20 JAN 2011,
4 in 10 home buyers took out more than one loan
Investors made up big proportion of private home buyers last year
By Aaron Low
NEW figures out yesterday underline the significant proportion of private property buyers last year who were investors.
Data from the Credit Bureau of Singapore (CBS) shows that 41 per cent of people who took out private property loans were getting a second loan or in some cases, a third or even higher number of loans.
Still, despite government measures unveiled earlier this month aimed at curbing speculative investing, property analysts do not expect a big drop-off in investors this year. The market-cooling moves followed a 17.6 per cent jump in private home prices last year and record sales.
They mean that anyone with an existing loan may now borrow only up to 60 per cent of the property's value, down from 70 per cent.
Other measures impose significantly higher stamp duty on sellers, of up to 16 per cent, and over a longer period after purchase of four years, up from three.
However, analysts suggest this 41 per cent of the private home-buying market will not evaporate overnight, as many cashed-up buyers do not necessarily need large loans.
PropNex chief executive Mohamed Ismail estimated that about 20 per cent of the market will be affected by the higher downpayment rule.
'But it is unlikely that all of the investor group will be maxing out their loans; some may be taking small loans and therefore may not even need the full 60 per cent loan,' he said.
The CBS figures, covering the period ended November last year, showed the other 59 per cent were those with no outstanding private property mortgages. CBS collects data from all major banks.
In 2009, the percentage of people with at least one mortgage taking up a loan was a slightly lower 39 per cent, while those without outstanding loans formed 61 per cent, the new figures show.
In total, 66,221 people took out property loans from January to November last year, up from 63,435 people in all of 2009.
Still, CBS said the number of borrowers may be overstated as it includes joint applicants for a loan - two or three people such as family members may be applying for one loan.
Analysts said this was the first time they have seen such data and it provides a deeper insight into the property market.
Property consultancy Cushman & Wakefield's senior manager for research Ong Kah Seng said the figures point to an increase in the number of 'investors, specu-vestors or even speculators'.
In fact, he believes the CBS numbers, may be under-estimating the number of investors in the market.
This is because the database does not keep track of whether borrowers have taken on HDB loans. Those who have would be recorded as having no outstanding loans, said analysts.
Colliers International director of research and advisory Tay Huey Ying said it is the heftier stamp duty that will chill the market. 'The stamp duty will put off new property purchases and cream off the marginal buyers,' she said. 'As such, I think the measures will likely lead to a steep fall in both volumes and prices.'
CBS data also show 87 per cent of the loans taken out last year were less than $1 million, supporting the view that much of the property market was driven by the mass property sector, said analysts.
Jones Lang LaSalle's head of research for South-east Asia, Dr Chua Yang Liang, said that many in this group were probably HDB upgraders, either looking for a new apartment to live in or buying a second property as an investment.
aaronl@sph.com.sg
Friday, January 28, 2011
ST Forum : Real estate agents need protection too
20 JAN 2011,
Real estate agents need protection too
I APPLAUD the Government's efforts to clean up the real estate industry with the formation of the Council for Estate Agencies. At the same time, I also sympathise with the realtors.
We need to keep in mind that unethical dealings can come from both buyers and sellers. I have been in the real estate business since 1992 and have experienced all sorts of unethical clients.
Some move out of their property and disappear upon completion of the sale without paying commission to the agency. Others have made unreasonable deductions or even refuse to pay the commission.
Bringing unethical clients to court is a long, tedious and costly process. Realtors seem to be at the mercy of clients, especially when they refuse to pay or make unreasonable deductions after a transaction has been completed. Is there anybody we can lodge a complaint with without having to drag the clients to court?
Perhaps we should introduce the practice of having clients pay 50 per cent of the commission when the 'option to purchase' is signed, with the remainder to be paid upon completion of the sale.
Until there is a proper benchmark procedure to deal with such clients, we will not see less of them any time soon.
Alexs Chua
Real estate agents need protection too
I APPLAUD the Government's efforts to clean up the real estate industry with the formation of the Council for Estate Agencies. At the same time, I also sympathise with the realtors.
We need to keep in mind that unethical dealings can come from both buyers and sellers. I have been in the real estate business since 1992 and have experienced all sorts of unethical clients.
Some move out of their property and disappear upon completion of the sale without paying commission to the agency. Others have made unreasonable deductions or even refuse to pay the commission.
Bringing unethical clients to court is a long, tedious and costly process. Realtors seem to be at the mercy of clients, especially when they refuse to pay or make unreasonable deductions after a transaction has been completed. Is there anybody we can lodge a complaint with without having to drag the clients to court?
Perhaps we should introduce the practice of having clients pay 50 per cent of the commission when the 'option to purchase' is signed, with the remainder to be paid upon completion of the sale.
Until there is a proper benchmark procedure to deal with such clients, we will not see less of them any time soon.
Alexs Chua
ST Forum : Uncertainties buyers must navigate
20 JAN 2011,
NEW PROPERTY MEASURES
Uncertainties buyers must navigate
THE measures aimed at cooling the property market have introduced an element of uncertainty for home buyers ('New measures to curb property speculation'; last Friday).
The measures will increase a seller's stamp duty, payable for up to four years from the date of purchase of the property. This will effectively reduce the amount available to the owner to settle the bank loan and have a surplus.
Although the Government may consider waiving the stamp duty in hardship cases, especially if they are health-related, a waiver is unlikely if a forced sale is precipitated by the owner's loss of job, inability to rent or increased interest costs.
For example, an owner who must sell his property in the first year of purchase must deduct the seller's stamp duty of 16 per cent from the proceeds. If he had obtained a loan of 80 per cent of the purchase price, he would have only enough to pay off the housing loan. His equity would be almost wiped out.
The new rules also imply another aspect to an owner's uncertainty. A loan-to-valuation ratio of 80 per cent does not mean the bank has a 20 per cent security margin during the first four years of the loan.
The seller's stamp duty will force banks to live with a razor-thin margin of 4 per cent for the first year, and the hope that property prices remain buoyant enough to improve the margin over four years.
But such an uncomfortable margin may affect a bank's willingness to lend as it will not enjoy the usual security buffer, as it did previously in the initial four-year loan period.
Currently, the valuation of properties is very close to the purchase price, but banks may well turn conservative if prices are expected to soften.
Apart from a lower valuation, banks could insist on a bigger margin to preserve their security margin.
Banks could also become stricter and more cautious in approving borrowers, to avoid potential default during the initial loan period. So marginal borrowers could be weeded out or be unable to obtain a loan at the desired amount.
The net result: Buyers may be asked to fork out more cash upfront to make up for the difference in valuation and purchase price and to enhance the bank's security margin.
So it is vital for buyers to do their sums scrupulously to ascertain their debt-servicing ability. They should seek a firm commitment from the bank on the loan quantum, to avoid nasty surprises arising from the valuation of the property offered as security and the margin of financing.
Kuo How Nam
President
Credit Counselling Singapore
NEW PROPERTY MEASURES
Uncertainties buyers must navigate
THE measures aimed at cooling the property market have introduced an element of uncertainty for home buyers ('New measures to curb property speculation'; last Friday).
The measures will increase a seller's stamp duty, payable for up to four years from the date of purchase of the property. This will effectively reduce the amount available to the owner to settle the bank loan and have a surplus.
Although the Government may consider waiving the stamp duty in hardship cases, especially if they are health-related, a waiver is unlikely if a forced sale is precipitated by the owner's loss of job, inability to rent or increased interest costs.
For example, an owner who must sell his property in the first year of purchase must deduct the seller's stamp duty of 16 per cent from the proceeds. If he had obtained a loan of 80 per cent of the purchase price, he would have only enough to pay off the housing loan. His equity would be almost wiped out.
The new rules also imply another aspect to an owner's uncertainty. A loan-to-valuation ratio of 80 per cent does not mean the bank has a 20 per cent security margin during the first four years of the loan.
The seller's stamp duty will force banks to live with a razor-thin margin of 4 per cent for the first year, and the hope that property prices remain buoyant enough to improve the margin over four years.
But such an uncomfortable margin may affect a bank's willingness to lend as it will not enjoy the usual security buffer, as it did previously in the initial four-year loan period.
Currently, the valuation of properties is very close to the purchase price, but banks may well turn conservative if prices are expected to soften.
Apart from a lower valuation, banks could insist on a bigger margin to preserve their security margin.
Banks could also become stricter and more cautious in approving borrowers, to avoid potential default during the initial loan period. So marginal borrowers could be weeded out or be unable to obtain a loan at the desired amount.
The net result: Buyers may be asked to fork out more cash upfront to make up for the difference in valuation and purchase price and to enhance the bank's security margin.
So it is vital for buyers to do their sums scrupulously to ascertain their debt-servicing ability. They should seek a firm commitment from the bank on the loan quantum, to avoid nasty surprises arising from the valuation of the property offered as security and the margin of financing.
Kuo How Nam
President
Credit Counselling Singapore
ST : Marymount homes to go by 2013
19 JAN 2011,
Marymount homes to go by 2013
Elderly retiree in tears over news of land acquisition
By Chong Zi Liang & Kimberly Spykerman
TWO years ago, residents of Marymount Terrace heard rumours that their land would be acquired by the Government.
Long-time resident Kevin Tan, 47, said a family had tried to sell their home then but were unable to do so. Checks by the lawyers showed that the land had been earmarked for future redevelopment.
'We were trying to get confirmation of this as early as possible so that we could make plans,' said Mr Tan, who works in the military.
He, together with other neighbours, even approached their mayor Zainudin Nordin to try and pin down the dates.
Yesterday morning, the rumours were proven true when government officials turned up at about 25 terrace houses to serve land acquisition notices, informing residents that their neighbourhood would be demolished for the construction of the North-South Expressway.
When The Straits Times visited the row of three-storey freehold homes along Marymount Road, a notice of land acquisition from the Singapore Land Authority (SLA) was pasted outside every home.
The residents have to move out by January 2013.
Residents were also given a letter informing them that meetings to determine compensation for their properties would be held next month.
It will be pegged to the market value as at the date of the acquisition of the land, said the SLA.
Mr Zainudin, who met residents last week to let them know about the impending acquisition, said he will continue to assist them.
'I will let the authorities know the issues that are pertinent to the residents,' he added.
Marymount Terrace is not the only affected neighbourhood. Condominiums such as Seletaris, Castle Green, Nuovo and Bullion Park in the Yio Chu Kang and Sembawang areas will have parts of their fences, boundary walls and grass verges affected by acquisition - but residents get to keep their homes.
High among the worries of Marymount Terrace residents is hunting for a new home.
'Everyone knows that property prices are so high nowadays, where am I going to find the money to get a new home? All my money is here,' said a resident who wanted to be known only as Mrs Lee, referring to the terrace house she bought 10 years ago.
Said Mr Tan: 'I hope the Government can help us find places to settle down...the market is hot now so we will have to join the queue and I don't know if we can get a place.'
Some residents, like Madam E. Koh, 67, found it hard to accept that they would have to leave less than two years after the nearby Marymount MRT station was completed.
'We put up with the drilling and pounding for years. Just as we are about to enjoy the convenience, this happens,' said the retiree.
Then, there is the pain of cutting ties with a familiar area.
One resident in her 80s, who asked to be known only as Madam Ho, sobbed when she heard the news.
Her first thought was how she would not be able to visit her neighbour every day for coffee and a chat once they no longer live side by side.
'It's hard for senior citizens like us to move around. After 16 years of living together, it's hard to just let go,' she said.
At the Marymount Convent, the living quarters of the Good Shepherd nuns and a nursing home are affected.
The nuns said they were 'grieving' at the prospect of losing their home. They declined to say more.
They held a meeting yesterday to discuss future plans. It is understood that the Marymount Convent School - within the convent's grounds - will not be affected.
Once the folks at Marymount Convent and Marymount Terrace leave, excavation will begin to build part of the North-South Expressway tunnel.
ziliang@sph.com.sg
kimspyke@sph.com.sg
Marymount homes to go by 2013
Elderly retiree in tears over news of land acquisition
By Chong Zi Liang & Kimberly Spykerman
TWO years ago, residents of Marymount Terrace heard rumours that their land would be acquired by the Government.
Long-time resident Kevin Tan, 47, said a family had tried to sell their home then but were unable to do so. Checks by the lawyers showed that the land had been earmarked for future redevelopment.
'We were trying to get confirmation of this as early as possible so that we could make plans,' said Mr Tan, who works in the military.
He, together with other neighbours, even approached their mayor Zainudin Nordin to try and pin down the dates.
Yesterday morning, the rumours were proven true when government officials turned up at about 25 terrace houses to serve land acquisition notices, informing residents that their neighbourhood would be demolished for the construction of the North-South Expressway.
When The Straits Times visited the row of three-storey freehold homes along Marymount Road, a notice of land acquisition from the Singapore Land Authority (SLA) was pasted outside every home.
The residents have to move out by January 2013.
Residents were also given a letter informing them that meetings to determine compensation for their properties would be held next month.
It will be pegged to the market value as at the date of the acquisition of the land, said the SLA.
Mr Zainudin, who met residents last week to let them know about the impending acquisition, said he will continue to assist them.
'I will let the authorities know the issues that are pertinent to the residents,' he added.
Marymount Terrace is not the only affected neighbourhood. Condominiums such as Seletaris, Castle Green, Nuovo and Bullion Park in the Yio Chu Kang and Sembawang areas will have parts of their fences, boundary walls and grass verges affected by acquisition - but residents get to keep their homes.
High among the worries of Marymount Terrace residents is hunting for a new home.
'Everyone knows that property prices are so high nowadays, where am I going to find the money to get a new home? All my money is here,' said a resident who wanted to be known only as Mrs Lee, referring to the terrace house she bought 10 years ago.
Said Mr Tan: 'I hope the Government can help us find places to settle down...the market is hot now so we will have to join the queue and I don't know if we can get a place.'
Some residents, like Madam E. Koh, 67, found it hard to accept that they would have to leave less than two years after the nearby Marymount MRT station was completed.
'We put up with the drilling and pounding for years. Just as we are about to enjoy the convenience, this happens,' said the retiree.
Then, there is the pain of cutting ties with a familiar area.
One resident in her 80s, who asked to be known only as Madam Ho, sobbed when she heard the news.
Her first thought was how she would not be able to visit her neighbour every day for coffee and a chat once they no longer live side by side.
'It's hard for senior citizens like us to move around. After 16 years of living together, it's hard to just let go,' she said.
At the Marymount Convent, the living quarters of the Good Shepherd nuns and a nursing home are affected.
The nuns said they were 'grieving' at the prospect of losing their home. They declined to say more.
They held a meeting yesterday to discuss future plans. It is understood that the Marymount Convent School - within the convent's grounds - will not be affected.
Once the folks at Marymount Convent and Marymount Terrace leave, excavation will begin to build part of the North-South Expressway tunnel.
ziliang@sph.com.sg
kimspyke@sph.com.sg
ST : 2 residential site sales will test cooling measures
18 JAN 2011,
2 residential site sales will test cooling measures
THE response of developers to the latest property cooling measures is about to be tested, with two residential sites up for sale.
The Bedok Reservoir and Bartley Road plots can accommodate 1,260 flats in total and have attractive selling points.
But experts say last week's cooling measures will probably mean a 'moderate response' from developers. A tender for the 4.56ha plot in Bedok Reservoir Road was launched by the Urban Redevelopment Authority (URA) yesterday.
The site has a maximum gross floor area of 63,873 sq m and can house about 640 homes. The project can be up to five storeys and used for serviced apartments. It will be the first residential site sold under the government land sales programme's confirmed list this year. Industry experts think it could fetch $220 million to $300 million.
The URA also said a reserve list site at Bartley Road-Lorong How Sun junction will go up for sale in about three weeks.
An unnamed party triggered the tender process by committing to bid at least $191.8 million - $288 per sq ft (psf) per plot ratio (ppr) - for the 2.21ha plot.
The Straits Times understands that the bid was finalised after the Jan 13 measures were announced. The 99-year leasehold site next to Bartley MRT Circle Line station can yield about 620 units and be used for condos or flats.
Mr Ong Teck Hui, Credo Real Estate's head of research and consultancy, said developers will be cautious after the measures, resulting in lower bids.
Mr Png Poh Soon, Knight Frank's head of research and consultancy, expects four to seven bids for the Bedok site. The top bid is likely to be between $450 and $500 psf ppr or up to about $340 million, translating to a selling price for the flat of $1,000 to $1,050 psf.
'Next door, condo units at Waterfront Gold were transacted at an average of $990 to $1,150 psf last year while average selling prices at Waterfront Waves were $650 to $800 psf,' Mr Png added.
Mr Tan Kok Keong, OrangeTee's head of research and consultancy, said the Bartley site should get more interest as it is close to the MRT and surrounded by landed housing. He expects up to eight bids of up to $450 to $500 psf ppr, making an overall price of about $330 million.
Mr Tan tips four to five bids for the Bedok site, reaching $350 psf ppr, saying: 'There's still a remaining supply of homes in the Bedok Reservoir area... so it's not as attractive.'
ESTHER TEO
2 residential site sales will test cooling measures
THE response of developers to the latest property cooling measures is about to be tested, with two residential sites up for sale.
The Bedok Reservoir and Bartley Road plots can accommodate 1,260 flats in total and have attractive selling points.
But experts say last week's cooling measures will probably mean a 'moderate response' from developers. A tender for the 4.56ha plot in Bedok Reservoir Road was launched by the Urban Redevelopment Authority (URA) yesterday.
The site has a maximum gross floor area of 63,873 sq m and can house about 640 homes. The project can be up to five storeys and used for serviced apartments. It will be the first residential site sold under the government land sales programme's confirmed list this year. Industry experts think it could fetch $220 million to $300 million.
The URA also said a reserve list site at Bartley Road-Lorong How Sun junction will go up for sale in about three weeks.
An unnamed party triggered the tender process by committing to bid at least $191.8 million - $288 per sq ft (psf) per plot ratio (ppr) - for the 2.21ha plot.
The Straits Times understands that the bid was finalised after the Jan 13 measures were announced. The 99-year leasehold site next to Bartley MRT Circle Line station can yield about 620 units and be used for condos or flats.
Mr Ong Teck Hui, Credo Real Estate's head of research and consultancy, said developers will be cautious after the measures, resulting in lower bids.
Mr Png Poh Soon, Knight Frank's head of research and consultancy, expects four to seven bids for the Bedok site. The top bid is likely to be between $450 and $500 psf ppr or up to about $340 million, translating to a selling price for the flat of $1,000 to $1,050 psf.
'Next door, condo units at Waterfront Gold were transacted at an average of $990 to $1,150 psf last year while average selling prices at Waterfront Waves were $650 to $800 psf,' Mr Png added.
Mr Tan Kok Keong, OrangeTee's head of research and consultancy, said the Bartley site should get more interest as it is close to the MRT and surrounded by landed housing. He expects up to eight bids of up to $450 to $500 psf ppr, making an overall price of about $330 million.
Mr Tan tips four to five bids for the Bedok site, reaching $350 psf ppr, saying: 'There's still a remaining supply of homes in the Bedok Reservoir area... so it's not as attractive.'
ESTHER TEO
ST : Cooling the property market
18 JAN 2011,
Cooling the property market
THREE times, it has mounted a cavalry charge up the hill, but each time, the defenders looked down and shrugged off the assaults, and carried on with their business. A futile Charge of the Light Brigade, as immortalised by Lord Alfred Tennyson? Not quite. This time, the cavalry put more iron in their lances, and the assault has stung. Announced last week, the Government's fresh salvo of property curbs shows that it is dead serious about cooling the red-hot property market. By far, the most potent weapons are the lowering of the loan-to-valuation (LTV) ratio from 70 to 60 per cent, as well as the 16 per cent stamp duty levied on properties sold in the first year after purchase.
The latest charge seems to have delivered the desired effects - at least for now. Some buyers have given up their options to purchase, while developers and property agents have cancelled their print and television advertisements. Analysts expect private home prices to correct by 5 to 10 per cent this year, as the Government's two-pronged strategy of releasing more land for development and curbing demand starts to bite. Some market watchers have called the measures 'draconian'. They are not wrong.
There is a silver lining, however. The measures are a precision weapon, which leaves first-time buyers largely unaffected. This is because the lower LTV limit affects only those with one or more outstanding housing loans. The 16 per cent stamp duty also leaves buyers with deep pockets free to pick up properties of their choice. If they want to sell the properties later, they need to wait for only four years.
In short, the latest measures show that the Government is pulling out all the stops to produce what it deems to be a 'sustainable' property market. The Monetary Authority of Singapore's (MAS) promise that the Government will remain 'vigilant' and implement more measures 'if necessary' to cool the property market underlines the Government's determination.
Whether more cooling-down measures are required, however, remains to be seen. Due to quantitative easing in the United States and the subsequent sloshing of capital around the globe looking for quick capital gains, property markets in places such as China, Hong Kong and Singapore are experiencing speculative froth. In November last year, the MAS warned that a potent cocktail of low borrowing costs and excess liquidity could push property prices higher again. If the measures announced last week are not sufficient to prevent that from happening, one should expect another charge up the hill. But besides iron in their lances, what would the cavalry use the next time?
Cooling the property market
THREE times, it has mounted a cavalry charge up the hill, but each time, the defenders looked down and shrugged off the assaults, and carried on with their business. A futile Charge of the Light Brigade, as immortalised by Lord Alfred Tennyson? Not quite. This time, the cavalry put more iron in their lances, and the assault has stung. Announced last week, the Government's fresh salvo of property curbs shows that it is dead serious about cooling the red-hot property market. By far, the most potent weapons are the lowering of the loan-to-valuation (LTV) ratio from 70 to 60 per cent, as well as the 16 per cent stamp duty levied on properties sold in the first year after purchase.
The latest charge seems to have delivered the desired effects - at least for now. Some buyers have given up their options to purchase, while developers and property agents have cancelled their print and television advertisements. Analysts expect private home prices to correct by 5 to 10 per cent this year, as the Government's two-pronged strategy of releasing more land for development and curbing demand starts to bite. Some market watchers have called the measures 'draconian'. They are not wrong.
There is a silver lining, however. The measures are a precision weapon, which leaves first-time buyers largely unaffected. This is because the lower LTV limit affects only those with one or more outstanding housing loans. The 16 per cent stamp duty also leaves buyers with deep pockets free to pick up properties of their choice. If they want to sell the properties later, they need to wait for only four years.
In short, the latest measures show that the Government is pulling out all the stops to produce what it deems to be a 'sustainable' property market. The Monetary Authority of Singapore's (MAS) promise that the Government will remain 'vigilant' and implement more measures 'if necessary' to cool the property market underlines the Government's determination.
Whether more cooling-down measures are required, however, remains to be seen. Due to quantitative easing in the United States and the subsequent sloshing of capital around the globe looking for quick capital gains, property markets in places such as China, Hong Kong and Singapore are experiencing speculative froth. In November last year, the MAS warned that a potent cocktail of low borrowing costs and excess liquidity could push property prices higher again. If the measures announced last week are not sufficient to prevent that from happening, one should expect another charge up the hill. But besides iron in their lances, what would the cavalry use the next time?
ST : 170 Spottiswoode 18 units sold despite cooling measures
18 JAN 2011,
170 Spottiswoode 18 units sold despite cooling measures
By Cheryl Lim
SOME property buyers shrugged off the latest cooling measures to take up flats at yesterday's preview of Spottiswoode 18, which will be built on the old Dragon Mansion site in Tanjong Pagar.
Around 68 per cent or 170 units out of the 251 units up for grabs were sold, said developer Roxy-Pacific Holdings.
The units sold were mainly smaller flats. Average prices were $1,900 per square foot (psf) and the price of a 387 sq ft, one-bedroom unit started from a relatively affordable $688,900.
More than half of the units at the project near Tanjong Pagar MRT station are 'shoebox' apartments - less than 500 sq ft in size.
While the response was strong, its average psf prices were also marginally lower than what nearby Spottiswoode Residences had been fetching recently.
Some former Dragon Mansion owners told The Straits Times they were interested in the new property for sentimental reasons while many others said they were still keen to buy for investment, given the low interest rates.
One show-flat visitor, who wanted to be known only as Mr Tan, said he found the project's smaller units attractive because of the good rental potential.
'As long as I continue to spend within my means, I won't be concerned about the (cooling) measures,' he said.
One former owner of Dragon Mansion said the measures did not dissuade her from buying because she and her husband can afford the investment.
The couple, who own four properties, settled on a two-bedroom unit for more than $1 million.
Roxy-Pacific's executive chairman and chief executive Teo Hong Lim told The Straits Times that he expected the good turnout for yesterday's launch.
He said the impact of the cooling measures may be hard to gauge but his firm's strategy is to go back to the fundamentals of developing land.
'This means we should not overbid for land, we should select sites carefully and effectively maximise the land's potential,' he said.
'We take the view that we should not be overly aggressive in our business model... If I don't buy a plot of land for a high price, if I control my costs well and design a product that the buyers like, the project is likely to do well.'
Developer Macly Group said it is closely monitoring the Spottiswoode 18 launch as it regards it as an indicator of how buyers are reacting to the cooling measures.
Separately, executive condominium project Austville Residences, which caters to mainly first-time buyers, has had a more muted response.
Since its Jan 13 launch, 20 per cent of its units have been sold.
All 540 units were released through a first-come-first-served system.
Units at the Sengkang project are priced at about $680 psf, with the smallest two-bedroom flat sized at 785 sq ft. The project is offering buyers a deferred payment scheme.
Austville was launched on the same day the new cooling measures were announced - last Thursday.
A spokesman for its developer, United Engineers, said it has seen a dip in interest as buyers are still digesting the new rules but he is confident that sales will pick up soon.
Buyers thronging the showroom of Spottiswoode 18 yesterday. The project will occupy the former Dragon Mansion site, near Tanjong Pagar MRT station. Average prices are $1,900 per sq ft and the price of a 387 sq ft one-bedroom unit starts from $688,900. -- ST PHOTO: NEO XIAOBIN
170 Spottiswoode 18 units sold despite cooling measures
By Cheryl Lim
SOME property buyers shrugged off the latest cooling measures to take up flats at yesterday's preview of Spottiswoode 18, which will be built on the old Dragon Mansion site in Tanjong Pagar.
Around 68 per cent or 170 units out of the 251 units up for grabs were sold, said developer Roxy-Pacific Holdings.
The units sold were mainly smaller flats. Average prices were $1,900 per square foot (psf) and the price of a 387 sq ft, one-bedroom unit started from a relatively affordable $688,900.
More than half of the units at the project near Tanjong Pagar MRT station are 'shoebox' apartments - less than 500 sq ft in size.
While the response was strong, its average psf prices were also marginally lower than what nearby Spottiswoode Residences had been fetching recently.
Some former Dragon Mansion owners told The Straits Times they were interested in the new property for sentimental reasons while many others said they were still keen to buy for investment, given the low interest rates.
One show-flat visitor, who wanted to be known only as Mr Tan, said he found the project's smaller units attractive because of the good rental potential.
'As long as I continue to spend within my means, I won't be concerned about the (cooling) measures,' he said.
One former owner of Dragon Mansion said the measures did not dissuade her from buying because she and her husband can afford the investment.
The couple, who own four properties, settled on a two-bedroom unit for more than $1 million.
Roxy-Pacific's executive chairman and chief executive Teo Hong Lim told The Straits Times that he expected the good turnout for yesterday's launch.
He said the impact of the cooling measures may be hard to gauge but his firm's strategy is to go back to the fundamentals of developing land.
'This means we should not overbid for land, we should select sites carefully and effectively maximise the land's potential,' he said.
'We take the view that we should not be overly aggressive in our business model... If I don't buy a plot of land for a high price, if I control my costs well and design a product that the buyers like, the project is likely to do well.'
Developer Macly Group said it is closely monitoring the Spottiswoode 18 launch as it regards it as an indicator of how buyers are reacting to the cooling measures.
Separately, executive condominium project Austville Residences, which caters to mainly first-time buyers, has had a more muted response.
Since its Jan 13 launch, 20 per cent of its units have been sold.
All 540 units were released through a first-come-first-served system.
Units at the Sengkang project are priced at about $680 psf, with the smallest two-bedroom flat sized at 785 sq ft. The project is offering buyers a deferred payment scheme.
Austville was launched on the same day the new cooling measures were announced - last Thursday.
A spokesman for its developer, United Engineers, said it has seen a dip in interest as buyers are still digesting the new rules but he is confident that sales will pick up soon.
Buyers thronging the showroom of Spottiswoode 18 yesterday. The project will occupy the former Dragon Mansion site, near Tanjong Pagar MRT station. Average prices are $1,900 per sq ft and the price of a 387 sq ft one-bedroom unit starts from $688,900. -- ST PHOTO: NEO XIAOBIN
ST Forum : Genuine buyer's problems
18 JAN 2011,
NEW PROPERTY MEASURES
Genuine buyer's problems
WHILE I appreciate the rationale for implementing additional curbs to speculative investments, thereby freeing more supply for genuine home buyers, the reduced loan-to-value limit of 60 per cent will further impede genuine upgraders who need a larger HDB flat or move into private property (' New measures to curb property speculation'; last Friday).
If the Government's aim is to increase public housing supply for first-time owners, that would come from more build-to-order (BTO) flats as well as facilitating more vacant three-room and four-room resale flats, which would be more affordable for younger couples.
More BTO flats are being built. But for HDB dwellers who need a larger flat or aspire to make the leap to owning private property, the new 70 per cent loan-to-value limit imposed last August was already an insurmountable financial obstacle.
The new limit will only force more families to stay put in their smaller flats, withholding supply. The reason: Families cannot get a second bank loan at 80 per cent unless they have HDB's approval letter (which comes within two weeks from the first appointment of their flat's sale) and a document from the bank holding their existing mortgage, which can be discharged only upon a sale.
If upgraders take this route, they must find temporary shelter for about two months, and move house twice, which will add to their costs.
The alternative, to ensure a new home upon vacating their old one, is to take that second mortgage at a 60 per cent loan-to-value, which will mean forking out more cash upfront.
Many lower-to-middle income HDB dwellers simply do not have that kind of spare cash, even after factoring in their Central Provident Fund money after the sale of their flat.
The Government should impose a staggered loan-to-value ratio for differing household incomes.
For instance, maintain the 80 per cent ratio for households earning a monthly total of $4,000 or less, 70 per cent for households earning $4,001 to $6,000, and 60 per cent from $6,000 up. Staggering the ratio will not penalise the lower-income groups together with the cash-rich investor.
Adam Reutens-Tan
NEW PROPERTY MEASURES
Genuine buyer's problems
WHILE I appreciate the rationale for implementing additional curbs to speculative investments, thereby freeing more supply for genuine home buyers, the reduced loan-to-value limit of 60 per cent will further impede genuine upgraders who need a larger HDB flat or move into private property (' New measures to curb property speculation'; last Friday).
If the Government's aim is to increase public housing supply for first-time owners, that would come from more build-to-order (BTO) flats as well as facilitating more vacant three-room and four-room resale flats, which would be more affordable for younger couples.
More BTO flats are being built. But for HDB dwellers who need a larger flat or aspire to make the leap to owning private property, the new 70 per cent loan-to-value limit imposed last August was already an insurmountable financial obstacle.
The new limit will only force more families to stay put in their smaller flats, withholding supply. The reason: Families cannot get a second bank loan at 80 per cent unless they have HDB's approval letter (which comes within two weeks from the first appointment of their flat's sale) and a document from the bank holding their existing mortgage, which can be discharged only upon a sale.
If upgraders take this route, they must find temporary shelter for about two months, and move house twice, which will add to their costs.
The alternative, to ensure a new home upon vacating their old one, is to take that second mortgage at a 60 per cent loan-to-value, which will mean forking out more cash upfront.
Many lower-to-middle income HDB dwellers simply do not have that kind of spare cash, even after factoring in their Central Provident Fund money after the sale of their flat.
The Government should impose a staggered loan-to-value ratio for differing household incomes.
For instance, maintain the 80 per cent ratio for households earning a monthly total of $4,000 or less, 70 per cent for households earning $4,001 to $6,000, and 60 per cent from $6,000 up. Staggering the ratio will not penalise the lower-income groups together with the cash-rich investor.
Adam Reutens-Tan
ST Forum : Same bank, same property but...
Jan 18, 2011
Same bank, same property but...
'Valuations differed by $200,000. Shouldn't valuations be based on fundamentals, rather than sentiment?'
MS YVONNE LEE-LEK SIEW LING: 'There is a need to legislate how desktop valuations are produced ('New measures to curb property speculation'; last Friday) as buyers and sellers rely on them to negotiate a price. Recently, I received two valuations from the same bank for the same property which differed by $200,000, or 15 per cent of the asking price. What was more disconcerting was that I kept receiving assurances from agents and bank officers that they could offer valuations to match the asking price. Shouldn't property valuations be based on fundamentals, rather than sentiment?'
Singaporean-friendly
'Restrict properties selling for below $1.2 million to citizens.'
MR ALBERT TYE: 'I applaud the Government's decisive move although there may be a loophole ('New measures to curb property speculation'; last Friday). The current market is flushed with liquidity and there is nothing to stop the money from flowing into the property market if prices fall. Shouldn't some restriction be placed on foreigners who have deep pockets to take advantage of the situation? Perhaps the Government could restrict properties selling for below $1.5 million or even $1.2 million to citizens and perhaps permanent residents. Otherwise, the current antidote of measures may be rendered ineffective as well.'
Same bank, same property but...
'Valuations differed by $200,000. Shouldn't valuations be based on fundamentals, rather than sentiment?'
MS YVONNE LEE-LEK SIEW LING: 'There is a need to legislate how desktop valuations are produced ('New measures to curb property speculation'; last Friday) as buyers and sellers rely on them to negotiate a price. Recently, I received two valuations from the same bank for the same property which differed by $200,000, or 15 per cent of the asking price. What was more disconcerting was that I kept receiving assurances from agents and bank officers that they could offer valuations to match the asking price. Shouldn't property valuations be based on fundamentals, rather than sentiment?'
Singaporean-friendly
'Restrict properties selling for below $1.2 million to citizens.'
MR ALBERT TYE: 'I applaud the Government's decisive move although there may be a loophole ('New measures to curb property speculation'; last Friday). The current market is flushed with liquidity and there is nothing to stop the money from flowing into the property market if prices fall. Shouldn't some restriction be placed on foreigners who have deep pockets to take advantage of the situation? Perhaps the Government could restrict properties selling for below $1.5 million or even $1.2 million to citizens and perhaps permanent residents. Otherwise, the current antidote of measures may be rendered ineffective as well.'
ST : Make tax system simpler for rented-out property
18 JAN 2011,
Make tax system simpler for rented-out property
THE Government has introduced progressive tax rates on property tax for owner-occupied properties from this year. Properties that are rented out will continue to be taxed at 10 per cent of the annual value.
The Government should consider extending the progressive tax rate system for rented out properties and remove property income from the income tax returns. There is no need for the same income to be taxed twice - as property tax and income tax - especially as the taxes are based on the market-adjusted annual value of the property.
The progressive tax rate on rented properties can be made to mirror the revenue that is currently collected by the Government from the income tax levied on the rental income.
As an owner of property that has been rented out, I now find it a hassle to compute the net property income to submit in my income tax returns. I must identify the rental income and expenses that are expended on the property, such as property tax, insurance, repairs, maintenance charges, agency fee and other items.
It is unclear if the owner is allowed to deduct the proportion of the rental that is set aside for furnishing of the property.
The complexity can be removed when the income tax portion is integrated into the proposed progressive rate on rented out properties. It will also save a lot of work for the Inland Revenue Authority of Singapore in policing the reporting of rental income.
Tan Kin Lian
Make tax system simpler for rented-out property
THE Government has introduced progressive tax rates on property tax for owner-occupied properties from this year. Properties that are rented out will continue to be taxed at 10 per cent of the annual value.
The Government should consider extending the progressive tax rate system for rented out properties and remove property income from the income tax returns. There is no need for the same income to be taxed twice - as property tax and income tax - especially as the taxes are based on the market-adjusted annual value of the property.
The progressive tax rate on rented properties can be made to mirror the revenue that is currently collected by the Government from the income tax levied on the rental income.
As an owner of property that has been rented out, I now find it a hassle to compute the net property income to submit in my income tax returns. I must identify the rental income and expenses that are expended on the property, such as property tax, insurance, repairs, maintenance charges, agency fee and other items.
It is unclear if the owner is allowed to deduct the proportion of the rental that is set aside for furnishing of the property.
The complexity can be removed when the income tax portion is integrated into the proposed progressive rate on rented out properties. It will also save a lot of work for the Inland Revenue Authority of Singapore in policing the reporting of rental income.
Tan Kin Lian
ST : HDB to review rule on siblings
18 JAN 2011,
HDB to review rule on siblings
By Jessica Cheam
THE Housing Board yesterday said it will be reviewing its scheme that allows siblings - whether citizens or permanent residents (PRs) - to buy resale flats.
Such applications, which are considered on a case-by-case basis, are small in number, the HDB added.
It had recently clarified that siblings can apply to buy HDB resale flats if their parents live overseas and do not already own a public flat. They could be citizens or PRs.
It made these points in response to queries from The Straits Times, following recent concerns that surfaced in online forums, where users noted that unmarried PR siblings above the age of 21 were allowed to buy HDB resale flats, whereas Singapore citizen siblings could not.
Some had asked why there was a difference in the rules.
Under the current rules, unmarried Singapore citizens can buy HDB resale flats only if they are above the age of 35 under the Single Singapore Citizen Scheme, or with their siblings if their parents are dead under the Orphans Scheme.
The HDB has since clarified that citizen siblings can apply to buy resale flats and that all such applications will be considered on a case-by-case basis.
It reiterated yesterday that one of the key principles regarding public housing ownership is that 'each family can own only one flat at a time'.
'This is applicable to Singaporeans and PRs. Therefore, applications from unmarried siblings whose parents reside overseas are considered on a case-by-case basis,' it said.
'Their parents must not already and cannot subsequently own another HDB flat concurrently.
'We have been very stringent in assessing such applications. The numbers granted so far are small,' the HDB pointed out.
It added that it will be reviewing the scheme 'as part of our ongoing policy reviews'.
The competition for public housing between citizens and PRs, with flat prices hitting historic highs, has caused some unhappiness among the population.
The HDB had addressed some of these concerns in March last year when it made a bigger distinction between benefits for citizens and PRs, including setting new quotas on PR ownership of flats in specific blocks and neighbourhoods and giving less in the way of subsidies.
But even after the recent clarification, people such as Mr Leong Sze Hian, who wrote to The Straits Times Forum page, noted that the public was 'largely unaware' of the scheme.
He said he felt it hard to agree that the HDB's rules treat citizen and PR siblings similarly.
'It is almost a given that the parents of most PR siblings would be overseas and do not already own an HDB flat, whereas much fewer parents of citizen siblings would be abroad and do not own an HDB flat,' he said.
HDB to review rule on siblings
By Jessica Cheam
THE Housing Board yesterday said it will be reviewing its scheme that allows siblings - whether citizens or permanent residents (PRs) - to buy resale flats.
Such applications, which are considered on a case-by-case basis, are small in number, the HDB added.
It had recently clarified that siblings can apply to buy HDB resale flats if their parents live overseas and do not already own a public flat. They could be citizens or PRs.
It made these points in response to queries from The Straits Times, following recent concerns that surfaced in online forums, where users noted that unmarried PR siblings above the age of 21 were allowed to buy HDB resale flats, whereas Singapore citizen siblings could not.
Some had asked why there was a difference in the rules.
Under the current rules, unmarried Singapore citizens can buy HDB resale flats only if they are above the age of 35 under the Single Singapore Citizen Scheme, or with their siblings if their parents are dead under the Orphans Scheme.
The HDB has since clarified that citizen siblings can apply to buy resale flats and that all such applications will be considered on a case-by-case basis.
It reiterated yesterday that one of the key principles regarding public housing ownership is that 'each family can own only one flat at a time'.
'This is applicable to Singaporeans and PRs. Therefore, applications from unmarried siblings whose parents reside overseas are considered on a case-by-case basis,' it said.
'Their parents must not already and cannot subsequently own another HDB flat concurrently.
'We have been very stringent in assessing such applications. The numbers granted so far are small,' the HDB pointed out.
It added that it will be reviewing the scheme 'as part of our ongoing policy reviews'.
The competition for public housing between citizens and PRs, with flat prices hitting historic highs, has caused some unhappiness among the population.
The HDB had addressed some of these concerns in March last year when it made a bigger distinction between benefits for citizens and PRs, including setting new quotas on PR ownership of flats in specific blocks and neighbourhoods and giving less in the way of subsidies.
But even after the recent clarification, people such as Mr Leong Sze Hian, who wrote to The Straits Times Forum page, noted that the public was 'largely unaware' of the scheme.
He said he felt it hard to agree that the HDB's rules treat citizen and PR siblings similarly.
'It is almost a given that the parents of most PR siblings would be overseas and do not already own an HDB flat, whereas much fewer parents of citizen siblings would be abroad and do not own an HDB flat,' he said.
ST : It's time to pay your property tax
18 JAN 2011,
It's time to pay your property tax
Taxman collected $1.35m in penalties last year; deadline is Jan 31
By Dhevarajan Devadas
THE taxman has issued property owners with a timely reminder: Pay your property tax by Jan 31.
The Inland Revenue Authority of Singapore (Iras) also wants to encourage taxpayers to sign up to pay through Giro, in an effort to improve efficiency and reduce late payments.
At a briefing yesterday, Iras corporate communications director Deanna Choo referred to a survey last year that pointed to the top three reasons cited for late payment.
They were: overlooking the deadline; not receiving the bill; and financial difficulties.
'One in three who did not pay on time claimed that they overlooked the deadline,' said Ms Choo.
Last year, 122,000 people, or 11 per cent of residential property owners, did not pay on time. The Iras collected $1.35 million in late payment penalties.
It has been taking steps to rectify the problem.
When it sent out property tax bills in November, the payment voucher came with a Giro application form on the same page. Previously, those who wanted to sign up for Giro had to attach the form separately.
'We hope that this will make it much easier for taxpayers to sign up for Giro and hopefully reduce the number of late payments this year,' said Ms Choo.
Last year, 54 per cent of payments made by residential property owners were through Giro, a figure that has been increasing over the last few years.
As further encouragement for taxpayers to sign up, the Iras announced a 'Giro Your Tax' initiative last October that features an annual lucky draw from this year to 2013.
All taxpayers on Giro stand a chance to win $360,000 in cash prizes. The first of the three draws will be in May.
The progressive property tax system announced in the 2010 Budget will apply from this year. It is three-tiered - zero per cent, 4 per cent and 6 per cent - and replaces the previous flat 4 per cent concessionary rate for owner-occupied residential homes.
The first $6,000 of a home's annual value (AV) will be exempted from tax - saving owners up to $240. The next $59,000 will be taxed at 4 per cent, and any AV above $65,000 will be levied at 6 per cent.
The AV is the estimated annual rent of an owner-occupied property if it were leased, excluding rent for furniture, fittings and any service charge.
ddheva@sph.com.sg
It's time to pay your property tax
Taxman collected $1.35m in penalties last year; deadline is Jan 31
By Dhevarajan Devadas
THE taxman has issued property owners with a timely reminder: Pay your property tax by Jan 31.
The Inland Revenue Authority of Singapore (Iras) also wants to encourage taxpayers to sign up to pay through Giro, in an effort to improve efficiency and reduce late payments.
At a briefing yesterday, Iras corporate communications director Deanna Choo referred to a survey last year that pointed to the top three reasons cited for late payment.
They were: overlooking the deadline; not receiving the bill; and financial difficulties.
'One in three who did not pay on time claimed that they overlooked the deadline,' said Ms Choo.
Last year, 122,000 people, or 11 per cent of residential property owners, did not pay on time. The Iras collected $1.35 million in late payment penalties.
It has been taking steps to rectify the problem.
When it sent out property tax bills in November, the payment voucher came with a Giro application form on the same page. Previously, those who wanted to sign up for Giro had to attach the form separately.
'We hope that this will make it much easier for taxpayers to sign up for Giro and hopefully reduce the number of late payments this year,' said Ms Choo.
Last year, 54 per cent of payments made by residential property owners were through Giro, a figure that has been increasing over the last few years.
As further encouragement for taxpayers to sign up, the Iras announced a 'Giro Your Tax' initiative last October that features an annual lucky draw from this year to 2013.
All taxpayers on Giro stand a chance to win $360,000 in cash prizes. The first of the three draws will be in May.
The progressive property tax system announced in the 2010 Budget will apply from this year. It is three-tiered - zero per cent, 4 per cent and 6 per cent - and replaces the previous flat 4 per cent concessionary rate for owner-occupied residential homes.
The first $6,000 of a home's annual value (AV) will be exempted from tax - saving owners up to $240. The next $59,000 will be taxed at 4 per cent, and any AV above $65,000 will be levied at 6 per cent.
The AV is the estimated annual rent of an owner-occupied property if it were leased, excluding rent for furniture, fittings and any service charge.
ddheva@sph.com.sg
ST : Curbs to stabilise home prices: Mah
16 JAN 2011,
Curbs to stabilise home prices: Mah
By Esther Teo
The new property market cooling measures announced on Thursday are meant to stabilise home prices and not necessarily cause them to fall, National Development Minister Mah Bow Tan said yesterday.
The measures may not be the last as well, he warned, adding that the Government will monitor the market closely and may act again if needed.
But he emphasised that the measures are not permanent, and once they are no longer necessary, they will be removed.
He also recognised that the new sellers' stamp duty of up to 16 per cent could become a problem should property owners need to urgently sell their home shortly after they have bought it.
So if some owners had a mitigating reason to sell their home and could show it, such as for medical reasons, the Government was prepared to be flexible.
'You can't formulate a policy that satisfies everybody in a group,' said Mr Mah. 'What you can do is to have a general policy and where there are genuine cases, take them offline and consider appeals as and when they come in.'
The Government announced new rules on Thursday that raised the sellers' stamp duty on properties to as much as 16 per cent of the sale price if the home is offloaded within a year of purchase.
The amount banks can lend on a second mortgage has been lowered from 70 per cent to 60 per cent of the home's value.
Speaking on the sidelines of a bursary presentation ceremony in Tampines, Mr Mah said that while previous market cooling measures have had some effect, the Government felt it had to act pre-emptively in response to recent signs that the market had become buoyant again.
'There are signs that the economy is not going to be as strong as last year. Interest rates are not going to remain at these low levels forever,' he said.
'So for people who are looking at investment properties or those who are upgrading, the question is if this is the right time for them to buy. Are they able to afford the repayments when interest rates go up?'
He noted, however, that prices could still move up.
'Prices must move up if the economy is doing well and people have got good jobs - especially... where interest rates are at an all-time low and liquidity is at an all-time high.'
As for whether the Government will act again, Mr Mah said: 'We will wait and see how the prices react. The (time from the last round of measures) was about five months, and before that it was six... It really depends on how the market moves, there's no hard and fast timing.'
The cooling measures seemed to have done the trick in that regard. Showflats The Sunday Times visited yesterday were markedly quieter as agents reported a fall in buyer interest.
Potential buyers who did turn up said they were looking around, doing their sums and hoping that prices had been lowered.
Ms Jenny Yong, 29, a marketing executive who was at the Cascadia showflat in Bukit Timah yesterday, said: '(My fiance and I) are not planning to commit to a purchase any time soon as we think prices can move only one way now - down.'
Curbs to stabilise home prices: Mah
By Esther Teo
The new property market cooling measures announced on Thursday are meant to stabilise home prices and not necessarily cause them to fall, National Development Minister Mah Bow Tan said yesterday.
The measures may not be the last as well, he warned, adding that the Government will monitor the market closely and may act again if needed.
But he emphasised that the measures are not permanent, and once they are no longer necessary, they will be removed.
He also recognised that the new sellers' stamp duty of up to 16 per cent could become a problem should property owners need to urgently sell their home shortly after they have bought it.
So if some owners had a mitigating reason to sell their home and could show it, such as for medical reasons, the Government was prepared to be flexible.
'You can't formulate a policy that satisfies everybody in a group,' said Mr Mah. 'What you can do is to have a general policy and where there are genuine cases, take them offline and consider appeals as and when they come in.'
The Government announced new rules on Thursday that raised the sellers' stamp duty on properties to as much as 16 per cent of the sale price if the home is offloaded within a year of purchase.
The amount banks can lend on a second mortgage has been lowered from 70 per cent to 60 per cent of the home's value.
Speaking on the sidelines of a bursary presentation ceremony in Tampines, Mr Mah said that while previous market cooling measures have had some effect, the Government felt it had to act pre-emptively in response to recent signs that the market had become buoyant again.
'There are signs that the economy is not going to be as strong as last year. Interest rates are not going to remain at these low levels forever,' he said.
'So for people who are looking at investment properties or those who are upgrading, the question is if this is the right time for them to buy. Are they able to afford the repayments when interest rates go up?'
He noted, however, that prices could still move up.
'Prices must move up if the economy is doing well and people have got good jobs - especially... where interest rates are at an all-time low and liquidity is at an all-time high.'
As for whether the Government will act again, Mr Mah said: 'We will wait and see how the prices react. The (time from the last round of measures) was about five months, and before that it was six... It really depends on how the market moves, there's no hard and fast timing.'
The cooling measures seemed to have done the trick in that regard. Showflats The Sunday Times visited yesterday were markedly quieter as agents reported a fall in buyer interest.
Potential buyers who did turn up said they were looking around, doing their sums and hoping that prices had been lowered.
Ms Jenny Yong, 29, a marketing executive who was at the Cascadia showflat in Bukit Timah yesterday, said: '(My fiance and I) are not planning to commit to a purchase any time soon as we think prices can move only one way now - down.'
MND : MEASURES TO MAINTAIN A STABLE AND SUSTAINABLE PROPERTY MARKET
13 JAN 2011,
Press Releases
MEASURES TO MAINTAIN A STABLE AND SUSTAINABLE PROPERTY MARKET
1 The Government announced today the following measures to maintain a stable and sustainable property market:
Increase the holding period for imposition of Seller’s Stamp Duty (SSD) from the current three years to four years;
Raise the SSD rates to 16%, 12%, 8% and 4% of consideration for residential properties which are bought on or after 14 January 2011, and are sold in the first, second, third and fourth year of purchase respectively;
Lower the Loan-To-Value (LTV) limit to 50% on housing loans granted by financial institutions regulated by MAS for property purchasers who are not individuals1; and
Lower the LTV limit on housing loans granted by financial institutions regulated by MAS from 70% to 60% for property purchasers who are individuals with one or more outstanding housing loans2 at the time of the new housing purchase;
The measures will take effect on 14 January 2011.
2 The Government's objective is to ensure a stable and sustainable property market where prices move in line with economic fundamentals. Previous Government measures have to some extent moderated the market, but sentiments remain buoyant. Low interest rates plus excessive liquidity in the financial system, both in Singapore and globally, could cause prices to rise beyond sustainable levels based on economic fundamentals. Moreover, when interest rates eventually rise, it could strain purchasers who have overextended themselves financially. Therefore, the Government has decided to introduce additional targeted measures to cool the property market and encourage greater financial prudence among property purchasers.
Extending the Holding Period for Imposition of Seller’s Stamp Duty (SSD) on Residential Properties from 3 Years to 4 Years & Raising the SSD Rates
3 Currently, for residential properties bought on or after 30 August 2010, SSD3 is imposed on the sale of such properties within three years of purchase. This followed the introduction of SSD for residential properties bought on or after 20 February 2010.
4 The SSD rates will be increased sharply from 14 January 2011, so as to provide a strong disincentive for investors looking to make short term gains. The holding period for imposition of SSD will also be extended from the current three years to four years. The impact of the SSD is especially significant as it is payable regardless whether the property is eventually sold at a gain or loss.
5 Specifically, for residential properties bought4 on or after 14 January 2011, the SSD rates to be levied on the full consideration will be increased5 to as follows:
SSD at 16% (higher than up to 3% currently), if the property is sold in the first year of purchase, i.e. the property is held for 1 year or less from its purchase date.
SSD at 12% (higher than up to 2% currently), if the property is sold in the second year of purchase, i.e. the property is held for more than 1 year and up to 2 years.
SSD at 8% (higher than up to 1% currently), if the property is sold in the third year of purchase, i.e. the property is held for more than 2 years and up to 3 years.
SSD at 4% (no SSD currently), if the property is sold in the fourth year of purchase, i.e. the property is held for more than 3 years and up to 4 years.
Please see Annex for examples of how the SSD will be computed.
6 The extended SSD will not affect HDB lessees as the required Minimum Occupation Period for HDB flats is 5 years.
7 IRAS will be releasing an updated e-tax guide on the circumstances under which SSD will apply and the procedures for paying SSD6. The e-tax guide will be available at www.iras.gov.sg. Taxpayers with enquiries may call IRAS at 6351 3697 or 6351 3698.
Lower the Loan-To-Value (LTV) Limit to 50% on housing loans granted by financial institutions regulated by MAS for residential property purchasers who are not individuals
8 With effect from 14 January 20117, an LTV limit of 50% will apply to all residential property purchasers who are not individuals. This includes corporations, trusts and collective investment schemes, among others. The 50% LTV limit for housing loans will also apply to joint property purchases by an individual and a purchaser who is not an individual.
Lower the LTV limit on housing loans granted by financial institutions regulated by MAS from the current 70% to 60% for residential property purchasers who are individuals with one or more outstanding housing loans at the time of the new housing purchase
9 The LTV limit is lowered from 70% to 60% with effect from 14 January 20118 for borrowers who are individuals and have one or more outstanding housing loans (whether from HDB or a financial institution regulated by MAS) at the time of applying for a housing loan for the new property purchase.
10 However, borrowers who can show evidence that they have sold their existing properties will not be subject to the lower LTV limit when they buy a new property. Where the existing property is a private property, he can show a signed Sale & Purchase (S&P) agreement with the IRAS certificate showing that stamp duty has been paid on it. Where the existing property is a HDB flat, he can show HDB’s approval letter to sell the flat, that HDB will issue within 2 weeks of the First Appointment. These borrowers will still be able to borrow at an 80% LTV from financial institutions.
11 Borrowers without any outstanding housing loans continue to have a LTV cap of 80%.
12 These rules apply to housing loans granted by financial institutions for private residential properties, Executive Condominiums, HUDC flats and HDB flats (including DBSS flats).
13 Loans granted by HDB for HDB flats (including DBSS flats) will still have a LTV cap of 90%. HDB loans are offered to eligible Singapore citizens buying their first homes or right-sizing their flats to meet their housing needs. HDB loan applicants are required to utilise all the balance in their CPF Ordinary Account before HDB loans will be granted. Furthermore, those taking a second concessionary HDB loan must use the CPF refund and 50% of the cash proceeds from the sale of their previous flat before they are granted an HDB loan. This is to ensure that eligible buyers, especially first-time buyers, purchase public housing in a financially prudent manner.
Adequate Supply in the Pipeline
14 There is an ample supply of private residential units and buyers need not rush to buy now. The Government will continue to ensure an adequate supply of housing to meet demand.
15 The annual average take-up9 of private residential units between 2007 and 2010 is about 12,700 units. Thus far, the sites awarded under the Government Land Sales (GLS) Programme in 2010 will already yield about 13,300 units. In the GLS Programme for the first half of 2011, we will make available sites that can yield about 14,300 private housing units, of which about 8,100 units will be from sites on the Confirmed List.
16 As at 3Q2010, there were about 64,400 uncompleted units of private housing from projects in the pipeline10. Of these, about 33,800 units were still unsold. This is equivalent to about 3 years of supply based on the average annual take-up over the last 4 years. The 33,800 unsold units in the pipeline comprised 3,300 units that had been launched for sale by developers and 11,400 units which had the pre-requisite conditions for sale11 and could be launched for sale immediately. The remaining 19,100 units with planning approvals did not have the pre-requisite conditions for sale but these could be obtained quickly from the Government12. The Government will also make available more supply in future GLS programmes. Buyers should bear in mind this supply in the pipeline when deciding whether to buy now.
17 The Government will continue to monitor the property market closely and take further steps to promote a stable and sustainable property market if necessary.
*****
1 “Purchasers who are not individuals” refer to purchasers who are not natural persons. These include but are not limited to corporations, trusts and collective investment schemes.
2 Financial institutions are required to conduct checks with HDB and with one or more credit bureaus on whether the purchaser has an outstanding housing loan at the time of applying for a housing loan for the property purchase. For joint purchasers, if either purchaser has an outstanding housing loan, the joint purchasers will be considered as having an outstanding housing loan.
3 The SSD will apply to the transfer or disposal of interest (including sale and gifts) of residential lands and residential units (whether completed or uncompleted).
4 The date of purchase for computation of the holding period for SSD shall be the date when a buyer (i.e. Buyer A) exercises the option to purchase the property, or signs the sale and purchase agreement, whichever is earlier. The date of sale of the property shall be the date when the subsequent buyer (i.e. Buyer B) exercises the option to purchase the property from Buyer A, or signs the sale and purchase agreement, whichever is earlier.
5 Currently, the SSD rates are levied at the same rate as buyer's stamp duty, i.e. 1% for the first $180,000, 2% for the next $180,000 and 3% on the balance. The SSD rates are tiered according to the duration of the holding period, i.e. the seller pays the full SSD rate if the residential property is sold in the first year of purchase; 2/3 the full SSD rate if the sale is in the second year; 1/3 the full SSD rate if in the third year.
6 SSD is to be paid within 14 days of the execution of the Agreement (i.e. exercise of Option or signing of Agreement). If the Agreement is executed overseas, upon receipt of the Agreement in Singapore, the SSD must be paid within 30 days.
7 The 50% LTV limit will apply to transactions where the date on which the option to purchase (OTP) was granted falls on or after 14 January 2011; or if there is no OTP, where the date of the Sale & Purchase agreement falls on or after 14 January 2011.
8 The 60% LTV limit will apply to transactions where the date on which the option to purchase (OTP) was granted falls on or after 14 January 2011; or if there is no OTP, where the date of the Sale & Purchase agreement falls on or after 14 January 2011.
9 Take-up refers to the number of private residential units, including Executive Condominium (EC) units, sold by developers.
10 These refer to new development and redevelopment projects with planning approvals, i.e. either a Provisional Permission (PP) or Written Permission (WP).
11 These refer to private residential developments with Housing Developer Licence and Building Plan Approval. Under the Housing Developer (Control and Licensing) Act, a sale licence must be obtained for a project with more than 4 units, if the developer intends to sell uncompleted residential units in the development. However, the sale of the residential units can only commence with the approval of the building plans of the development.
12 These refer to uncompleted private residential developments without pre-requisites for sale but with WP or PP granted. The sale licences could be obtained within 5 working days and building plan approvals could be obtained within 7 working days from the date of application for cases where clearances from various technical agencies are obtained and relevant documents are in order during formal submissions.
Issued by: Ministry of National Development, Ministry of Finance and Monetary Authority of Singapore
Date: 13 January 2011
>>back to top
Annex
Computation of the Seller’s Stamp Duty (SSD) for properties bought on or after 14 January 2011 and sold within 4 years of purchase
Example 1:
Mr Lee purchased his residential property on 14 January 2011 and sold it on 13 January 2012 for $1,000,000.
Holding period: 1 year (i.e. SSD rate of 16% is chargeable)
SSD payable :
16% of $1,000,000 = $160,000
Example 2:
Mr Tan purchased his residential property on 14 January 2011 and sold it on 13 January 2013 for $1,000,000.
Holding period: 2 years (i.e. SSD rate of 12% is chargeable)
SSD payable :
12% of $1,000,000 = $120,000
Example 3:
Mr Tan purchased his residential property on 14 January 2011 and sold it on 13 January 2014 for $1,000,000.
Holding period: 3 years (i.e. SSD rate of 8% is chargeable)
SSD payable :
8% of $1,000,000 = $80,000
Example 4:
Mr Tan purchased his residential property on 14 January 2011 and sold it on 13 January 2015 for $1,000,000.
Holding period: 4 years (i.e. SSD rate of 4% is chargeable)
SSD payable :
4% of $1,000,000 = $40,000
Example 5:
Mr Tan purchased his residential property on 14 January 2011 and sold it on 14 January 2015 for $1,000,000.
Holding period: More than 4 years. No SSD is payable.
SSD payable: $0
Press Releases
MEASURES TO MAINTAIN A STABLE AND SUSTAINABLE PROPERTY MARKET
1 The Government announced today the following measures to maintain a stable and sustainable property market:
Increase the holding period for imposition of Seller’s Stamp Duty (SSD) from the current three years to four years;
Raise the SSD rates to 16%, 12%, 8% and 4% of consideration for residential properties which are bought on or after 14 January 2011, and are sold in the first, second, third and fourth year of purchase respectively;
Lower the Loan-To-Value (LTV) limit to 50% on housing loans granted by financial institutions regulated by MAS for property purchasers who are not individuals1; and
Lower the LTV limit on housing loans granted by financial institutions regulated by MAS from 70% to 60% for property purchasers who are individuals with one or more outstanding housing loans2 at the time of the new housing purchase;
The measures will take effect on 14 January 2011.
2 The Government's objective is to ensure a stable and sustainable property market where prices move in line with economic fundamentals. Previous Government measures have to some extent moderated the market, but sentiments remain buoyant. Low interest rates plus excessive liquidity in the financial system, both in Singapore and globally, could cause prices to rise beyond sustainable levels based on economic fundamentals. Moreover, when interest rates eventually rise, it could strain purchasers who have overextended themselves financially. Therefore, the Government has decided to introduce additional targeted measures to cool the property market and encourage greater financial prudence among property purchasers.
Extending the Holding Period for Imposition of Seller’s Stamp Duty (SSD) on Residential Properties from 3 Years to 4 Years & Raising the SSD Rates
3 Currently, for residential properties bought on or after 30 August 2010, SSD3 is imposed on the sale of such properties within three years of purchase. This followed the introduction of SSD for residential properties bought on or after 20 February 2010.
4 The SSD rates will be increased sharply from 14 January 2011, so as to provide a strong disincentive for investors looking to make short term gains. The holding period for imposition of SSD will also be extended from the current three years to four years. The impact of the SSD is especially significant as it is payable regardless whether the property is eventually sold at a gain or loss.
5 Specifically, for residential properties bought4 on or after 14 January 2011, the SSD rates to be levied on the full consideration will be increased5 to as follows:
SSD at 16% (higher than up to 3% currently), if the property is sold in the first year of purchase, i.e. the property is held for 1 year or less from its purchase date.
SSD at 12% (higher than up to 2% currently), if the property is sold in the second year of purchase, i.e. the property is held for more than 1 year and up to 2 years.
SSD at 8% (higher than up to 1% currently), if the property is sold in the third year of purchase, i.e. the property is held for more than 2 years and up to 3 years.
SSD at 4% (no SSD currently), if the property is sold in the fourth year of purchase, i.e. the property is held for more than 3 years and up to 4 years.
Please see Annex for examples of how the SSD will be computed.
6 The extended SSD will not affect HDB lessees as the required Minimum Occupation Period for HDB flats is 5 years.
7 IRAS will be releasing an updated e-tax guide on the circumstances under which SSD will apply and the procedures for paying SSD6. The e-tax guide will be available at www.iras.gov.sg. Taxpayers with enquiries may call IRAS at 6351 3697 or 6351 3698.
Lower the Loan-To-Value (LTV) Limit to 50% on housing loans granted by financial institutions regulated by MAS for residential property purchasers who are not individuals
8 With effect from 14 January 20117, an LTV limit of 50% will apply to all residential property purchasers who are not individuals. This includes corporations, trusts and collective investment schemes, among others. The 50% LTV limit for housing loans will also apply to joint property purchases by an individual and a purchaser who is not an individual.
Lower the LTV limit on housing loans granted by financial institutions regulated by MAS from the current 70% to 60% for residential property purchasers who are individuals with one or more outstanding housing loans at the time of the new housing purchase
9 The LTV limit is lowered from 70% to 60% with effect from 14 January 20118 for borrowers who are individuals and have one or more outstanding housing loans (whether from HDB or a financial institution regulated by MAS) at the time of applying for a housing loan for the new property purchase.
10 However, borrowers who can show evidence that they have sold their existing properties will not be subject to the lower LTV limit when they buy a new property. Where the existing property is a private property, he can show a signed Sale & Purchase (S&P) agreement with the IRAS certificate showing that stamp duty has been paid on it. Where the existing property is a HDB flat, he can show HDB’s approval letter to sell the flat, that HDB will issue within 2 weeks of the First Appointment. These borrowers will still be able to borrow at an 80% LTV from financial institutions.
11 Borrowers without any outstanding housing loans continue to have a LTV cap of 80%.
12 These rules apply to housing loans granted by financial institutions for private residential properties, Executive Condominiums, HUDC flats and HDB flats (including DBSS flats).
13 Loans granted by HDB for HDB flats (including DBSS flats) will still have a LTV cap of 90%. HDB loans are offered to eligible Singapore citizens buying their first homes or right-sizing their flats to meet their housing needs. HDB loan applicants are required to utilise all the balance in their CPF Ordinary Account before HDB loans will be granted. Furthermore, those taking a second concessionary HDB loan must use the CPF refund and 50% of the cash proceeds from the sale of their previous flat before they are granted an HDB loan. This is to ensure that eligible buyers, especially first-time buyers, purchase public housing in a financially prudent manner.
Adequate Supply in the Pipeline
14 There is an ample supply of private residential units and buyers need not rush to buy now. The Government will continue to ensure an adequate supply of housing to meet demand.
15 The annual average take-up9 of private residential units between 2007 and 2010 is about 12,700 units. Thus far, the sites awarded under the Government Land Sales (GLS) Programme in 2010 will already yield about 13,300 units. In the GLS Programme for the first half of 2011, we will make available sites that can yield about 14,300 private housing units, of which about 8,100 units will be from sites on the Confirmed List.
16 As at 3Q2010, there were about 64,400 uncompleted units of private housing from projects in the pipeline10. Of these, about 33,800 units were still unsold. This is equivalent to about 3 years of supply based on the average annual take-up over the last 4 years. The 33,800 unsold units in the pipeline comprised 3,300 units that had been launched for sale by developers and 11,400 units which had the pre-requisite conditions for sale11 and could be launched for sale immediately. The remaining 19,100 units with planning approvals did not have the pre-requisite conditions for sale but these could be obtained quickly from the Government12. The Government will also make available more supply in future GLS programmes. Buyers should bear in mind this supply in the pipeline when deciding whether to buy now.
17 The Government will continue to monitor the property market closely and take further steps to promote a stable and sustainable property market if necessary.
*****
1 “Purchasers who are not individuals” refer to purchasers who are not natural persons. These include but are not limited to corporations, trusts and collective investment schemes.
2 Financial institutions are required to conduct checks with HDB and with one or more credit bureaus on whether the purchaser has an outstanding housing loan at the time of applying for a housing loan for the property purchase. For joint purchasers, if either purchaser has an outstanding housing loan, the joint purchasers will be considered as having an outstanding housing loan.
3 The SSD will apply to the transfer or disposal of interest (including sale and gifts) of residential lands and residential units (whether completed or uncompleted).
4 The date of purchase for computation of the holding period for SSD shall be the date when a buyer (i.e. Buyer A) exercises the option to purchase the property, or signs the sale and purchase agreement, whichever is earlier. The date of sale of the property shall be the date when the subsequent buyer (i.e. Buyer B) exercises the option to purchase the property from Buyer A, or signs the sale and purchase agreement, whichever is earlier.
5 Currently, the SSD rates are levied at the same rate as buyer's stamp duty, i.e. 1% for the first $180,000, 2% for the next $180,000 and 3% on the balance. The SSD rates are tiered according to the duration of the holding period, i.e. the seller pays the full SSD rate if the residential property is sold in the first year of purchase; 2/3 the full SSD rate if the sale is in the second year; 1/3 the full SSD rate if in the third year.
6 SSD is to be paid within 14 days of the execution of the Agreement (i.e. exercise of Option or signing of Agreement). If the Agreement is executed overseas, upon receipt of the Agreement in Singapore, the SSD must be paid within 30 days.
7 The 50% LTV limit will apply to transactions where the date on which the option to purchase (OTP) was granted falls on or after 14 January 2011; or if there is no OTP, where the date of the Sale & Purchase agreement falls on or after 14 January 2011.
8 The 60% LTV limit will apply to transactions where the date on which the option to purchase (OTP) was granted falls on or after 14 January 2011; or if there is no OTP, where the date of the Sale & Purchase agreement falls on or after 14 January 2011.
9 Take-up refers to the number of private residential units, including Executive Condominium (EC) units, sold by developers.
10 These refer to new development and redevelopment projects with planning approvals, i.e. either a Provisional Permission (PP) or Written Permission (WP).
11 These refer to private residential developments with Housing Developer Licence and Building Plan Approval. Under the Housing Developer (Control and Licensing) Act, a sale licence must be obtained for a project with more than 4 units, if the developer intends to sell uncompleted residential units in the development. However, the sale of the residential units can only commence with the approval of the building plans of the development.
12 These refer to uncompleted private residential developments without pre-requisites for sale but with WP or PP granted. The sale licences could be obtained within 5 working days and building plan approvals could be obtained within 7 working days from the date of application for cases where clearances from various technical agencies are obtained and relevant documents are in order during formal submissions.
Issued by: Ministry of National Development, Ministry of Finance and Monetary Authority of Singapore
Date: 13 January 2011
>>back to top
Annex
Computation of the Seller’s Stamp Duty (SSD) for properties bought on or after 14 January 2011 and sold within 4 years of purchase
Example 1:
Mr Lee purchased his residential property on 14 January 2011 and sold it on 13 January 2012 for $1,000,000.
Holding period: 1 year (i.e. SSD rate of 16% is chargeable)
SSD payable :
16% of $1,000,000 = $160,000
Example 2:
Mr Tan purchased his residential property on 14 January 2011 and sold it on 13 January 2013 for $1,000,000.
Holding period: 2 years (i.e. SSD rate of 12% is chargeable)
SSD payable :
12% of $1,000,000 = $120,000
Example 3:
Mr Tan purchased his residential property on 14 January 2011 and sold it on 13 January 2014 for $1,000,000.
Holding period: 3 years (i.e. SSD rate of 8% is chargeable)
SSD payable :
8% of $1,000,000 = $80,000
Example 4:
Mr Tan purchased his residential property on 14 January 2011 and sold it on 13 January 2015 for $1,000,000.
Holding period: 4 years (i.e. SSD rate of 4% is chargeable)
SSD payable :
4% of $1,000,000 = $40,000
Example 5:
Mr Tan purchased his residential property on 14 January 2011 and sold it on 14 January 2015 for $1,000,000.
Holding period: More than 4 years. No SSD is payable.
SSD payable: $0
ST : CEA not up to the task
15 JAN 2011,
CEA not up to the task
I READ with concern about how the Council for Estate Agencies (CEA) is treating application forms for its licence ("125 estate agents' application forms missing"; Monday).
It has managed to lose 125 application forms, tarry on 813 forms for which it has given "provisional approval", and sit on 923 forms from applicants who did not disclose past antecedents.
Each application form represents the livelihood of an individual who may be a family's sole breadwinner.
Not granting the licence or not granting it on time will have an impact on all the family members.
It makes one wonder if the CEA is up to undertaking the task it has assumed.
Was it too ambitious to set up the agency in October last year and expect things to be sorted out by the end of last year? How does the CEA explain to the households affected that it is overloaded with work and under-staffed? Was this not foreseeable? Couldn't early steps have been taken to alleviate its manpower shortage?
As for those agents with criminal track records, was the guideline properly drawn up as to who might be accepted and who will not? If an agent had committed a crime 10 years ago but has been successfully practising as an agent for the last 10 years without any complaints from the public, will he still be prohibited from practising as an agent?
Is the CEA guideline made known beforehand so that all those who are affected might know where they stand and may not incur expenses and time in taking the requisite examinations?
Dealing with each application on a case-by-case basis, with no proper guidelines or training and with inadequate staff, points to more delays.
The CEA is clearly unprepared and inadequately equipped to deal with the applications.
Chan Chow Seng
CEA not up to the task
I READ with concern about how the Council for Estate Agencies (CEA) is treating application forms for its licence ("125 estate agents' application forms missing"; Monday).
It has managed to lose 125 application forms, tarry on 813 forms for which it has given "provisional approval", and sit on 923 forms from applicants who did not disclose past antecedents.
Each application form represents the livelihood of an individual who may be a family's sole breadwinner.
Not granting the licence or not granting it on time will have an impact on all the family members.
It makes one wonder if the CEA is up to undertaking the task it has assumed.
Was it too ambitious to set up the agency in October last year and expect things to be sorted out by the end of last year? How does the CEA explain to the households affected that it is overloaded with work and under-staffed? Was this not foreseeable? Couldn't early steps have been taken to alleviate its manpower shortage?
As for those agents with criminal track records, was the guideline properly drawn up as to who might be accepted and who will not? If an agent had committed a crime 10 years ago but has been successfully practising as an agent for the last 10 years without any complaints from the public, will he still be prohibited from practising as an agent?
Is the CEA guideline made known beforehand so that all those who are affected might know where they stand and may not incur expenses and time in taking the requisite examinations?
Dealing with each application on a case-by-case basis, with no proper guidelines or training and with inadequate staff, points to more delays.
The CEA is clearly unprepared and inadequately equipped to deal with the applications.
Chan Chow Seng
ST : Good times ahead for commercial property
15 JAN 2011,
Good times ahead for commercial property
Analysts expect rise in occupancy, rent with strong business growth
By Jonathan Kwok
THE office market is tipped to enjoy a boom for the next few years on the back of a robust economy that is encouraging bosses to increase hiring and expand their premises.
Analysts say the surging demand for space is coming up against the harsh reality of limited supply, with the usual outcome - rents and property prices are heading north and likely to continue in that direction for the next few years.
There are external factors driving the sector as well. Hong Kong rents are still twice the level of those here which can only enhance Singapore's appeal.
The increasingly buoyant office sector has forced some analysts to revise their forecasts.
Swiss bank Credit Suisse now expects Grade A rents to be $10.13 per sq ft this year, up from its previous high of $9.69. They should rise further to $11.60 next year and $12.92 in 2013.
'The demand-supply outlook is supportive of rising rents,' said a Credit Suisse note on Wednesday.
'Singapore... office rents are still at a 50 per cent discount to Hong Kong's, and the gap is expected to widen further.'
Credit Suisse notes that businesses are still in 'expansion mode', especially in the financial, insurance, oil and gas, service and shipping industries.
DMG & Partner Securities sees Grade A rents hitting $12 psf this year, which would mark a 20 per cent year-on-year increase. Prime rents will edge up slightly to $9 psf, DMG added. It noted yesterday that office demand will be driven by healthy economic growth and increased hiring, particularly in business and financial services.
But as demand grows, supply becomes more limited.
DMG estimates that the average take-up rate from 2010 to 2014 should register at 1.9 million sq ft a year, higher than the supply of 1.5 million sq ft. The excess demand will absorb some of the existing unoccupied space.
Limited supply will keep prices up, say analysts. DMG noted that while only half of the office supply this year is pre-leased, new supply coming on stream is 'limited from 2012 to 2014', averaging only 1.3 million sq ft a year versus the 20-year average of 1.9 million sq ft.
The broking house said that 2.5 million sq ft from six plots vested to a Malaysia- Singapore joint venture and 9.6 million sq ft from 13 plots in the Marina Bay precinct could increase supply, but these properties will not be finished until 2015 at the earliest.
'Conversion of aged offices, potentially 1.2 million to 2.5 million sq ft (of it), into inner-city condominiums could further lower supply,' it said.
DMG said that any significant jumps in supply should take place only in 2015.
Credit Suisse also noted that 2015 will be the year when new supply comes through, citing developments in Tanjong Pagar and South Beach that will be ready then.
This means that office occupancy will recover to 90 per cent in 2014, when a potential shortage in prime Central Business District (CBD) space is expected to occur, said the Swiss bank.
DMG said the market forces in play - rising rents, low interest rates and improving appetites for office space - will drive up property prices.
It expects Grade A capital values to hit $2,750 psf this year, a 12 per cent rise from last year, while prime capital values should reach $2,150 psf, up 3 per cent.
DMG's bullish view of the sector has prompted it to initiate coverage of office property players Overseas Union Enterprise (OUE) and Singapore Land with 'buy' calls on both.
It cites their many quality assets, solid dividend payouts and undemanding valuations. DMG has put a target price of $4.20 on OUE and $9.50 on Singapore Land.
Credit Suisse has raised its target price on CapitaCommercial Trust (CCT) from $1.63 to $1.81 and lifted its valuation of K-Reit Asia from $1.51 to $1.75. Suntec Reit's target price was increased to $1.64 from $1.60.
CCT and K-Reit have 'outperform' ratings from Credit Suisse, and it maintained its 'neutral' call on Suntec as it thinks the stock is fairly priced and expects stronger office growth to be partly offset by a weaker retail contribution.
jonkwok@sph.com.sg
Good times ahead for commercial property
Analysts expect rise in occupancy, rent with strong business growth
By Jonathan Kwok
THE office market is tipped to enjoy a boom for the next few years on the back of a robust economy that is encouraging bosses to increase hiring and expand their premises.
Analysts say the surging demand for space is coming up against the harsh reality of limited supply, with the usual outcome - rents and property prices are heading north and likely to continue in that direction for the next few years.
There are external factors driving the sector as well. Hong Kong rents are still twice the level of those here which can only enhance Singapore's appeal.
The increasingly buoyant office sector has forced some analysts to revise their forecasts.
Swiss bank Credit Suisse now expects Grade A rents to be $10.13 per sq ft this year, up from its previous high of $9.69. They should rise further to $11.60 next year and $12.92 in 2013.
'The demand-supply outlook is supportive of rising rents,' said a Credit Suisse note on Wednesday.
'Singapore... office rents are still at a 50 per cent discount to Hong Kong's, and the gap is expected to widen further.'
Credit Suisse notes that businesses are still in 'expansion mode', especially in the financial, insurance, oil and gas, service and shipping industries.
DMG & Partner Securities sees Grade A rents hitting $12 psf this year, which would mark a 20 per cent year-on-year increase. Prime rents will edge up slightly to $9 psf, DMG added. It noted yesterday that office demand will be driven by healthy economic growth and increased hiring, particularly in business and financial services.
But as demand grows, supply becomes more limited.
DMG estimates that the average take-up rate from 2010 to 2014 should register at 1.9 million sq ft a year, higher than the supply of 1.5 million sq ft. The excess demand will absorb some of the existing unoccupied space.
Limited supply will keep prices up, say analysts. DMG noted that while only half of the office supply this year is pre-leased, new supply coming on stream is 'limited from 2012 to 2014', averaging only 1.3 million sq ft a year versus the 20-year average of 1.9 million sq ft.
The broking house said that 2.5 million sq ft from six plots vested to a Malaysia- Singapore joint venture and 9.6 million sq ft from 13 plots in the Marina Bay precinct could increase supply, but these properties will not be finished until 2015 at the earliest.
'Conversion of aged offices, potentially 1.2 million to 2.5 million sq ft (of it), into inner-city condominiums could further lower supply,' it said.
DMG said that any significant jumps in supply should take place only in 2015.
Credit Suisse also noted that 2015 will be the year when new supply comes through, citing developments in Tanjong Pagar and South Beach that will be ready then.
This means that office occupancy will recover to 90 per cent in 2014, when a potential shortage in prime Central Business District (CBD) space is expected to occur, said the Swiss bank.
DMG said the market forces in play - rising rents, low interest rates and improving appetites for office space - will drive up property prices.
It expects Grade A capital values to hit $2,750 psf this year, a 12 per cent rise from last year, while prime capital values should reach $2,150 psf, up 3 per cent.
DMG's bullish view of the sector has prompted it to initiate coverage of office property players Overseas Union Enterprise (OUE) and Singapore Land with 'buy' calls on both.
It cites their many quality assets, solid dividend payouts and undemanding valuations. DMG has put a target price of $4.20 on OUE and $9.50 on Singapore Land.
Credit Suisse has raised its target price on CapitaCommercial Trust (CCT) from $1.63 to $1.81 and lifted its valuation of K-Reit Asia from $1.51 to $1.75. Suntec Reit's target price was increased to $1.64 from $1.60.
CCT and K-Reit have 'outperform' ratings from Credit Suisse, and it maintained its 'neutral' call on Suntec as it thinks the stock is fairly priced and expects stronger office growth to be partly offset by a weaker retail contribution.
jonkwok@sph.com.sg
ST : Property agent loses 'commission' suit
15 JAN 2011,
Property agent loses 'commission' suit
A PROPERTY agent who sued a buyer for $437,870 that she said he owed her as a commission has had her claim dismissed by the High Court.
Ms Agnes Foo helped Mr Ho Kiau Seng buy 11 apartments for $37 million in all. She claimed he agreed to pay her $437,870 for helping him get a 'good price'.
Mr Ho, 65, argued that although he had verbally agreed to pay her a commission, he had done so on the condition that she would resell the flats for him. This did not happen.
He had also been under the impression that she would get a commission from the seller.
Justice Lee Seiu Kin threw out Ms Foo's claim earlier this week. He also ordered her to hand back the $165,956 that Mr Ho had given her for her expenses.
The judge noted that it was 'unusual' for a housing agent to collect a commission from the buyer when she was expected to get her due from the seller.
Ms Foo was helping to market a housing project in Buckley Road near Newton in 2007 when she met Mr Ho, the managing director of steel products firm Leong Jin Corporation.
Three months later, he signed a deal to buy 11 units at the project, in his personal capacity.
He then made two payouts to Ms Foo over a period of nine months, for a total of $165,956.
They had different explanations for the payments. Ms Foo claimed they were partial payments of her commission. Mr Ho said they were advances for her expenses, made at her request.
Ms Foo, defended by lawyer John Tan, claimed that Mr Ho had agreed to pay a sum equivalent to 30 per cent of the savings she had obtained for him. This worked out to $437,870.
Mr Ho, defended by lawyers Hee Theng Fong and Sim Mei Ling from KhattarWong, denied making any such agreement.
Justice Lee said in his grounds of judgment that although Mr Ho had agreed to pay a commission to Ms Foo, the sums were not agreed upon until after the option to buy had been clinched.
There was no formula
Property agent loses 'commission' suit
A PROPERTY agent who sued a buyer for $437,870 that she said he owed her as a commission has had her claim dismissed by the High Court.
Ms Agnes Foo helped Mr Ho Kiau Seng buy 11 apartments for $37 million in all. She claimed he agreed to pay her $437,870 for helping him get a 'good price'.
Mr Ho, 65, argued that although he had verbally agreed to pay her a commission, he had done so on the condition that she would resell the flats for him. This did not happen.
He had also been under the impression that she would get a commission from the seller.
Justice Lee Seiu Kin threw out Ms Foo's claim earlier this week. He also ordered her to hand back the $165,956 that Mr Ho had given her for her expenses.
The judge noted that it was 'unusual' for a housing agent to collect a commission from the buyer when she was expected to get her due from the seller.
Ms Foo was helping to market a housing project in Buckley Road near Newton in 2007 when she met Mr Ho, the managing director of steel products firm Leong Jin Corporation.
Three months later, he signed a deal to buy 11 units at the project, in his personal capacity.
He then made two payouts to Ms Foo over a period of nine months, for a total of $165,956.
They had different explanations for the payments. Ms Foo claimed they were partial payments of her commission. Mr Ho said they were advances for her expenses, made at her request.
Ms Foo, defended by lawyer John Tan, claimed that Mr Ho had agreed to pay a sum equivalent to 30 per cent of the savings she had obtained for him. This worked out to $437,870.
Mr Ho, defended by lawyers Hee Theng Fong and Sim Mei Ling from KhattarWong, denied making any such agreement.
Justice Lee said in his grounds of judgment that although Mr Ho had agreed to pay a commission to Ms Foo, the sums were not agreed upon until after the option to buy had been clinched.
There was no formula
ST : Stamp duty: Mixed views from analysts
15 JAN 2011,
property measures
Stamp duty: Mixed views from analysts
By Cheryl Lim
THE dramatic ramping up of the stamp duty applicable to property sellers has drawn mixed reactions from analysts.
Some say the new regulations provide useful protection against the excesses of an unfettered market, which could lead to spiralling foreclosures. Others worry that sellers switching homes for legitimate reasons will be hurt.
Under the new rules - part of the Government's latest property cooling measures, unveiled on Thursday - sellers must pay stamp duty if they sell their homes within four years of the purchase.
The rate is 16 per cent of the selling price in the first year, 12 per cent in the second, 8 per cent in the third and 4 per cent in the fourth.
Previously, stamp duty was imposed if the property was sold within three years of the purchase. Also, the rates were considerably lower at 3 per cent of the selling price in the first year, 2 per cent in the second and 1 per cent in the third.
Credo Real Estate managing director Karamjit Singh said the new changes might seem harsh, especially to buyers planning to relocate for personal reasons during the period subject to stamp duty.
'If they want to move so they can be closer to schools, work or relatives, they would not be considered speculators. Yet, they would still be penalised for selling their property,' he said.
Some analysts likened the seller's stamp duty to the five-year minimum occupation period instituted for owners of Housing Board flats.
Mr Singh said public sector housing is heavily subsidised, but private homes are not, so they should not be controlled to such an extent.
However, Mr Donald Han, the vice-chairman of property consultancy Cushman & Wakefield, said: 'If you give free rein to the market, investors who have dabbled too heavily in real estate could fall into a spiral of foreclosures. This revision protects those who might otherwise over-indulge and buy real estate in a bigger way.'
Mr Colin Tan, a research and consultancy director at Chesterton Suntec International, said property is an emotional issue for Singaporeans. 'Everyone has property dreams and dreams are emotional.'
He said owners thinking of selling their property might be disconcerted by the limitations, but he noted that they could actually prove to be a 'blessing in disguise'.
Mr Singh said that while buyers and sellers will need to rethink their housing plans in view of the new regulations, the measures will help solve the short-term problem of demand outstripping supply.
'It could be another one or two years before the system finds some sort of balance... and the Government could withdraw the measures when they are no longer perceived as necessary.'
property measures
Stamp duty: Mixed views from analysts
By Cheryl Lim
THE dramatic ramping up of the stamp duty applicable to property sellers has drawn mixed reactions from analysts.
Some say the new regulations provide useful protection against the excesses of an unfettered market, which could lead to spiralling foreclosures. Others worry that sellers switching homes for legitimate reasons will be hurt.
Under the new rules - part of the Government's latest property cooling measures, unveiled on Thursday - sellers must pay stamp duty if they sell their homes within four years of the purchase.
The rate is 16 per cent of the selling price in the first year, 12 per cent in the second, 8 per cent in the third and 4 per cent in the fourth.
Previously, stamp duty was imposed if the property was sold within three years of the purchase. Also, the rates were considerably lower at 3 per cent of the selling price in the first year, 2 per cent in the second and 1 per cent in the third.
Credo Real Estate managing director Karamjit Singh said the new changes might seem harsh, especially to buyers planning to relocate for personal reasons during the period subject to stamp duty.
'If they want to move so they can be closer to schools, work or relatives, they would not be considered speculators. Yet, they would still be penalised for selling their property,' he said.
Some analysts likened the seller's stamp duty to the five-year minimum occupation period instituted for owners of Housing Board flats.
Mr Singh said public sector housing is heavily subsidised, but private homes are not, so they should not be controlled to such an extent.
However, Mr Donald Han, the vice-chairman of property consultancy Cushman & Wakefield, said: 'If you give free rein to the market, investors who have dabbled too heavily in real estate could fall into a spiral of foreclosures. This revision protects those who might otherwise over-indulge and buy real estate in a bigger way.'
Mr Colin Tan, a research and consultancy director at Chesterton Suntec International, said property is an emotional issue for Singaporeans. 'Everyone has property dreams and dreams are emotional.'
He said owners thinking of selling their property might be disconcerted by the limitations, but he noted that they could actually prove to be a 'blessing in disguise'.
Mr Singh said that while buyers and sellers will need to rethink their housing plans in view of the new regulations, the measures will help solve the short-term problem of demand outstripping supply.
'It could be another one or two years before the system finds some sort of balance... and the Government could withdraw the measures when they are no longer perceived as necessary.'
ST : MAS wants tighter rules for home loans
15 JAN 2011,
property measures
MAS wants tighter rules for home loans
Borrowers' debts from other sources should be taken into account in assessment, it said
By Gabriel Chen
HOMEBUYERS may not get the same quantum of loans from banks to buy a home under new rules being proposed by the regulator.
The Monetary Authority of Singapore (MAS), in a consultation paper released on Thursday, wants financial institutions to add up a borrower's loans from sources like unsecured credit facilities and insurance policies before deciding on how much they can lend for a home.
MAS' aim is to remind banks to maintain prudent credit standards and to encourage financial prudence among borrowers.
Take a person with a $5,000 loan under Citibank's Ready Credit facility and a $5,000 insurance policy loan with insurer Great Eastern.
The MAS is proposing that these debts be taken into account by the bank when computing the homebuyer's loan-to-value (LTV) ratio and in assessing whether he complies with lending rules.
And in another 'prudential measure', the MAS is proposing that mortgage equity withdrawal loans (MWLs) - akin to a home equity line of credit - be subjected to various LTV limits.
These loans, which can be used for anything from refinancing a primary housing loan to buying shares, have been on the rise following the Goverment's August property cooling measures.
Bankers say that more borrowers have been using such loans to make downpayments for investment property.
The LTV limits vary across the industry although some 'liberal banks' are increasingly applying the 90 per cent LTV limits.
The MAS is now proposing that if a borrower has already paid off the mortgage on his home, he can buy another property with at least a 20 per cent deposit with a MWL.
But if he still has outstanding mortgage debt, he will have to put down at least 40 per cent deposit on a second home.
The MAS noted that the purpose of this policy is 'to apply the regulatory LTV limits, not just to loans used to purchase residential property, but to loans secured on residential property as well'.
'This is to be consistent with the need for financial institutions to maintain prudent credit standards and to encourage financial prudence among borrowers.'
If implemented, it can be 'seen to curb overleverage by consumers in the context that interest rates globally are unlikely to stay at depressed levels indefinitely', according to Mr Geoffrey Ying, who heads the mortgage division at financial advisory firm New Independent.
Ms Helen Neo, Maybank Singapore's head of consumer banking, reckons the proposals could reduce the likelihood of negative equity - when the loan exceeds the value of the home.
But some bankers say the proposal to factor in unsecured credit facilities and insurance policy loans could be hard to implement.
'Most banks already factor in an individual's unsecured credit facilities in the calculation of his total debt-servicing ratio, by tapping on Credit Bureau data,' said Standard Chartered's head of consumer banking for Singapore, Mr Dennis Khoo.
'But it's currently inferred because the data indicates the total amount of credit facilities the individual has with banks, and not the breakdown of how much facilities he has with each bank.'
gabrielc@sph.com.sg
property measures
MAS wants tighter rules for home loans
Borrowers' debts from other sources should be taken into account in assessment, it said
By Gabriel Chen
HOMEBUYERS may not get the same quantum of loans from banks to buy a home under new rules being proposed by the regulator.
The Monetary Authority of Singapore (MAS), in a consultation paper released on Thursday, wants financial institutions to add up a borrower's loans from sources like unsecured credit facilities and insurance policies before deciding on how much they can lend for a home.
MAS' aim is to remind banks to maintain prudent credit standards and to encourage financial prudence among borrowers.
Take a person with a $5,000 loan under Citibank's Ready Credit facility and a $5,000 insurance policy loan with insurer Great Eastern.
The MAS is proposing that these debts be taken into account by the bank when computing the homebuyer's loan-to-value (LTV) ratio and in assessing whether he complies with lending rules.
And in another 'prudential measure', the MAS is proposing that mortgage equity withdrawal loans (MWLs) - akin to a home equity line of credit - be subjected to various LTV limits.
These loans, which can be used for anything from refinancing a primary housing loan to buying shares, have been on the rise following the Goverment's August property cooling measures.
Bankers say that more borrowers have been using such loans to make downpayments for investment property.
The LTV limits vary across the industry although some 'liberal banks' are increasingly applying the 90 per cent LTV limits.
The MAS is now proposing that if a borrower has already paid off the mortgage on his home, he can buy another property with at least a 20 per cent deposit with a MWL.
But if he still has outstanding mortgage debt, he will have to put down at least 40 per cent deposit on a second home.
The MAS noted that the purpose of this policy is 'to apply the regulatory LTV limits, not just to loans used to purchase residential property, but to loans secured on residential property as well'.
'This is to be consistent with the need for financial institutions to maintain prudent credit standards and to encourage financial prudence among borrowers.'
If implemented, it can be 'seen to curb overleverage by consumers in the context that interest rates globally are unlikely to stay at depressed levels indefinitely', according to Mr Geoffrey Ying, who heads the mortgage division at financial advisory firm New Independent.
Ms Helen Neo, Maybank Singapore's head of consumer banking, reckons the proposals could reduce the likelihood of negative equity - when the loan exceeds the value of the home.
But some bankers say the proposal to factor in unsecured credit facilities and insurance policy loans could be hard to implement.
'Most banks already factor in an individual's unsecured credit facilities in the calculation of his total debt-servicing ratio, by tapping on Credit Bureau data,' said Standard Chartered's head of consumer banking for Singapore, Mr Dennis Khoo.
'But it's currently inferred because the data indicates the total amount of credit facilities the individual has with banks, and not the breakdown of how much facilities he has with each bank.'
gabrielc@sph.com.sg
ST : Investor forfeits $10,000 fee
15 JAN 2011,
property measures
Investor forfeits $10,000 fee
PROPERTY investor Angela Hou knows what the new cooling measures have cost her - around $10,000.
That is the princely amount she walked away from yesterday after deciding to forfeit her booking fee for a condominium unit she had set her heart on. Ms Hou, 28, was about to buy two condo flats when she heard the news on Thursday night.
'On the spot, I decided to let go of the 1 per cent booking fee for one of the properties, which was about $10,000.'
'Because at least I would have lost that amount, rather than if property prices slide more than 1 per cent then I'll lose out more.'
Ms Hou, who became a property investor, and subsequently an agent after getting the real estate bug a year or so ago, said many others like her have decided to let go of their booking fees and have adopted a wait and see attitude.
'Another reason why I decided to let go was the fear that I might not be able to find a tenant to cover my mortgage,' she added. 'With fewer people selling because of the changes to seller's stamp duty, this means more buyers will be renting out, to cover cost - resulting in oversupply.'
The new measures soured Ms Hou on the property scene after what had been a couple of good years for her. She ventured into real estate and bought a studio unit in District Nine when the property market was down two years ago.
'That was the time during the Lehman Brothers debacle, and the small profit I turned from selling it gave me the confidence to continue,' she said yesterday.
It also gave her a taste of real estate and she became a property agent.
It was all going swimmingly as well thanks to the booming market, and Ms Hou snapped up several properties.
But then Thursday's housing measures landed, leaving her frustrated and out of a substantial sum.
Ms Hou said she will be more careful in future purchases because there is less room for error.
'Who knows, I might look around again in about five months or so, but I'll really have to be sure.'
property measures
Investor forfeits $10,000 fee
PROPERTY investor Angela Hou knows what the new cooling measures have cost her - around $10,000.
That is the princely amount she walked away from yesterday after deciding to forfeit her booking fee for a condominium unit she had set her heart on. Ms Hou, 28, was about to buy two condo flats when she heard the news on Thursday night.
'On the spot, I decided to let go of the 1 per cent booking fee for one of the properties, which was about $10,000.'
'Because at least I would have lost that amount, rather than if property prices slide more than 1 per cent then I'll lose out more.'
Ms Hou, who became a property investor, and subsequently an agent after getting the real estate bug a year or so ago, said many others like her have decided to let go of their booking fees and have adopted a wait and see attitude.
'Another reason why I decided to let go was the fear that I might not be able to find a tenant to cover my mortgage,' she added. 'With fewer people selling because of the changes to seller's stamp duty, this means more buyers will be renting out, to cover cost - resulting in oversupply.'
The new measures soured Ms Hou on the property scene after what had been a couple of good years for her. She ventured into real estate and bought a studio unit in District Nine when the property market was down two years ago.
'That was the time during the Lehman Brothers debacle, and the small profit I turned from selling it gave me the confidence to continue,' she said yesterday.
It also gave her a taste of real estate and she became a property agent.
It was all going swimmingly as well thanks to the booming market, and Ms Hou snapped up several properties.
But then Thursday's housing measures landed, leaving her frustrated and out of a substantial sum.
Ms Hou said she will be more careful in future purchases because there is less room for error.
'Who knows, I might look around again in about five months or so, but I'll really have to be sure.'
ST : Closer to dream of owning his own home
15 JAN 2011,
property measures
Closer to dream of owning his own home
AS A potential first-time home buyer, Mr Joshua Cheah, 29, was all smiles after he heard about the latest Government measures to curb property speculation.
The credit risk analyst, who previously lived with his parents in a five-room flat at Farrer Court, has been on the lookout for his own pad since the HUDC estate went en bloc in 2007.
The family is currently renting a four-room Housing Board flat at Marine Parade.
Mr Cheah has yet to decide if he will buy his first home by himself or together with his parents.
He believes the revision in the seller's stamp duty - which will now range from 4 per cent to 16 per cent, depending on when the sale is done during the four years following the property's purchase - will put off speculators and lead to more affordable prices.
He is keeping his options open and is prepared to wait up to two years 'because these price adjustments take time'.
Before, he was considering only public housing, either new or resale.
'With these new rules, I will wait and see how much private property prices slide before I take the plunge,' he said.
'Just as in Hong Kong, land is scarce in Singapore, so property is a good investment,' he added.
Regarding the new measures, he said: 'It's a good move that will allow more Singaporeans to pursue their dream of owning a home of their own, even with foreign buyers coming in.'
DARYL CHIN
property measures
Closer to dream of owning his own home
AS A potential first-time home buyer, Mr Joshua Cheah, 29, was all smiles after he heard about the latest Government measures to curb property speculation.
The credit risk analyst, who previously lived with his parents in a five-room flat at Farrer Court, has been on the lookout for his own pad since the HUDC estate went en bloc in 2007.
The family is currently renting a four-room Housing Board flat at Marine Parade.
Mr Cheah has yet to decide if he will buy his first home by himself or together with his parents.
He believes the revision in the seller's stamp duty - which will now range from 4 per cent to 16 per cent, depending on when the sale is done during the four years following the property's purchase - will put off speculators and lead to more affordable prices.
He is keeping his options open and is prepared to wait up to two years 'because these price adjustments take time'.
Before, he was considering only public housing, either new or resale.
'With these new rules, I will wait and see how much private property prices slide before I take the plunge,' he said.
'Just as in Hong Kong, land is scarce in Singapore, so property is a good investment,' he added.
Regarding the new measures, he said: 'It's a good move that will allow more Singaporeans to pursue their dream of owning a home of their own, even with foreign buyers coming in.'
DARYL CHIN
ST : Upgraders get warm feeling from cooling measures
15 JAN 2011,
property measures
Upgraders get warm feeling from cooling measures
UPGRADERS like Mr Ken Kee, 33, are feeling optimistic in the wake of the property market cooling measures announced on Thursday.
The manager, who rents a four-room flat in Sembawang, believes the latest government rulings will dampen speculation and improve their chances of landing their dream homes.
Mr Kee, whose joint income with his wife is less than $7,000, has three sons, aged eight, six and one.
He previously owned a four-room flat in Sembawang, which was bought for $212,000 in 2003 and sold for $380,000 in December.
His dream was to own either an Executive Condominium (EC) or a private property.
Now with the latest measures in place, he is hopeful that prices will head downwards.
As his mortgage has been fully paid up, he is not affected by the new rules which stipulate that buyers with outstanding mortgages must pay at least 40 per cent of the property price up front and in cash.
Instead, he needs to pay only 20 per cent up front and can borrow up to 80 per cent.
While he is glad that the new measures could mean less competition from speculators, he also knows that he cannot own private property and also invest in a resale HDB flat.
The measures introduced on Aug 30 last year stipulate that owners must sell their private properties after buying resale flats.
That said, however, he remains upbeat: 'Since there is a lot of uncertainty in the market now, I think this is the best time to go in, before prices inch upwards again.'
DARYL CHIN
property measures
Upgraders get warm feeling from cooling measures
UPGRADERS like Mr Ken Kee, 33, are feeling optimistic in the wake of the property market cooling measures announced on Thursday.
The manager, who rents a four-room flat in Sembawang, believes the latest government rulings will dampen speculation and improve their chances of landing their dream homes.
Mr Kee, whose joint income with his wife is less than $7,000, has three sons, aged eight, six and one.
He previously owned a four-room flat in Sembawang, which was bought for $212,000 in 2003 and sold for $380,000 in December.
His dream was to own either an Executive Condominium (EC) or a private property.
Now with the latest measures in place, he is hopeful that prices will head downwards.
As his mortgage has been fully paid up, he is not affected by the new rules which stipulate that buyers with outstanding mortgages must pay at least 40 per cent of the property price up front and in cash.
Instead, he needs to pay only 20 per cent up front and can borrow up to 80 per cent.
While he is glad that the new measures could mean less competition from speculators, he also knows that he cannot own private property and also invest in a resale HDB flat.
The measures introduced on Aug 30 last year stipulate that owners must sell their private properties after buying resale flats.
That said, however, he remains upbeat: 'Since there is a lot of uncertainty in the market now, I think this is the best time to go in, before prices inch upwards again.'
DARYL CHIN
ST : Impact on prices likely only after Q1
15 JAN 2011,
property measures
Impact on prices likely only after Q1
By Esther Teo
HOME prices are expected to take a tumble this year on the back of tough new cooling measures unveiled by the Government on Thursday, although top-end homes might be immune.
Some analysts are predicting suburban home prices to fall by as much as 10 per cent after a significant run-up in the recent red-hot market.
Any correction, however, is likely to emerge only after the first quarter of the year. Price falls often come only after a prolonged stand-off between buyers and sellers, they add.
Most experts agree any further rise of prices will be halted at least temporarily as buyers adjust to the measures.
But they added that continued low interest rates and strong confidence in the economy and property market might counter any prolonged dampening impact.
The measures unveiled include a higher seller's stamp duty of up to 16 per cent applying to up to four years after date of purchase.
Research firm Kim Eng said the mass market segment remains the most vulnerable, adding that prices could fall by up to 10 per cent over the next year.
Buyers in the mid- to high-end segment tend to have deeper pockets. But even then, higher stamp duty may cap price appreciation now, it added.
DMG & Partners property analyst Brandon Lee also expects a 10 per cent correction for mass market homes, where buyers usually take on larger loans and are more price-sensitive. He believes this will come in the second half of the year.
However, Mr Lee expects high-end property prices to hold steady owing to their limited supply and the strong holding power of such developers.
But not all experts agree that mass market homes will be the worst hit. Cushman & Wakefield's senior manager for Asia-Pacific research Ong Kah Seng says prices in this segment are unlikely to fall immediately, as they are underpinned by genuine demand and the economy's strength.
However, this could change if there is prolonged resistance to home buying, he added.
UOB Kay Hian property analyst Vikrant Pandey has drastically cut his price forecast for this year from up to 3 per cent growth to a 5 to 15 per cent correction. He also expects sales volumes to fall by up to 35 per cent.
'The seller's stamp duty hike is the most severe unanticipated measure and would instantly dry up speculative transactions that make up around 8 per cent of total housing transactions and will cause a major slowdown in the secondary market,' he said.
A day after the market was stunned by the tougher-than-expected measures, analysts say only first-time homebuyers and those without outstanding home loans have emerged unscathed. They can look forward to property prices taking a dip from their record highs.
Property developers and disgruntled owners looking to sell their homes, however, will have to adjust to a shrinking buyer pool as many take a wait-and-see approach on their purchases.
Mr Chia Boon Kuah, chief operating officer of property sales at Far East Organization, said that the firm is presently reviewing some of its business programmes to build a stronger base of long-term buyers. 'We will roll out our launches as and when ready,' he added.
CapitaLand chief executive Liew Mun Leong said at a public lecture at National University of Singapore yesterday he expects sales volume and home prices in all segments, except at the top-end, to fall.
Boutique developer EL Development managing director Lim Yew Soon, who is planning to launch SkySuites 17 at Balestier in March, said he will watch market reaction closely in the next two months.
'If the reaction is not so strong then we may proceed as planned but if the market quietens down then we may postpone it to a later date,' he added.
Even if the firm was willing to drop the launch prices, they cannot fall much lower since there were already many other costs to consider, Mr Lim said.
Additional reporting by Cheryl Lim
property measures
Impact on prices likely only after Q1
By Esther Teo
HOME prices are expected to take a tumble this year on the back of tough new cooling measures unveiled by the Government on Thursday, although top-end homes might be immune.
Some analysts are predicting suburban home prices to fall by as much as 10 per cent after a significant run-up in the recent red-hot market.
Any correction, however, is likely to emerge only after the first quarter of the year. Price falls often come only after a prolonged stand-off between buyers and sellers, they add.
Most experts agree any further rise of prices will be halted at least temporarily as buyers adjust to the measures.
But they added that continued low interest rates and strong confidence in the economy and property market might counter any prolonged dampening impact.
The measures unveiled include a higher seller's stamp duty of up to 16 per cent applying to up to four years after date of purchase.
Research firm Kim Eng said the mass market segment remains the most vulnerable, adding that prices could fall by up to 10 per cent over the next year.
Buyers in the mid- to high-end segment tend to have deeper pockets. But even then, higher stamp duty may cap price appreciation now, it added.
DMG & Partners property analyst Brandon Lee also expects a 10 per cent correction for mass market homes, where buyers usually take on larger loans and are more price-sensitive. He believes this will come in the second half of the year.
However, Mr Lee expects high-end property prices to hold steady owing to their limited supply and the strong holding power of such developers.
But not all experts agree that mass market homes will be the worst hit. Cushman & Wakefield's senior manager for Asia-Pacific research Ong Kah Seng says prices in this segment are unlikely to fall immediately, as they are underpinned by genuine demand and the economy's strength.
However, this could change if there is prolonged resistance to home buying, he added.
UOB Kay Hian property analyst Vikrant Pandey has drastically cut his price forecast for this year from up to 3 per cent growth to a 5 to 15 per cent correction. He also expects sales volumes to fall by up to 35 per cent.
'The seller's stamp duty hike is the most severe unanticipated measure and would instantly dry up speculative transactions that make up around 8 per cent of total housing transactions and will cause a major slowdown in the secondary market,' he said.
A day after the market was stunned by the tougher-than-expected measures, analysts say only first-time homebuyers and those without outstanding home loans have emerged unscathed. They can look forward to property prices taking a dip from their record highs.
Property developers and disgruntled owners looking to sell their homes, however, will have to adjust to a shrinking buyer pool as many take a wait-and-see approach on their purchases.
Mr Chia Boon Kuah, chief operating officer of property sales at Far East Organization, said that the firm is presently reviewing some of its business programmes to build a stronger base of long-term buyers. 'We will roll out our launches as and when ready,' he added.
CapitaLand chief executive Liew Mun Leong said at a public lecture at National University of Singapore yesterday he expects sales volume and home prices in all segments, except at the top-end, to fall.
Boutique developer EL Development managing director Lim Yew Soon, who is planning to launch SkySuites 17 at Balestier in March, said he will watch market reaction closely in the next two months.
'If the reaction is not so strong then we may proceed as planned but if the market quietens down then we may postpone it to a later date,' he added.
Even if the firm was willing to drop the launch prices, they cannot fall much lower since there were already many other costs to consider, Mr Lim said.
Additional reporting by Cheryl Lim
ST : Investment condo now out of reach
15 JAN 2011
property measures
Investment condo now out of reach
THE investment condo Mrs Rhoda Dinesen was all set to buy after years of saving has got that much more out of reach.
The new rules mean Mrs Dinesen, 42, has to stump up a much bigger upfront payment - 40 per cent instead of 30 per cent - as she still has an outstanding loan on her first home.
'Where in the world does anybody have 40 per cent waiting in the bank that is not used somewhere else? This rules out the middle class completely,' she said yesterday.
It has all come as a bitter blow for the director of a public relations agency.
In 2002 she took out a 25-year bank loan for a three-room condominium unit in Geylang.
Nearly 10 years on she felt it was the time to buy another property.
'I, like many others, want to get a bigger place as I'm trying to bring in my mother to live with us. I also want to leave this area and move to somewhere quieter like Kembangan.'
But now she fears she may have missed the boat.
'A few years ago, I could purchase only something up to $800,000, but my dream home was valued at $1.2 million. So I waited. Then the measures kicked in last year, and I waited again. (Thursday) was a shocker.'
If Mrs Dinesen, who still has an outstanding home loan, bought a house before yesterday, she would have needed to pay only 30 per cent of the price upfront and borrow the rest.
But now she would have to fork out 40 per cent - cash she just does not have.
Her focus now is to keep a lookout for properties overseas. 'For many of us, it's not about speculation, it's about retirement. If I can't buy in Singapore, I'll just buy overseas, because I have to think long term about what I will have when I retire.'
property measures
Investment condo now out of reach
THE investment condo Mrs Rhoda Dinesen was all set to buy after years of saving has got that much more out of reach.
The new rules mean Mrs Dinesen, 42, has to stump up a much bigger upfront payment - 40 per cent instead of 30 per cent - as she still has an outstanding loan on her first home.
'Where in the world does anybody have 40 per cent waiting in the bank that is not used somewhere else? This rules out the middle class completely,' she said yesterday.
It has all come as a bitter blow for the director of a public relations agency.
In 2002 she took out a 25-year bank loan for a three-room condominium unit in Geylang.
Nearly 10 years on she felt it was the time to buy another property.
'I, like many others, want to get a bigger place as I'm trying to bring in my mother to live with us. I also want to leave this area and move to somewhere quieter like Kembangan.'
But now she fears she may have missed the boat.
'A few years ago, I could purchase only something up to $800,000, but my dream home was valued at $1.2 million. So I waited. Then the measures kicked in last year, and I waited again. (Thursday) was a shocker.'
If Mrs Dinesen, who still has an outstanding home loan, bought a house before yesterday, she would have needed to pay only 30 per cent of the price upfront and borrow the rest.
But now she would have to fork out 40 per cent - cash she just does not have.
Her focus now is to keep a lookout for properties overseas. 'For many of us, it's not about speculation, it's about retirement. If I can't buy in Singapore, I'll just buy overseas, because I have to think long term about what I will have when I retire.'
ST : Property measures cool sentiments
15 JAN 2011
property measures
Property measures cool sentiments
Some buyers pull out, property shares hit, developers take stock
By Jessica Cheam
SCORES of buyers have withdrawn offers or walked away from thousands of dollars of deposits as the shock of the tough cooling measures reverberated through the housing market yesterday.
Agents have also reported that their phones have been running hot with worried people wanting advice.
And property shares of companies like City Developments (CDL), Keppel Land and CapitaLand fell as well with investors bailing out of the sector.
But one group was smiling yesterday: First-time buyers, who are optimistic that prices will now fall enough to allow them to get onto the private property ladder.
The Government announced new rules on Thursday that raised the seller's stamp duty on new properties to as much as 16 per cent of the sale price if the home is offloaded within a year.
The amount banks can lend on a second property has been lowered to 60 per cent of the home's value.
The Government's move has stunned both sides of the market - developers and some buyers - with neither sure how to move forward.
International Property Advisor chief executive Ku Swee Yong said many of the firm's clients had withdrawn their cheques or postponed decisions to buy.
Others who had paid option fees - around $10,000 for a $1 million property - have walked away from the money rather than sign on the dotted line.
But first time buyers such as credit analyst Mr Joshua Cheah, 29, were upbeat. Mr Cheah, who is renting a flat with his parents and plans to buy a private home, believes the moves will deter speculators and put a property within his reach.
While some analysts say the measures will effectively wipe out all speculative activity and even end genuine investor demand, others in the industry are downplaying the impact.
CapitaLand chief executive Liew Mun Leong says it is 'business as usual' for the firm, with no plans to delay launches or reduce prices in spite of the tough cooling measures.
Law firm Rodyk & Davidson partner Lee Liat Yeang, who acts for many real estate developers, said that although developers are concerned, 'generally they are still optimistic'.
One developer client of the firm said it may go ahead with launches as demand is still there. This is true for many mass market condos who target first-time buyers, which are largely unaffected by the new financing rules, added Mr Lee.
But Mr Nicholas Mak, SLP International Property Consultants' research executive director, said: 'We are expecting developers to delay launches. Whether prices will fall is the big question,' he said.
CDL spokesman Gerry De Silva told The Straits Times: 'The market will take time to absorb the news. We will assess the situation and meanwhile review our strategy.'
Other developers have said they will also take the wait-and-see approach but The Straits Times understands some have already pulled back on marketing with at least three big-name firms yanking marketing campaigns for new launches.
Still, SLP's Mr Mak said there could be a silver lining: Land prices for future tenders could decline in the light of weaker sentiment and in turn lead to cheaper apartments.
Meanwhile, banks say the moves are unlikely to have a major impact on their business.
Ms Vibha Coburn, business director of secured finance solutions at Citibank Singapore, said buyers are not always borrowing the maximum loan they can get due to the high liquidity in the market.
jcheam@sph.com.sg
Additional reporting by Esther Teo
At least three big firms have pulled marketing campaigns for new launches, while other developers say they will take a wait-and-see approach. --ST FILE PHOTO
property measures
Property measures cool sentiments
Some buyers pull out, property shares hit, developers take stock
By Jessica Cheam
SCORES of buyers have withdrawn offers or walked away from thousands of dollars of deposits as the shock of the tough cooling measures reverberated through the housing market yesterday.
Agents have also reported that their phones have been running hot with worried people wanting advice.
And property shares of companies like City Developments (CDL), Keppel Land and CapitaLand fell as well with investors bailing out of the sector.
But one group was smiling yesterday: First-time buyers, who are optimistic that prices will now fall enough to allow them to get onto the private property ladder.
The Government announced new rules on Thursday that raised the seller's stamp duty on new properties to as much as 16 per cent of the sale price if the home is offloaded within a year.
The amount banks can lend on a second property has been lowered to 60 per cent of the home's value.
The Government's move has stunned both sides of the market - developers and some buyers - with neither sure how to move forward.
International Property Advisor chief executive Ku Swee Yong said many of the firm's clients had withdrawn their cheques or postponed decisions to buy.
Others who had paid option fees - around $10,000 for a $1 million property - have walked away from the money rather than sign on the dotted line.
But first time buyers such as credit analyst Mr Joshua Cheah, 29, were upbeat. Mr Cheah, who is renting a flat with his parents and plans to buy a private home, believes the moves will deter speculators and put a property within his reach.
While some analysts say the measures will effectively wipe out all speculative activity and even end genuine investor demand, others in the industry are downplaying the impact.
CapitaLand chief executive Liew Mun Leong says it is 'business as usual' for the firm, with no plans to delay launches or reduce prices in spite of the tough cooling measures.
Law firm Rodyk & Davidson partner Lee Liat Yeang, who acts for many real estate developers, said that although developers are concerned, 'generally they are still optimistic'.
One developer client of the firm said it may go ahead with launches as demand is still there. This is true for many mass market condos who target first-time buyers, which are largely unaffected by the new financing rules, added Mr Lee.
But Mr Nicholas Mak, SLP International Property Consultants' research executive director, said: 'We are expecting developers to delay launches. Whether prices will fall is the big question,' he said.
CDL spokesman Gerry De Silva told The Straits Times: 'The market will take time to absorb the news. We will assess the situation and meanwhile review our strategy.'
Other developers have said they will also take the wait-and-see approach but The Straits Times understands some have already pulled back on marketing with at least three big-name firms yanking marketing campaigns for new launches.
Still, SLP's Mr Mak said there could be a silver lining: Land prices for future tenders could decline in the light of weaker sentiment and in turn lead to cheaper apartments.
Meanwhile, banks say the moves are unlikely to have a major impact on their business.
Ms Vibha Coburn, business director of secured finance solutions at Citibank Singapore, said buyers are not always borrowing the maximum loan they can get due to the high liquidity in the market.
jcheam@sph.com.sg
Additional reporting by Esther Teo
At least three big firms have pulled marketing campaigns for new launches, while other developers say they will take a wait-and-see approach. --ST FILE PHOTO
ST : Firms will have to fork out bigger cash proportion
14 JAN 2011
new property curbs
Firms will have to fork out bigger cash proportion
By Cheryl Lim
ONE small group of property buyers will have to fork out a higher proportion of cash upfront than all other buyers as a result of the latest round of property market cooling measures.
Buyers who are not individuals - that includes companies, trusts and collective investment schemes - can borrow just 50 per cent of the property's value.
They are being forced to put half of the property's value on the table in cash after the loan-to-value ratio has been slashed for them.
The loan-to-value ratio represents the size of a loan as a percentage of a property's worth.
This group accounts for a small but growing portion of property deals as these investors look to property as a way to protect themselves against the impact of rising levels of inflation.
This new limit comes into effect today and will also apply to joint property deals by an individual and purchaser who is not an individual.
In February last year, the limit for all housing loans provided by financial institutions was lowered to 80 per cent.
That was cut even further to 70 per cent for all housing loans in the last round of property measures last August.
Observers said that the number of purchases by non-individuals is small. But property consultancy Propnex's chief executive Mohamed Ismail said he believes this latest measure has been introduced to prevent individuals from circumventing the earlier rules by incorporating companies to buy property.
Mr Png Poh Soon, head of research and consultancy at Knight Frank, said non-individual buyers do not make up a significant portion of all property buyers.
'We do see companies and institutions coming in from overseas to buy property in bulk, but in terms of percentage purchased, it is not significant,' said Mr Png.
He added investors prefer putting their money in Singapore because it is more stable and secure.
Urban Redevelopment Authority Realis data obtained by property consultancy Cushman & Wakefield shows this group of buyers made up 2.8 per cent of total private residential transactions in the first quarter of last year.
In the second quarter, this figure was 2.6, increasing to 4.2 per cent in the third quarter and then to 6.2 per cent in the last quarter.
Knight Frank's Mr Png added that these buyers mostly look to buy commercial and office property but they may also turn their eye to the residential sector. He pointed out the latest measures might not deter these buyers, because some may be able to hold off selling the property for a longer period.
'(These measures) are to make sure they think twice before buying and to encourage more long-term investors rather than short-term speculators,' he said.
new property curbs
Firms will have to fork out bigger cash proportion
By Cheryl Lim
ONE small group of property buyers will have to fork out a higher proportion of cash upfront than all other buyers as a result of the latest round of property market cooling measures.
Buyers who are not individuals - that includes companies, trusts and collective investment schemes - can borrow just 50 per cent of the property's value.
They are being forced to put half of the property's value on the table in cash after the loan-to-value ratio has been slashed for them.
The loan-to-value ratio represents the size of a loan as a percentage of a property's worth.
This group accounts for a small but growing portion of property deals as these investors look to property as a way to protect themselves against the impact of rising levels of inflation.
This new limit comes into effect today and will also apply to joint property deals by an individual and purchaser who is not an individual.
In February last year, the limit for all housing loans provided by financial institutions was lowered to 80 per cent.
That was cut even further to 70 per cent for all housing loans in the last round of property measures last August.
Observers said that the number of purchases by non-individuals is small. But property consultancy Propnex's chief executive Mohamed Ismail said he believes this latest measure has been introduced to prevent individuals from circumventing the earlier rules by incorporating companies to buy property.
Mr Png Poh Soon, head of research and consultancy at Knight Frank, said non-individual buyers do not make up a significant portion of all property buyers.
'We do see companies and institutions coming in from overseas to buy property in bulk, but in terms of percentage purchased, it is not significant,' said Mr Png.
He added investors prefer putting their money in Singapore because it is more stable and secure.
Urban Redevelopment Authority Realis data obtained by property consultancy Cushman & Wakefield shows this group of buyers made up 2.8 per cent of total private residential transactions in the first quarter of last year.
In the second quarter, this figure was 2.6, increasing to 4.2 per cent in the third quarter and then to 6.2 per cent in the last quarter.
Knight Frank's Mr Png added that these buyers mostly look to buy commercial and office property but they may also turn their eye to the residential sector. He pointed out the latest measures might not deter these buyers, because some may be able to hold off selling the property for a longer period.
'(These measures) are to make sure they think twice before buying and to encourage more long-term investors rather than short-term speculators,' he said.
ST : New measures to curb property speculation
13 Jan 2011,
new property curbs
New measures to curb property speculation
Govt steps in for fourth time in two years, catching many by surprise
By Esther Teo
A CHILL is set to descend on Singapore's property market after the Government unveiled tough new measures yesterday that analysts say will effectively kill off short-term speculation and make most property investors look before they leap.
They include hiking seller's stamp duty to a new maximum of 16 per cent, up from 3 per cent previously, and making it payable for up to four years from the date of purchase of a property.
Anyone with an existing home loan looking to buy a second property for investment will also now need to fork out more cash and Central Provident Fund savings.
That is because the loan limit for such properties is now 60 per cent of the property's value, down from 70 per cent previously.
The measures take effect today.
Yesterday's announcement marked the fourth time in less than two years that the Government has stepped in to cool the property market here.
It caught many by surprise, since it comes barely five months after tighter financing and ownership rules were announced on Aug 30 last year.
In its statement, the Government said that while these previous measures had to some extent moderated the market, sentiment remained buoyant.
'Low interest rates plus excessive liquidity in the financial system - both in Singapore and globally - could cause prices to rise beyond sustainable levels based on economic fundamentals,' it added.
'Moreover, when interest rates eventually rise, it could strain purchasers who have over-extended themselves financially.'
Even as the Government moved to temper exuberance in the market, homes were flying off the shelf.
Local developer Oxley Holdings separately announced yesterday that its 41-unit Loft@Holland condominium was sold out within two hours of its soft launch at prices from $1,630 per sq ft to $2,166 per sq ft.
'Demand was strong enough to require balloting to be conducted for all but two units,' it added. 'On average, there were about three interested buyers per unit.'
The seller's stamp duty was first introduced in February last year. Its impact is especially significant because it is payable regardless of whether the property is sold at a gain or loss.
The Government also introduced a new rule that will see institutions such as corporations, trusts and collective investment schemes face tighter financing rules.
The loan limit will be lowered to 50 per cent on housing loans granted to property purchasers of such types who are 'not individuals or natural persons'. There was no rule specific to this class of investors previously.
But these tighter rules will not apply to loans granted to property developers for en bloc sales or land zoned for residential purposes, the Monetary Authority of Singapore said.
Although the new measures have been introduced to cool the market in general and encourage greater financial prudence among home buyers, some property buyers will remain unaffected.
First-time buyers, as well as property owners without outstanding home loans, continue to be able to borrow up to 80 per cent of the value of the property.
Private home prices climbed 17.6 per cent last year as a record 15,025 new homes were sold in the first 11 months of the year.
A surfeit of liquidity and low borrowing rates have also fuelled concerns that asset bubbles are forming not just in Singapore but in regional economies like Hong Kong and China.
In November, Hong Kong announced some of its toughest-ever measures to cool the property market, applying a stamp duty of as high as 15 per cent on apartments sold within six months of purchase.
Downpayments for homes costing HK$12 million (S$2 million) or more also rose to 50 per cent, from 40 per cent previously.
Sounding shell-shocked, industry players said the market will probably react in a knee-jerk manner.
Buying interest will dry up initially and new property launches will slow down as the market digests the news.
Ms Tay Huey Ying, director of research and consultancy at Colliers International, expects home buyers to be on their guard, leading to a fall in sales volume in the short term before possibly recovering later.
She has revised her price growth forecast for this year down from 10 per cent to between 5 and 8 per cent.
The Real Estate Developers' Association of Singapore (Redas) said that the measures will discourage speculative demand and will encourage longer-term holding of properties, contributing to the stability of the market.
'It is in the interest of the market to see a more gradual trend in growth and value for genuine home owners and investors,' it said.
Ms Valerie Lee, 24, a first-time buyer looking for a private home, welcomed the new measures, saying that property prices have remained out of her reach even after the Aug 30 measures were introduced.
'As a genuine buyer, I think it's a good move,' said the executive in a utility and energy company. 'The property price index is still going up, so hopefully these new measures will work and be substantial enough to keep speculators away. I'm hoping that prices will come down.'
esthert@sph.com.sg
More reports
--------------------------------------------------------------------------------
Sounding shell-shocked, industry players said the market will probably react in a knee-jerk manner. Buying interest will dry up initially and new property launches will slow down as the market digests the news.
new property curbs
New measures to curb property speculation
Govt steps in for fourth time in two years, catching many by surprise
By Esther Teo
A CHILL is set to descend on Singapore's property market after the Government unveiled tough new measures yesterday that analysts say will effectively kill off short-term speculation and make most property investors look before they leap.
They include hiking seller's stamp duty to a new maximum of 16 per cent, up from 3 per cent previously, and making it payable for up to four years from the date of purchase of a property.
Anyone with an existing home loan looking to buy a second property for investment will also now need to fork out more cash and Central Provident Fund savings.
That is because the loan limit for such properties is now 60 per cent of the property's value, down from 70 per cent previously.
The measures take effect today.
Yesterday's announcement marked the fourth time in less than two years that the Government has stepped in to cool the property market here.
It caught many by surprise, since it comes barely five months after tighter financing and ownership rules were announced on Aug 30 last year.
In its statement, the Government said that while these previous measures had to some extent moderated the market, sentiment remained buoyant.
'Low interest rates plus excessive liquidity in the financial system - both in Singapore and globally - could cause prices to rise beyond sustainable levels based on economic fundamentals,' it added.
'Moreover, when interest rates eventually rise, it could strain purchasers who have over-extended themselves financially.'
Even as the Government moved to temper exuberance in the market, homes were flying off the shelf.
Local developer Oxley Holdings separately announced yesterday that its 41-unit Loft@Holland condominium was sold out within two hours of its soft launch at prices from $1,630 per sq ft to $2,166 per sq ft.
'Demand was strong enough to require balloting to be conducted for all but two units,' it added. 'On average, there were about three interested buyers per unit.'
The seller's stamp duty was first introduced in February last year. Its impact is especially significant because it is payable regardless of whether the property is sold at a gain or loss.
The Government also introduced a new rule that will see institutions such as corporations, trusts and collective investment schemes face tighter financing rules.
The loan limit will be lowered to 50 per cent on housing loans granted to property purchasers of such types who are 'not individuals or natural persons'. There was no rule specific to this class of investors previously.
But these tighter rules will not apply to loans granted to property developers for en bloc sales or land zoned for residential purposes, the Monetary Authority of Singapore said.
Although the new measures have been introduced to cool the market in general and encourage greater financial prudence among home buyers, some property buyers will remain unaffected.
First-time buyers, as well as property owners without outstanding home loans, continue to be able to borrow up to 80 per cent of the value of the property.
Private home prices climbed 17.6 per cent last year as a record 15,025 new homes were sold in the first 11 months of the year.
A surfeit of liquidity and low borrowing rates have also fuelled concerns that asset bubbles are forming not just in Singapore but in regional economies like Hong Kong and China.
In November, Hong Kong announced some of its toughest-ever measures to cool the property market, applying a stamp duty of as high as 15 per cent on apartments sold within six months of purchase.
Downpayments for homes costing HK$12 million (S$2 million) or more also rose to 50 per cent, from 40 per cent previously.
Sounding shell-shocked, industry players said the market will probably react in a knee-jerk manner.
Buying interest will dry up initially and new property launches will slow down as the market digests the news.
Ms Tay Huey Ying, director of research and consultancy at Colliers International, expects home buyers to be on their guard, leading to a fall in sales volume in the short term before possibly recovering later.
She has revised her price growth forecast for this year down from 10 per cent to between 5 and 8 per cent.
The Real Estate Developers' Association of Singapore (Redas) said that the measures will discourage speculative demand and will encourage longer-term holding of properties, contributing to the stability of the market.
'It is in the interest of the market to see a more gradual trend in growth and value for genuine home owners and investors,' it said.
Ms Valerie Lee, 24, a first-time buyer looking for a private home, welcomed the new measures, saying that property prices have remained out of her reach even after the Aug 30 measures were introduced.
'As a genuine buyer, I think it's a good move,' said the executive in a utility and energy company. 'The property price index is still going up, so hopefully these new measures will work and be substantial enough to keep speculators away. I'm hoping that prices will come down.'
esthert@sph.com.sg
More reports
--------------------------------------------------------------------------------
Sounding shell-shocked, industry players said the market will probably react in a knee-jerk manner. Buying interest will dry up initially and new property launches will slow down as the market digests the news.
ST : Property measures will stem demand for now: Analysts
13 Jan 2011
new property curbs
Property measures will stem demand for now: Analysts
Investors will think twice and developers are expected to delay launches
By Jessica Cheam
THE property cooling measures announced yesterday will effectively halt buying activity from property investors across the private market - at least for the time being.
Market analysts that The Straits Times spoke to said the drastic measures will make investors reassess their finances and think twice before signing on the dotted line.
Developers are also widely expected to postpone their property launches and may lower their prices to lure buyers back to the market in the coming months.
Yesterday's measures, which included raising the seller's stamp duty to a hefty maximum of 16 per cent of the purchase price, and lowering the amount banks can loan home buyers for a second property to 60 per cent of the property's value, were described as 'punitive' by analysts.
Property consultancy International Property Advisor's (IPA) chief executive Ku Swee Yong said the move was a 'sledgehammer' that came as a surprise to the industry.
'Many of our clients who are genuine investors are now re-assessing their loans situation. The market will be frozen stiff for a while,' he said.
And for sellers who buy a private property from today onwards but genuinely need to dispose of their properties in the short-term, such as those who have suffered losses in business or who have fallen critically ill, the stamp duty will 'cripple them completely', he added.
Property investor S.K. Cheah, 42, who is self-employed and already owns a few investment properties, said that genuine investors will find it hard to come up with the 40 per cent downpayment for new investments.
But he conceded that in the long run, this may be healthy for the market as there are many investors out there who may be heavily leveraged and may get into financial trouble when interest rates start climbing.
Mr Colin Tan, research and consultancy director of Chesterton Suntec International, said that the industry had somewhat anticipated another round of measures - but not so soon.
The last round of measures, which tightened ownership rules and restricted financing, was announced last August and the market was still reacting to that, he said.
Demand will most certainly be dampened, added Mr Tan, but he noted that investors who are 'comfortably well off' will not have problems forking out a higher amount upfront for investment homes.
Foreign capital inflows into Singapore - a well-known destination for property investment on the international property circuit - could still create demand in the market, he added.
All eyes are on developers now for their next move.
CapitaLand, for example, was expected to launch around 1,700 new homes this year across some projects such as The Nassim, Urban Resort Condominium, The Interlace and d'Leedon.
City Developments and Far East Organization also had new launches slated for the next few months. When contacted, all three developers declined to comment.
Mr Tan said he expects a knee-jerk reaction from developers, who will now most likely postpone these launches.
Mr Lim Yew Soon, managing director of EL Development, said he is mulling over the effect of the measures on his company's Skysuites 17 at Balestier, which is slated for launch in March.
'If the market takes it lightly, our pricing will still meet market expectations. But if the market reacts drastically, based on upcoming launches, we may decide to hold off the launch by three months or so,' he said.
IPA's Mr Ku said developers may have to reduce their asking prices, and may drop them by 1 to 2 per cent initially to test the market.
Although yesterday's measures did not directly address the public housing market, analysts say the measures could also have a trickle-down effect on HDB resale flat prices.
Mr Ku noted that if mass market home prices started declining to the level of sought-after HDB resale flats in good locations, resale flat prices could weaken as buyers look to buy private property instead.
First-time home buyers such as Ms Yvonne Koh, 26, a bank executive, said the prospect of falling prices is music to her ears. 'I just started looking for a home and was deciding between a private apartment and a resale HDB flat. Hopefully the measures will bring prices down to a more affordable level so I can buy sooner rather than later,' she said.
jcheam@sph.com.sg
new property curbs
Property measures will stem demand for now: Analysts
Investors will think twice and developers are expected to delay launches
By Jessica Cheam
THE property cooling measures announced yesterday will effectively halt buying activity from property investors across the private market - at least for the time being.
Market analysts that The Straits Times spoke to said the drastic measures will make investors reassess their finances and think twice before signing on the dotted line.
Developers are also widely expected to postpone their property launches and may lower their prices to lure buyers back to the market in the coming months.
Yesterday's measures, which included raising the seller's stamp duty to a hefty maximum of 16 per cent of the purchase price, and lowering the amount banks can loan home buyers for a second property to 60 per cent of the property's value, were described as 'punitive' by analysts.
Property consultancy International Property Advisor's (IPA) chief executive Ku Swee Yong said the move was a 'sledgehammer' that came as a surprise to the industry.
'Many of our clients who are genuine investors are now re-assessing their loans situation. The market will be frozen stiff for a while,' he said.
And for sellers who buy a private property from today onwards but genuinely need to dispose of their properties in the short-term, such as those who have suffered losses in business or who have fallen critically ill, the stamp duty will 'cripple them completely', he added.
Property investor S.K. Cheah, 42, who is self-employed and already owns a few investment properties, said that genuine investors will find it hard to come up with the 40 per cent downpayment for new investments.
But he conceded that in the long run, this may be healthy for the market as there are many investors out there who may be heavily leveraged and may get into financial trouble when interest rates start climbing.
Mr Colin Tan, research and consultancy director of Chesterton Suntec International, said that the industry had somewhat anticipated another round of measures - but not so soon.
The last round of measures, which tightened ownership rules and restricted financing, was announced last August and the market was still reacting to that, he said.
Demand will most certainly be dampened, added Mr Tan, but he noted that investors who are 'comfortably well off' will not have problems forking out a higher amount upfront for investment homes.
Foreign capital inflows into Singapore - a well-known destination for property investment on the international property circuit - could still create demand in the market, he added.
All eyes are on developers now for their next move.
CapitaLand, for example, was expected to launch around 1,700 new homes this year across some projects such as The Nassim, Urban Resort Condominium, The Interlace and d'Leedon.
City Developments and Far East Organization also had new launches slated for the next few months. When contacted, all three developers declined to comment.
Mr Tan said he expects a knee-jerk reaction from developers, who will now most likely postpone these launches.
Mr Lim Yew Soon, managing director of EL Development, said he is mulling over the effect of the measures on his company's Skysuites 17 at Balestier, which is slated for launch in March.
'If the market takes it lightly, our pricing will still meet market expectations. But if the market reacts drastically, based on upcoming launches, we may decide to hold off the launch by three months or so,' he said.
IPA's Mr Ku said developers may have to reduce their asking prices, and may drop them by 1 to 2 per cent initially to test the market.
Although yesterday's measures did not directly address the public housing market, analysts say the measures could also have a trickle-down effect on HDB resale flat prices.
Mr Ku noted that if mass market home prices started declining to the level of sought-after HDB resale flats in good locations, resale flat prices could weaken as buyers look to buy private property instead.
First-time home buyers such as Ms Yvonne Koh, 26, a bank executive, said the prospect of falling prices is music to her ears. 'I just started looking for a home and was deciding between a private apartment and a resale HDB flat. Hopefully the measures will bring prices down to a more affordable level so I can buy sooner rather than later,' she said.
jcheam@sph.com.sg
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