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
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'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
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