangible 'Singapore spirit' that makes Singapore such an economic dynamo and a beacon for comers from many lands.
He defined the spirit as one based on values such as multiracialism, loyalty, shared responsibility and shared dreams.
It was seen in Singapore's founding fathers such as Dr Goh Keng Swee, he said, announcing the naming of two institutions - the Singapore Command and Staff College and a new centre of education - after the late deputy prime minister, who passed away in May.
The spirit can also be found in 33-year-old Alvan Yap, who is hearing-impaired but volunteers to teach deaf children in Timor Leste sign language.
With the Youth Olympic Games just ended earlier in the week, Mr Lee took the opportunity to voice his appreciation for the 30,000 staff and volunteers who made the Games possible.
While Singapore may be small, it is in a 'very strong position', he said, relating how a Canadian lady he met at the Games Village congratulated Singapore for having 'cleared the bar'.
'We've reinforced our talent, we've worked closely together, delivered results, won respect for Singapore.
'So with good leadership, and a close-knit team imbued with the Singapore spirit, we will seize the opportunities around us and take our nation to the next level,' he said.
xueying@sph.com.sg
--------------------------------------------------------------------------------
LONG TERM ASSET
'Our purpose is to make sure that in the long term, Singaporeans can own their homes and afford it, and it would be a gradually appreciating asset which will grow as Singapore grows, so that Singaporeans can benefit.'
PM Lee
More steps to ease housing woes: PM
Govt will announce today measures to cool private property market
By Li Xueying
THE Government will be introducing more measures to ensure public housing remains affordable and to cool the red-hot private property market.
Announcing this in his National Day Rally speech last night, Prime Minister Lee Hsien Loong gave some details of what will be done to make sure HDB flats remain affordable to Singaporeans, including those currently earning more than $8,000 a month.
But he held back on impending measures to rein in runaway private property prices.
Buyers and sellers will not be put on tenterhooks for long though. The announcement by the Ministry of National Development (MND) is due at 8am today.
'I don't want to go into the details tonight, otherwise you will remember nothing else about my speech,' he said, to laughter from the 1,500-strong audience at the University Cultural Centre.
'Tomorrow morning before the market opens, MND will put out their press statement and (MND Minister) Mah Bow Tan will hold a press conference.
'But our purpose is to make sure that in the long term, Singaporeans can own their homes and afford it, and it would be a gradually appreciating asset which will grow as Singapore grows, so that Singaporeans can benefit.'
The announcement was among a range of measures to address Singaporeans' anxiety over the influx of foreigners and immigrants.
The 'very hot topic' took up a major chunk of Mr Lee's three-hour address, delivered in Malay, Mandarin and English.
While acknowledging 'legitimate concerns which we take seriously' - fears over competition, crowding and the changing character of Singapore's society, he also spelled out why it is important for the country to stay open.
It needs to gain talent, garner reinforcements to grow the economy and make up for the population shortfall.
So the challenge is in balancing Singaporeans' concerns with these imperatives. As Mr Lee put it: 'How do we keep the door open while protecting the interest of Singaporeans? How do we welcome citizens while holding to our values?'
There are no ideal or permanent solutions, he acknowledged, and 'we will have to manage, monitor and adjust as we go along'.
He outlined what the Government is trying to do to limit the downsides.
Besides alleviating housing woes, it makes an important distinction between foreign workers and immigrants.
The former are transients who will leave when the job is done, said Mr Lee.
Significantly, he re-adjusted his estimate of the number of extra foreign workers Singapore will need this year. Where earlier he had projected 100,000, last night he revised it down to 80,000.
'We've recalculated, maybe we'll get by with a few less, perhaps 80,000 workers,' he said.
As for immigrants, the number is far smaller, and Singapore is 'very careful' whom it accepts.
Citizens will always come first, he assured his audience.
As a mark of this emphasis, he announced a new $9,000 award for NS men, more details of which will be released tomorrow.
To address complaints of congestion on public transport, Mr Lee reiterated measures already in the works to ease the crunch, such as the purchase of more trains and the building of more rail lines.
All in, these measures will cost $60 billion over the next 10 years.
Turning to education, Mr Lee expanded on the theme of inclusivity that he first brought up in his Rally in 2005: shaping the education system into one that enables students of different talents and abilities to maximise their potential.
Singapore is realising this vision, he said, but 'we can still do better'.
Among the new moves coming up is one to allow Normal (Academic) students to get a 'through-train' to polytechnic, skipping the O levels.
As for Express stream students, those in seven more secondary schools can get to be on the Integrated Programme whereby they go straight on to the A levels.
On the economic front, Mr Lee noted that while Singapore is attaining a spectacular 13 to 15 per cent in growth this year, the figure is 'less spectacular' when seen over the three years from 2008 to this year.
Averaged out, growth becomes 5 per cent a year over these three years.
But this is a 'realistic target'. 'For the next 10 years, if we can make 3 to 5 per cent growth on average every year, I think we're doing well,' he said.
Beyond bread and butter issues, Mr Lee also dwelt on the intangible 'Singapore spirit' that makes Singapore such an economic dynamo and a beacon for comers from many lands.
He defined the spirit as one based on values such as multiracialism, loyalty, shared responsibility and shared dreams.
It was seen in Singapore's founding fathers such as Dr Goh Keng Swee, he said, announcing the naming of two institutions - the Singapore Command and Staff College and a new centre of education - after the late deputy prime minister, who passed away in May.
The spirit can also be found in 33-year-old Alvan Yap, who is hearing-impaired but volunteers to teach deaf children in Timor Leste sign language.
With the Youth Olympic Games just ended earlier in the week, Mr Lee took the opportunity to voice his appreciation for the 30,000 staff and volunteers who made the Games possible.
While Singapore may be small, it is in a 'very strong position', he said, relating how a Canadian lady he met at the Games Village congratulated Singapore for having 'cleared the bar'.
'We've reinforced our talent, we've worked closely together, delivered results, won respect for Singapore.
'So with good leadership, and a close-knit team imbued with the Singapore spirit, we will seize the opportunities around us and take our nation to the next level,' he said.
xueying@sph.com.sg
--------------------------------------------------------------------------------
LONG TERM ASSET
'Our purpose is to make sure that in the long term, Singaporeans can own their homes and afford it, and it would be a gradually appreciating asset which will grow as Singapore grows, so that Singaporeans can benefit.'
PM Lee
ST : Property stocks still stuck in the basement
Aug 30, 2010
CAI JIN
Property stocks still stuck in the basement
Why developers' shares are not keeping up with soaring home prices
By Goh Eng Yeow
PRICES of private homes have gone through the roof and have even eclipsed the 1996 peak, yet share prices for property developers seem stuck in the basement, unloved and neglected.
Even though local banks have swung close to 2007's highs, several developers are still languishing at half of their peaks back then.
This is surprising given that sales of new homes this year are on track to overtake 2007's record 14,811 units, after 9,957 units were snapped up between January and July.
Conventional market wisdom dictates that the booming residential market and the soaring prices home-seekers are willing to pay should translate into hefty profits for developers - and therefore higher share prices.
But not so, with analysts estimating that the property sector is trading at a hefty 20 per cent discount to valuation.
This is despite the jump in profitability experienced by some developers in their second-quarter results.
CapitaLand, for one, swung to a hefty gain of $476 million for the second quarter from a loss of $157 million a year earlier, as the lustre from the property boom rubbed off on its profit and loss account.
But its share price is still down 44 per cent from its 2007 all-time high of $7.12.
It is a stark contrast to the boom year of 2007, when real estate counters were traded at a premium to valuations.
Are investors missing something here? Surely, the market's dour view on property counters is out of sync with the realities of the market.
Of course, it is easy to blame global uncertainties for the malaise afflicting property counters.
It was the foreign fund managers who recognised that property counters were undervalued in 2007 and propelled them to record highs in the liquidity-induced rally that year.
But the sub-prime mortgage crisis in the United States has knocked many of these former masters of the universe out of action.
Still, there seems to be more to this conundrum than foreign fund managers becoming risk-averse.
Few will deny that our housing boom is largely shaped by events beyond our shores, particularly the loose monetary policies implemented by US Federal Reserve chairman Ben Bernanke as he pared interest rates to almost zero last year to revive the troubled US economy.
Because the US dollar is the world's reserve currency, this move sharply depressed interest rates around the world.
Some banks in Singapore have slashed mortgage rates to as low as below 1 per cent to grab a bigger slice of the mortgage market.
Home-buyers have gleefully taken the opportunity of negligible borrowing costs to buy bigger, and in some cases multiple, properties, driving prices sharply higher in the process.
But interest rates cannot stay in the doldrums forever and the stock market may simply be pricing a risk premium into the price of property counters, in case the tide turns on the booming housing market.
Let us take a home-buyer who secures a 25-year, $1 million loan to buy his dream condo.
At a mortgage rate of 1.25 per cent, a back-of-the envelope calculation shows a monthly repayment of $4,375.
If the mortgage rate climbs back to 4 per cent - the prevailing rate three years ago - his instalment will escalate by almost 50 per cent to $6,666.
It is a simple illustration of how rising interest rates can make a big dent on the affordability of owning a home, especially alongside commitments like a car loan.
What worries some investors is that the Fed may be forced to start raising US interest rates as soon as 2012 to fight off inflationary pressure.
Higher interest rates may cause some home-buyers to walk away from their purchases, especially those who had bought properties under an interest-only payment scheme previously offered by developers to jack up sales at launches.
The scheme was scrapped by the Government in September last year but many projects that had already been financed by this option are scheduled for completion in 2012, just as the Fed may raise rates.
It is this market segment that has investors spooked as it is the one most likely at risk of defaults, as buyers can walk away from their purchases by simply forfeiting their downpayments.
Of course, defaults in 2012 will not materialise if property prices keep rising, allowing buyers to unload their purchases for a profit before they are completed.
But the likelihood is that price rises will moderate.
A recent Kim Eng Research report estimates that developers have about 15,600 unsold condos on hand.
This is more than sufficient to satisfy demand, even if it reaches 2007 highs. And that figure does not include new launches likely to hit the market and the growing supply of existing condos put up for sale.
It explains why equity investors are not taking any chances on property stocks, even though it seems unlikely that any home-buyer may default in today's buoyant market. The months ahead will determine which party has read the market correctly.
engyeow@sph.com.sg
Cai Jin runs every Monday and covers financial matters and corporate governance issues that can affect investors. The two Chinese characters marry wealth with good fortune - the two crucial factors that any investor needs to prosper.
--------------------------------------------------------------------------------
Home-buyers have gleefully taken the opportunity of negligible borrowing costs to buy bigger, and in some cases, multiple properties, driving prices sharply higher in the process.
CAI JIN
Property stocks still stuck in the basement
Why developers' shares are not keeping up with soaring home prices
By Goh Eng Yeow
PRICES of private homes have gone through the roof and have even eclipsed the 1996 peak, yet share prices for property developers seem stuck in the basement, unloved and neglected.
Even though local banks have swung close to 2007's highs, several developers are still languishing at half of their peaks back then.
This is surprising given that sales of new homes this year are on track to overtake 2007's record 14,811 units, after 9,957 units were snapped up between January and July.
Conventional market wisdom dictates that the booming residential market and the soaring prices home-seekers are willing to pay should translate into hefty profits for developers - and therefore higher share prices.
But not so, with analysts estimating that the property sector is trading at a hefty 20 per cent discount to valuation.
This is despite the jump in profitability experienced by some developers in their second-quarter results.
CapitaLand, for one, swung to a hefty gain of $476 million for the second quarter from a loss of $157 million a year earlier, as the lustre from the property boom rubbed off on its profit and loss account.
But its share price is still down 44 per cent from its 2007 all-time high of $7.12.
It is a stark contrast to the boom year of 2007, when real estate counters were traded at a premium to valuations.
Are investors missing something here? Surely, the market's dour view on property counters is out of sync with the realities of the market.
Of course, it is easy to blame global uncertainties for the malaise afflicting property counters.
It was the foreign fund managers who recognised that property counters were undervalued in 2007 and propelled them to record highs in the liquidity-induced rally that year.
But the sub-prime mortgage crisis in the United States has knocked many of these former masters of the universe out of action.
Still, there seems to be more to this conundrum than foreign fund managers becoming risk-averse.
Few will deny that our housing boom is largely shaped by events beyond our shores, particularly the loose monetary policies implemented by US Federal Reserve chairman Ben Bernanke as he pared interest rates to almost zero last year to revive the troubled US economy.
Because the US dollar is the world's reserve currency, this move sharply depressed interest rates around the world.
Some banks in Singapore have slashed mortgage rates to as low as below 1 per cent to grab a bigger slice of the mortgage market.
Home-buyers have gleefully taken the opportunity of negligible borrowing costs to buy bigger, and in some cases multiple, properties, driving prices sharply higher in the process.
But interest rates cannot stay in the doldrums forever and the stock market may simply be pricing a risk premium into the price of property counters, in case the tide turns on the booming housing market.
Let us take a home-buyer who secures a 25-year, $1 million loan to buy his dream condo.
At a mortgage rate of 1.25 per cent, a back-of-the envelope calculation shows a monthly repayment of $4,375.
If the mortgage rate climbs back to 4 per cent - the prevailing rate three years ago - his instalment will escalate by almost 50 per cent to $6,666.
It is a simple illustration of how rising interest rates can make a big dent on the affordability of owning a home, especially alongside commitments like a car loan.
What worries some investors is that the Fed may be forced to start raising US interest rates as soon as 2012 to fight off inflationary pressure.
Higher interest rates may cause some home-buyers to walk away from their purchases, especially those who had bought properties under an interest-only payment scheme previously offered by developers to jack up sales at launches.
The scheme was scrapped by the Government in September last year but many projects that had already been financed by this option are scheduled for completion in 2012, just as the Fed may raise rates.
It is this market segment that has investors spooked as it is the one most likely at risk of defaults, as buyers can walk away from their purchases by simply forfeiting their downpayments.
Of course, defaults in 2012 will not materialise if property prices keep rising, allowing buyers to unload their purchases for a profit before they are completed.
But the likelihood is that price rises will moderate.
A recent Kim Eng Research report estimates that developers have about 15,600 unsold condos on hand.
This is more than sufficient to satisfy demand, even if it reaches 2007 highs. And that figure does not include new launches likely to hit the market and the growing supply of existing condos put up for sale.
It explains why equity investors are not taking any chances on property stocks, even though it seems unlikely that any home-buyer may default in today's buoyant market. The months ahead will determine which party has read the market correctly.
engyeow@sph.com.sg
Cai Jin runs every Monday and covers financial matters and corporate governance issues that can affect investors. The two Chinese characters marry wealth with good fortune - the two crucial factors that any investor needs to prosper.
--------------------------------------------------------------------------------
Home-buyers have gleefully taken the opportunity of negligible borrowing costs to buy bigger, and in some cases, multiple properties, driving prices sharply higher in the process.
BT : Another dousing to cool property market
Business Times - 30 Aug 2010
Another dousing to cool property market
More flats to be built; govt looking at measures on resale deals and private housing
By CONRAD TAN
(SINGAPORE) The government will take further action to cool the property market and curb speculation in the resale market for HDB flats, including building 22,000 new public homes next year - up from 16,000 this year, Prime Minister Lee Hsien Loong said last night.
'We've twice acted to cool the market - once last year, and once in February this year - but the prices are still rising,' Mr Lee said in his National Day Rally speech. 'I think we need to do more.'
The National Development Ministry is expected to announce more details this morning, before the stock market opens.
'I don't want to go into the details tonight, otherwise you will remember nothing else about my speech,' Mr Lee said, drawing laughter from the audience at the University Cultural Centre at the National University of Singapore.
Private-home prices have risen 38 per cent in the year to the second quarter, according to an index compiled by the Urban Redevelopment Authority.
Prices rose 5.3 per cent in the second quarter, only slightly slower than the 5.6 per cent increase in the first quarter. The prices of HDB flats in the secondary, or resale, market have also risen sharply in recent months.
The government will tighten rules that allow private-property owners to buy an HDB flat in the resale market, and then sell it soon after. 'Quite a number' of private-property owners have bought HDB resale flats and then sold them after a year or two, Mr Lee said. 'I think we should tighten the rules further, so that it's quite clear that HDB flats are meant primarily for owner-occupation.'
The surge in property prices in Hong Kong and Singapore is in part 'a reflection that there's a lot of liquidity flowing to Asia', which has weathered the financial crisis better than the United States and Europe, said Selena Ling, an economist at OCBC Bank.
Ten days ago, the Hong Kong government announced more measures to curb speculation in its own red-hot property market, including raising the supply of land for sale and barring the resale of new condominiums before the properties are delivered.
The government will also allow Singaporean households who earn $8,000-$10,000 a month to buy HDB flats under its design, build and sell scheme (DBSS). Such households often can't afford private homes, but could previously buy only executive condominiums from HDB, since they earned more than $8,000. The government will release more land for executive condos and DBSS flats to ensure adequate supply, Mr Lee said.
Elsewhere in his wide-ranging speech, Mr Lee strove to reassure Singaporeans that the government would put their needs first, emphasising efforts to sharpen the distinctions between citizens, permanent residents and non-residents, as well as to protect Singaporeans' jobs.
He hinted that the foreign-worker levy that employers of foreign workers must pay could rise beyond the levels already announced in February, making it more attractive for firms to hire local workers where they can.
'The levies are going up, they're going to go up further - and I think they'll have to go up further beyond that in the longer term, or maybe the not so long term,' he said. 'Some employers may feel the pinch, but it is necessary because we need to manage the inflow and not have an indefinite number' of foreign workers, he said.
Mr Lee also announced a new award, totalling $9,000, to recognise the national-service contributions of Singaporean men.
The sum will be paid in tranches at 'major milestones' of an NSman's service into his Post-Secondary Education and Central Provident Fund accounts, Mr Lee said. The award is for citizens only; permanent residents who have done national service will receive the award when they take up citizenship. The Defence Ministry is expected to announce details this week.
The government also expects to pay out some $400 million to 400,000 Singaporeans who qualify for the Workfare Income Supplement scheme for low-wage workers aged 35 or older this year, Mr Lee said. That scheme, too, is for Singaporeans only, and puts them at an advantage over low-wage foreigners here, he noted.
'But the protection can only go so far,' he added. 'If you lack the skills or are not competitive, then it doesn't matter how high the foreign-worker levy is, or how generous the Workfare is, the jobs are still going to go elsewhere.'
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Another dousing to cool property market
More flats to be built; govt looking at measures on resale deals and private housing
By CONRAD TAN
(SINGAPORE) The government will take further action to cool the property market and curb speculation in the resale market for HDB flats, including building 22,000 new public homes next year - up from 16,000 this year, Prime Minister Lee Hsien Loong said last night.
'We've twice acted to cool the market - once last year, and once in February this year - but the prices are still rising,' Mr Lee said in his National Day Rally speech. 'I think we need to do more.'
The National Development Ministry is expected to announce more details this morning, before the stock market opens.
'I don't want to go into the details tonight, otherwise you will remember nothing else about my speech,' Mr Lee said, drawing laughter from the audience at the University Cultural Centre at the National University of Singapore.
Private-home prices have risen 38 per cent in the year to the second quarter, according to an index compiled by the Urban Redevelopment Authority.
Prices rose 5.3 per cent in the second quarter, only slightly slower than the 5.6 per cent increase in the first quarter. The prices of HDB flats in the secondary, or resale, market have also risen sharply in recent months.
The government will tighten rules that allow private-property owners to buy an HDB flat in the resale market, and then sell it soon after. 'Quite a number' of private-property owners have bought HDB resale flats and then sold them after a year or two, Mr Lee said. 'I think we should tighten the rules further, so that it's quite clear that HDB flats are meant primarily for owner-occupation.'
The surge in property prices in Hong Kong and Singapore is in part 'a reflection that there's a lot of liquidity flowing to Asia', which has weathered the financial crisis better than the United States and Europe, said Selena Ling, an economist at OCBC Bank.
Ten days ago, the Hong Kong government announced more measures to curb speculation in its own red-hot property market, including raising the supply of land for sale and barring the resale of new condominiums before the properties are delivered.
The government will also allow Singaporean households who earn $8,000-$10,000 a month to buy HDB flats under its design, build and sell scheme (DBSS). Such households often can't afford private homes, but could previously buy only executive condominiums from HDB, since they earned more than $8,000. The government will release more land for executive condos and DBSS flats to ensure adequate supply, Mr Lee said.
Elsewhere in his wide-ranging speech, Mr Lee strove to reassure Singaporeans that the government would put their needs first, emphasising efforts to sharpen the distinctions between citizens, permanent residents and non-residents, as well as to protect Singaporeans' jobs.
He hinted that the foreign-worker levy that employers of foreign workers must pay could rise beyond the levels already announced in February, making it more attractive for firms to hire local workers where they can.
'The levies are going up, they're going to go up further - and I think they'll have to go up further beyond that in the longer term, or maybe the not so long term,' he said. 'Some employers may feel the pinch, but it is necessary because we need to manage the inflow and not have an indefinite number' of foreign workers, he said.
Mr Lee also announced a new award, totalling $9,000, to recognise the national-service contributions of Singaporean men.
The sum will be paid in tranches at 'major milestones' of an NSman's service into his Post-Secondary Education and Central Provident Fund accounts, Mr Lee said. The award is for citizens only; permanent residents who have done national service will receive the award when they take up citizenship. The Defence Ministry is expected to announce details this week.
The government also expects to pay out some $400 million to 400,000 Singaporeans who qualify for the Workfare Income Supplement scheme for low-wage workers aged 35 or older this year, Mr Lee said. That scheme, too, is for Singaporeans only, and puts them at an advantage over low-wage foreigners here, he noted.
'But the protection can only go so far,' he added. 'If you lack the skills or are not competitive, then it doesn't matter how high the foreign-worker levy is, or how generous the Workfare is, the jobs are still going to go elsewhere.'
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
ST : Developers 'hungry' to launch new condos
Aug 29, 2010
property
Developers 'hungry' to launch new condos
Host of projects to come on stream when Hungry Ghost Festival ends, but affordability is still key
By Joyce Teo
The market for new property launches has slowed this month but should see a rebound after the Hungry Ghost Festival ends on Sept 7.
Developers are already lining up projects for launch, and these choices are expected to range from mass-market homes to high-end ones.
Next month, Hoi Hup Sunway is targeting to launch the 473-unit Vacanza@East - a freehold project in Lengkong Tujoh in the east, near the Pan-Island Expressway.
Hoi Hup said the joint venture bought the vacant freehold site for the project late last year. The condo will have one- to four-bedders from as small as just under 500 sq ft. Prices will start from more than $500,000, sources said.
City Developments and Hong Realty's 642-unit NV Residences in Pasir Ris Grove is also likely to be pushed out next month.
Marketing material shows that the 99-year leasehold condo has one- to four-bedroom units as well as penthouses, with the smallest one-bedders also just under 500 sq ft in size. The material says prices for the two-bedders will start from more than $600,000.
Around the same time, Chip Eng Seng's Oasis@Elias in Pasir Ris is likely to be relaunched at higher prices. The condo had sold for an average of $670 per sq ft in July last year, though its price has since risen to about $740 psf.
Property experts say rising prices have forced buyers to pay more for a private home. But affordability remains the key.
A report by property consultancy DTZ last week said those with public housing addresses are increasingly buying private homes that cost more than $1 million.
Some 43 per cent of buyers with HDB addresses bought homes costing more than $1 million in the second quarter, up from 36 per cent in the first quarter, it said.
This is due to prices having risen almost 20 per cent since the third quarter of last year.
'There is a chance new mass-market projects may be launched at higher psf prices,' said Savills Residential director Phylicia Ang.
'As long as developers keep the total price quantum affordable, there should be demand for these projects.'
Said Mr Peter Ow, managing director (residential services) at Knight Frank: 'The pricing of mass-market projects is constrained by the target market's income level.
'So what developers do is to build smaller units across the board, from the two- to the four-bedroom units. Smaller units help to keep the total quantum price affordable,' he said.
Unlike the previous 2007 boom which was led by the high-end sector, the current buying wave is mainly in the lower-end market segment - which is buoyed by rising public housing resale prices, DTZ said.
The high-end market is quiet given the global economic uncertainty, though a few developers may start launching such projects from next month. These could include Twin Peaks in Leonie Hill, The Peak@Cairnhill in Cairnhill Rise and Belle Vue Residences in Oxley Walk.
Belle Vue Residences was soft launched more than a year ago, and more than 100 of its 176 units have been sold. June caveats showed that three units were sold at $2,064 psf to $2,700 psf.
In the later part of next month, two projects in the mid-tier to high-end category can be expected, Knight Frank's Mr Ow said.
There is the freehold 250-unit Cityscape at Farrer Park by IOI group and Kim Seng Heng Realty. It is likely to be launched at an average of $1,500 psf.
Amara Holdings is also looking to push out its 30-unit Killiney 118, which is within walking distance of Somerset MRT station. This freehold project is expected to go for more than $2,000 psf.
According to CBRE, two executive condominium launches may hit the market come October. These are the 573-unit Esparina Residences by Frasers Centrepoint and Lum Chang Building Contractors, and the 406-unit The Canopy by China-based MCC Land.
Looking ahead, experts expect buying activity in the mass- to mid-market segment to continue, though it is expected to be more selective due to the higher prices.
'Although prices of mass-market homes are peakish, take-up could still be healthy due to the strength of underlying demand for them, if developers do not try to push the price border further,' said Colliers International director of research and advisory Tay Huey Ying.
joyceteo@sph.com.sg
--------------------------------------------------------------------------------
Sustained demand
'There is a chance new mass-market projects may be launched at higher psf prices...
As long as developers keep the total price quantum affordable, there should be demand for these projects.'
SAVILLS RESIDENTIAL DIRECTOR PHYLICIA ANG
An artist's impression of the Belle Vue Residences, one of a handful of high-end development projects that could be launched from next month. -- PHOTO: WING TAI
property
Developers 'hungry' to launch new condos
Host of projects to come on stream when Hungry Ghost Festival ends, but affordability is still key
By Joyce Teo
The market for new property launches has slowed this month but should see a rebound after the Hungry Ghost Festival ends on Sept 7.
Developers are already lining up projects for launch, and these choices are expected to range from mass-market homes to high-end ones.
Next month, Hoi Hup Sunway is targeting to launch the 473-unit Vacanza@East - a freehold project in Lengkong Tujoh in the east, near the Pan-Island Expressway.
Hoi Hup said the joint venture bought the vacant freehold site for the project late last year. The condo will have one- to four-bedders from as small as just under 500 sq ft. Prices will start from more than $500,000, sources said.
City Developments and Hong Realty's 642-unit NV Residences in Pasir Ris Grove is also likely to be pushed out next month.
Marketing material shows that the 99-year leasehold condo has one- to four-bedroom units as well as penthouses, with the smallest one-bedders also just under 500 sq ft in size. The material says prices for the two-bedders will start from more than $600,000.
Around the same time, Chip Eng Seng's Oasis@Elias in Pasir Ris is likely to be relaunched at higher prices. The condo had sold for an average of $670 per sq ft in July last year, though its price has since risen to about $740 psf.
Property experts say rising prices have forced buyers to pay more for a private home. But affordability remains the key.
A report by property consultancy DTZ last week said those with public housing addresses are increasingly buying private homes that cost more than $1 million.
Some 43 per cent of buyers with HDB addresses bought homes costing more than $1 million in the second quarter, up from 36 per cent in the first quarter, it said.
This is due to prices having risen almost 20 per cent since the third quarter of last year.
'There is a chance new mass-market projects may be launched at higher psf prices,' said Savills Residential director Phylicia Ang.
'As long as developers keep the total price quantum affordable, there should be demand for these projects.'
Said Mr Peter Ow, managing director (residential services) at Knight Frank: 'The pricing of mass-market projects is constrained by the target market's income level.
'So what developers do is to build smaller units across the board, from the two- to the four-bedroom units. Smaller units help to keep the total quantum price affordable,' he said.
Unlike the previous 2007 boom which was led by the high-end sector, the current buying wave is mainly in the lower-end market segment - which is buoyed by rising public housing resale prices, DTZ said.
The high-end market is quiet given the global economic uncertainty, though a few developers may start launching such projects from next month. These could include Twin Peaks in Leonie Hill, The Peak@Cairnhill in Cairnhill Rise and Belle Vue Residences in Oxley Walk.
Belle Vue Residences was soft launched more than a year ago, and more than 100 of its 176 units have been sold. June caveats showed that three units were sold at $2,064 psf to $2,700 psf.
In the later part of next month, two projects in the mid-tier to high-end category can be expected, Knight Frank's Mr Ow said.
There is the freehold 250-unit Cityscape at Farrer Park by IOI group and Kim Seng Heng Realty. It is likely to be launched at an average of $1,500 psf.
Amara Holdings is also looking to push out its 30-unit Killiney 118, which is within walking distance of Somerset MRT station. This freehold project is expected to go for more than $2,000 psf.
According to CBRE, two executive condominium launches may hit the market come October. These are the 573-unit Esparina Residences by Frasers Centrepoint and Lum Chang Building Contractors, and the 406-unit The Canopy by China-based MCC Land.
Looking ahead, experts expect buying activity in the mass- to mid-market segment to continue, though it is expected to be more selective due to the higher prices.
'Although prices of mass-market homes are peakish, take-up could still be healthy due to the strength of underlying demand for them, if developers do not try to push the price border further,' said Colliers International director of research and advisory Tay Huey Ying.
joyceteo@sph.com.sg
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Sustained demand
'There is a chance new mass-market projects may be launched at higher psf prices...
As long as developers keep the total price quantum affordable, there should be demand for these projects.'
SAVILLS RESIDENTIAL DIRECTOR PHYLICIA ANG
An artist's impression of the Belle Vue Residences, one of a handful of high-end development projects that could be launched from next month. -- PHOTO: WING TAI
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