ST : Cool, not crash property market

Nov 23, 2009
Cool, not crash property market
By Jessica Cheam



Such schemes included the Interest Absorption Scheme and the Interest-Only Loans, which allowed home buyers to defer the bulk of the payment on their home purchase. -- ST PHOTO: DESMOND FOO

MEASURES to cool the property market appear to have had some effect in tempering market exuberance for private homes, said National Development Minister Mah Bow Tan on Monday.

But the government's intention is to 'cool the market, not crash it', said Mr Mah, who did not rule out restoring some of the disallowed schemes in the future.

Such schemes included the Interest Absorption Scheme and the Interest-Only Loans, which allowed home buyers to defer the bulk of the payment on their home purchase.

These schemes were banned with immediate effect in September, when the Government also announced the resumption of the Government Land Sales (GLS) programme to put supply on the market.

Mr Mah noted in Parliament on Monday that latest figures from the Urban Redevelopment Authority (URA) show that sales of private homes by developers fell month-on-month by 37 per cent in September, and a further 29 per cent in October.

'The Government will continue to monitor the property market closely and assess the market's response to the measures introduced before deciding whether further measures are necessary to promote a stable and sustainable property market,' he said.

ST l Interest rates to stay low

Nov 23, 2009
Interest rates to stay low
Annual average savings rate this year likely to fall below last year's 0.22%
By Francis Chan



The rates of savings accounts are unlikely to rise - at least in the next six months, experts say. -- ST PHOTO: KUA CHEE SIONG

SAVINGS accounts have seen miserly interest rates of below 1 per cent per annum since 2001 - and people hoping for better yields ahead will be disappointed.

The rates are unlikely to rise - at least in the next six months, experts say.

Monthly average savings rates have been on a downward trend from January to last month. This means the annual average rate for this year is likely to dip below last year's already paltry 0.22 per cent.

Rubbing salt into savers' wounds - inflation is likely to rise next year.

Based on figures from 10 banks and financial institutions compiled by the Monetary Authority of Singapore (MAS), savings accounts earned an average of 0.22 per cent a year in January, before holding at just 0.16 per cent from July to last month.

This is a far cry from the 1.28 per cent savers used to get in 2000, which was the last time interest rates exceeded 1 per cent.

ST : Early boost to Sentosa IR

Nov 23, 2009
Early boost to Sentosa IR



The biggest event, the 11th World Chinese Entrepreneurs Convention, will see 4,000 business leaders gather at the Sentosa integrated resort. -- PHOTO: RESORTS WORLD SENTOSA

IN AN early boost ahead of its opening, Resorts World at Sentosa (RWS) has secured 30 bookings for events to be hosted at the integrated resort starting next year.

The biggest event, the 11th World Chinese Entrepreneurs Convention, will see 4,000 business leaders gather at the Sentosa integrated resort for a corporate pow-wow from Oct 5 to 7.

Securing such business events, known in the industry as meetings, incentives, conventions and exhibitions (Mice), are important as business travellers are bigger spenders and a target group that Singapore Tourism Board wishes to grow.

RWS director of Mice Elena Arabadjieva, said: "As the world's economy recovers, we are getting strong interest from organisers for events from 2010 to as far ahead as 2014 and that gives us great confidence in Singapore's meetings and incentive travel sector in the mid to long term."

Events secured by RWS include the Asia Pacific Retailers Convention in 2011 and the 10th Asia Pacific Congress of Endoscopic Surgery in 2011. Besides inking the 30 contracts, the IR is also in talks with another 150 organisers for events up to 2015.

Marina Bay Sands, too, has been signing up Mice events. The events being lined include the 3rd Sea Asia Conference and Exhibition in 2011, the Industrial Fabrics Association International Expo Asia in 2011 and the 77th UFI Congress by the Global Association of the Exhibition Industry next year.

BT : Curbs on property speculation 'have had some effect': Mah Bow Tan

Business Times - 23 Nov 2009


Curbs on property speculation 'have had some effect': Mah Bow Tan

By EMILYN YAP

The anti-speculative measures implemented by the government in September to cool the property market have worked, said National Development Minister Mah Bow Tan in Parliament on Monday.

'These measures appear to have had some effect in tempering the exuberance in the private housing market,' he noted.

The government on September 14 announced a package of measures to prevent a property bubble from forming. One of these measures was the removal of the Interest Absorption Scheme and the Interest-Only Loans (IOL).

Another was the resumption of land sales on the Confirmed List for the first half of 2010.

BT : HDB does not price flats on cost plus profit basis: Mah Bow Tan

Business Times - 23 Nov 2009


HDB does not price flats on cost plus profit basis: Mah Bow Tan

By EMILYN YAP

The Housing and Development Board (HDB) does not price its flats on a cost-plus-profit basis, but on 'market price less a generous discount', said National Development Minister Mah Bow Tan in Parliament on Monday.

He shared that the total cost of building flats varies depending on when, where and what HDB builds. The cost includes the cost of land as well as the constuction costs of flats and ancillary services. The total cost can vary from $230,000 for a 3-room flat in Punggol to $530,000 for a 5-room flat in Tiong Bahru.

'Together with the Additional Housing Grant which varies from $5,000 -$40,000... on average the subsidies amount to about 20 per cent of the market price for 4-room flats. It will be even more for smaller flats. This is the subsidy given to all first-time buyers, to keep the flats affordable.'

ST : Bugis office block sold to private school

Nov 23, 2009

Bugis office block sold to private school

By Joyce Teo



An artist's impression of the ERC campus in North Bridge Road, which will house state-of-the-art classrooms, a library and cafes. -- PHOTO: ERC INSTITUTE

A DULL-LOOKING office block just behind Bugis Junction has been sold and will be renovated for use as a campus for private school ERC Institute.

ERC Holdings, which owns the school, bought nearly all of the 999-year leasehold building in North Bridge Road for

$46 million earlier this month from City Developments. With 60 units, or 38,534 sq ft, ERC now owns 91.3 per cent of the strata-titled development.

It plans to spend between $3.5 million and $5 million to renovate the six-storey block, said ERC Holdings chief executive Andy Ong.

The price, which works out to about $1,194 per sq ft based on strata area, is considered fair as such space is hard to find in the city, said Mr Shaun Poh of DTZ, who sealed the deal. Mr Ong said he took 15 months to find the space.

Currently, ERC Institute, which has 2,000 students, operates out of two sites: a campus in River Valley Road and an office unit in Robinson Centre. Its most popular programme covers entrepreneurship.

Come September next year, when its long-term lease at Robinson Centre ends, ERC Holdings will give up that space and move to the Bugis building, tentatively named ERC Complex.

'By 2012, we hope to get 6,000 to 8,000 students, of which 3,000 to 4,000 will be in Singapore,' said Mr Ong.

ERC has started operations elsewhere in the region, including in Indonesia.

After the renovation, the new building will offer better facilities than the existing campuses, said Mr Ong.

It will have at least two cafes serving a variety of cuisines, a library, a student rest area and a recreation area.

About 30 to 40 state-of-the-art classrooms will be spread over three levels.

One floor will be reserved for the corporate office of ERC Holdings.

The ground floor has retail space, currently taken by a hair salon and a noodle shop. This Fashion has just moved out.

Nearby, another small office block, Premier Centre, could also be transformed. Budget hotel operator Fragrance Group bought it in July for $18 million, or $1,076 per sq ft, from a Hong Leong Group unit, and might turn it into a hotel.

ST : Timing of HDB tax hike 'avoids bigger increases later'

Nov 23, 2009

Timing of HDB tax hike 'avoids bigger increases later'

By Sue-Ann Chia, Senior Political Correspondent

THE property tax of HDB flats is being raised next year partly to avoid having to introduce a bigger increase later should home prices continue to rise, said Acting Minister for Information, Communications and the Arts Lui Tuck Yew.

He gave the reason yesterday, after being asked at a dialogue with Aljunied-Hougang residents whether the Government could delay it, as the recession has just started to ease.

Noting that the adjustment had been delayed once, Rear-Admiral (NS) Lui said: 'The problem is, the longer you defer it, the larger the increase will be...if HDB prices continue to go up.'

He also pointed out that the Government is taking steps to soften the impact of the tax rise early next year. It is giving HDB homeowners a one-off rebate, set at 50per cent of the property tax payable and capped at $120. This means low-income families with homes whose property tax is $50 and less will not have to pay any such tax next year.

The property tax rate is 10 per cent of a property's annual value, although homes that are owner-occupied enjoy a concessionary 4 per cent tax rate. The annual value has increased with rising property prices.

HDB resale prices have risen a hefty 31.2per cent in the past two years, and a further 3.8per cent in the first nine months of this year.

Hence, the Government has decided to raise the property tax 'to reflect the prevailing movement of HDB prices and also to give rebates', said Rear-Adm Lui.

He also addressed residents' concerns about the affordability of HDB flats.

Noting that existing owners gain from their asset's increasing value, he said: 'If they eventually need to sell...(it) releases more money for their old age.'

But the anxieties of those planning to buy a flat are not lost on him. He assured them that an HDB flat would not be beyond their means, saying that the Ministry of National Development has matched the prices of different flat types against the salaries of different groups of people in the population. 'It tries to make sure that for every group, there is a flat type that meets their needs,' he said.

In doing so, it aims for homeowners to pay no more than 30per cent of their salary every month towards their home loan.

More than 75per cent of HDB dwellers use only the contributions to their CPF savings to make their monthly loan payments, he said, urging residents to buy what is affordable.

BT : Subsales in past 2 quarters among highest since 1995

Business Times - 23 Nov 2009


Subsales in past 2 quarters among highest since 1995

Completion of large condo projects near MRT stations helps to boost demand

By KALPANA RASHIWALA

(SINGAPORE) The number of subsales in the second and third quarters of this year were among the six highest quarterly figures since 1995 - reflecting the build-up in subsale activity that led to the government announcing measures on Sept 14 to cool property prices.

The completion of several condos this year - many of them large projects, close to MRT stations or near new projects launched this year - helped to boost their demand in the subsale market.

As well, the rise in private home prices this year has given sellers an incentive to let go units bought earlier.

Savills Singapore's analysis of caveats captured by URA's Realis system as at Nov 17 showed that 1,249 caveats were lodged for subsales of private apartments and condos in Q3 this year, a tad below the 1,300 caveats in Q2.

Since 1995 (when the Realis caveats database was first set up), there had been four other quarters when subsales of condos/apart- ments exceeded the 1,000 mark - during the 1996 and 2007 property market highs.

In Q2 and Q3 2007, subsales hit 1,857 and 1,534 respectively; in Q1 and Q2 1996, subsales were 1,238 and 1,650.

Projects that topped the subsales charts in Q2 and Q3 this year had generally been launched a few years ago and many of them were completed this year. Examples include Rivergate in the Robertson Quay area, Casa Merah near Tanah Merah MRT Station, City Square Residences along Kitchener Road, The Metropolitan Condo in the Alexandra Road area, The Centris in Jurong and Botannia in West Coast.

Projects that have been recently completed or which are nearing completion offer added appeal to potential buyers keen to move in or rent them out soon.

Giving a seller's perspective, Knight Frank chairman Tan Tiong Cheng said: 'If they bought their properties with the intention of leasing them out and if they find today's rental market challenging, it may make sense to simply cash out, especially if they can make a profit.'

Savills' lists of the most popular projects in the subsale market in Q2 and Q3 2009 did not include developments launched this year, with the exception of The Quartz, which was relaunched this year.

'Those who bought projects launched this year would find it harder to flip because their entry price may already be very high,' says Lee Hon Kiun, owner of Landmark Property Advisers.

Subsales refer to secondary market transactions in projects that have yet to receive Certificate of Statutory Completion. This can take place three to 12 months after Temporary Occupation Permit (TOP).

While subsales are often tracked as a gauge of speculative activity, Mr Lee hesitates to equate the increase in subsales in Q2 and Q3 this year with speculation. 'Those who bought two to three years ago and sold this year... in the Singapore context, that's a very long time,' he chuckled. 'Speculation is when people buy a property and flip it within six months to make a profit,' he added.

Savills senior manager (research and consultancy) Christine Sun said new property launches by developers also fuelled subsale interest for nearby projects released a few years ago. For example, the release of Alexis, Ascentia Sky and Interlace in the Alexandra Road area could have helped subsales at The Metropolitan Condo nearby, which was completed this year.

Agreeing, Landmark's Mr Lee said buyers can pick up more attractive buys in the subsale market for earlier launched projects than at new launches in the same area.

A developer said: 'Personally, I advise friends to buy in subsale projects as prices are discounted to new launches.'

HDB upgraders bought 39 per cent of the 1,300 private apartments/condos transacted in the subsale market in Q2 this year, although the figure has slipped to 36.6 per cent in Q3 and 33.7 per cent in October. Nonetheless, these figures are higher than HDB residents' 20.8 and 23.1 per cent share of subsale purchases during the property bull market in Q2 and Q3 2007.

Analysts say the jump in HDB resale flat prices has narrowed the price gap with private housing and made it easier for HDB dwellers to upgrade to a private home; and the subsale market offers a ready supply of recently completed homes that are ready for occupation.

Secondly, existing HDB flat dwellers looking for a bigger home may be deterred from picking one up from the HDB resale market because of high prevailing cash over valuation premiums. 'If they fork out a little more cash, they could foot the downpayment for a private condo in the subsale market instead,' said the developer.

Savills also provided monthly subsales data for non-landed private homes, which showed that for this year, the figure peaked at 596 in June.

It has since declined to 483 in July, 441 in August, 325 in Sept and just 184 in October - as at Nov 17 when Savills extracted the Realis data. It also observed an increase in the number of foreigners (including permanent residents) snapping up condos and apartments in the subsale market. Their share of purchases in the subsale market rose to about 31 per cent in Q3 this year and 33 per cent in October - from 21 per cent in Q1 2009.

Between 2007 and the first 10 months of 2009, Indonesians were the top buyers in the subsale market, followed by Malaysians, mainland Chinese, Indians and UK nationals.

Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

ST LETTER : Cost cap on lift upgrading

Nov 22, 2009

YOUR LETTERS

Cost cap on lift upgrading

I refer to the letter by Mr Michael Yeo, 'Upgrade lifts in ineligible blocks too' (Nov 8).

The Government has set a cost cap of $30,000 for each benefiting unit as an eligibility criterion for the Lift Upgrading Programme (LUP).� The purpose of the cost cap is to maximise the use of the LUP budget, to allow as many residents as possible to benefit from the programme.

This cost cap is necessary because the cost of lift upgrading can be very high, and it is not realistic to provide lift upgrading at any cost. In some cases, the cost can even exceed $100,000 per benefiting unit, or a substantial proportion of the value of the flat.

When the LUP was first introduced in 2001, about 1,000 blocks exceeded the LUP cost cap and were not eligible for the programme. Over the years, HDB has introduced innovative and cost-effective lift solutions so that more blocks can be eligible for LUP.

Today, we have reduced the number of ineligible blocks to just over 200. The HDB will continue to actively explore alternative cost-effective solutions so that more blocks can become eligible for LUP.

HDB is mindful of the need to keep the cost of LUP low so that more lifts can qualify for the programme.

We have reduced the extent of finishes at lift lobbies. We have also made use of bulk procurement arrangements to procure lifts and building contracts to reap economies of scale.

Chee Kheng Chye
Deputy director (Upgrading Programmes Management)
Housing & Development Board

ST : More condos let you walk on air

Nov 22, 2009

More condos let you walk on air

Developers are tempting buyers with skybridges which can house gyms and gardens or host parties

By Terrence Voon




One Shenton, an upcoming condo development, will feature three skybridges connecting two towers. -- PHOTO: CITY DEVELOPMENTS LIMITED

The sky is now a playground for condo residents.

More developers are touting skybridges in new projects, tempting buyers with the promise of greenery, meals and even workouts in mid-air.

These gravity-defying structures, made famous by HDB's Pinnacle@Duxton, will pop up in Lincoln Suites, One Shenton, Sky@eleven and Silversea.

The Quartz near Buangkok MRT station, completed this year, has one too.

One Shenton has three skybridges connecting a 50-storey skyscraper to a smaller 43-storey tower.

Two of the skybridges are part of private residential units, which can be used for dinner parties, while the third, on the 24th floor, features a gym which can be used by all residents.

Said Mr Anthony Chia, deputy general manager of design and projects for City Developments: 'It's an experience akin to the excitement on the Petronas Towers viewing gallery or crossing the Golden Gate Bridge in San Francisco.'

Lincoln Suites, a recently launched offering in Novena, also boasts a gym in the sky. Built using tempered glass and steel, the skybridge on the 24th level has a see-through floor so residents can get a workout with the world literally at their feet.

In the case of Silversea in Marine Parade, the aim was to create a common space on the 11th floor for residents to mingle. 'The design rationale was to link each pair of towers with bridges so that an uncluttered, column-free common space for the residents is created,' said Mr Chng Kiong Huat, executive director of development and planning at Far East Organization.

At Pinnacle@Duxton, 12 skybridges link seven residential blocks on the 50th and 26th floors, forming continuous sky gardens that offer a green sanctuary for residents.

A check with the Urban Redevelopment Authority (URA) and the Building and Construction Authority showed that there are no specific rules that govern the construction of skybridges in high-rise buildings.

Developers are given free rein, as long as they conform to standard building design codes.

But these lofty structures do not come cheap.

Developers estimate that it can cost more than $200,000 to build one, depending on the materials used and design complexity.

Fully covered skybridges are considered part of a condominium's gross floor area, which is pre-determined by the URA.

This means that the floor area occupied by a skybridge could have been used for another apartment unit, giving developers additional income.

At Lincoln Suites, the 32 sq m taken up by the skybridge could have been used for a $700,000 studio apartment. 'It's an extra cost but we wanted something iconic that would be the talk of the town,' said Mr Francis Koh, CEO and group managing director of Koh Brothers, one of four developers involved in the project.

'Buyers today are more sophisticated, so it is important to give them something extra.'

Developers said buyers are swooning over skybridges, and plan to build more.

Even public housing is reaching for the sky.

According to an HDB spokesman, there will be more skybridges soon as part of plans to rejuvenate the heartland. They will likely be seen at the upcoming Dawson estate in Queenstown.

But despite the soaring appeal of such bridges, prospective buyers said they will look at other factors first before signing off on a purchase.

Said corporate trainer Tay Shun Kiat, 42, who is looking for a private apartment for his mother: 'It looks really nice, but location and price are still most important to me.'

ST : Private home buyers go slow

Nov 22, 2009

property

Private home buyers go slow

Year-end lull hits auction deals and new launches as buying sentiment cools

By Joyce Teo




The posh 99-year leasehold Marina Bay Suites is set to hold a private preview on Wednesday. It is likely to be the last major condo launch this year. -- PHOTO: MARINA BAY FINANCIAL CENTRE

The auction market is seeing more sellers eager to beat the year-end lull as sentiment cools.

However, buyers do not seem to be in a hurry to commit.

Knight Frank's auction on Thursday offered 23 residential properties for sale - its longest list this year, said executive director for auctions Mary Sai.

Among them was a rare 999-year leasehold, two-storey house in Pasir Ris Road that sits on 8,007 sq ft of land and faces a seafront park.

Even so, the bids came in below the opening price of $4.5 million, and the property was not sold. The counter offer was $4 million and the closing bid $4.24 million.

Only one residential property was sold at the auction. It was a low-floor, two-bedroom unit in freehold Regent Court which was sold for $700,000.

'The auction attracted a large crowd of observers, but the results were disappointing as buyers remained cautious,' said Ms Sai.

'Of late, potential buyers have been making counter offers that are 10 to 20 per cent below the opening bids.'

Whether the sale goes through depends on whether the seller can accept such prices, she said.

These are not mortgagee sales.

Mr Shaun Poh, DTZ's senior director for investment advisory services and auctions, said the mild slowdown in the auction market recently is partly a reflection of what is happening in the overall market.

Owners want to sell now as the school holidays are coming, and they worry that people might no longer be in the buying mood, said Ms Sai.

She added: 'With all the government announcements, some also think it is better to sell now than later.'

The Government came out in mid-September with measures to calm the property market.

Two months later, Finance Minister Tharman Shanmugaratnam warned that the Government would not hesitate to use every tool at its disposal in a calibrated fashion to prevent another boom.

Said Ms Sai: 'People are still keen to buy, but they have become more cautious since there has been a strong word from the Government that there is no need to panic as there is enough supply.'

At Colliers International, deputy managing director of agency and business services Grace Ng said it had received fewer inquiries about properties put up for auction since the government announcements.

The number of auction deals has also fallen since prices have risen, she said.

'At the beginning of the year, sellers were asking for prices above valuation, and buyers couldn't get bank support,' she said. 'Now, they are asking for prices at valuation level, but values have since gone up, so there is some resistance.'

With the slowdown in the market, buying activities might pick up only next year, industry observers said.

The new launch market is fairly quiet too, with the exception of the posh Marina Bay Suites, which will hold a private preview on Wednesday.

The launch of the 99-year leasehold project - by a consortium made up of Keppel Land, Cheung Kong Holdings and Hongkong Land - has been delayed for nearly two years because of the global crisis. It has 221 large units (three- and four-bedders). The developers have not disclosed the prices.

CBRE's executive director for residential properties, Mr Joseph Tan, said Marina Bay Suites is likely to be the last major condo launch this year.

ST : Sports Hub: Vivian asks for patience

Nov 22, 2009

Sports Hub: Vivian asks for patience

Minister says delay is deliberate, so as to get best deal for construction of project

By Wang Meng Meng




Present at the unveiling of Youth Olympic Games mascots Lyo (in orange) and Merly at Suntec City yesterday were (from left) Senior Parliamentary Secretary of MCYS Teo Ser Luck , Dr Vivian Balakrishnan (with his son), YOG organising committee chairman Ng Ser Miang and deputy chairman Niam Chiang Meng. -- ST PHOTO: DESMOND FOO

Please be patient and Singapore will get a Sports Hub everyone can be proud of.

That was Dr Vivian Balakrish-nan's response to queries on the Singapore Sports Hub Consor-tium's (SSHC) recent decision to launch a financing competition to raise money for the delayed project.

The completion of the Sports Hub, to be built on the site of the National Stadium in Kallang, has been pushed back tentatively to late 2013 or early 2014.

The Minister for Community Development, Youth and Sports, who was speaking on the sidelines at the unveiling of the Youth Olympic Games (YOG) mascots, appealed for understanding.

'I understand Singaporeans' impatience to get this iconic project off the ground. I also want to see a wonderful new Sports Hub for all Singaporeans.

'But I also ask for your understanding to let me do this properly, carefully and get value for money. Then, in due time, this is something which we can all be proud of,' he said.

Due to the recession, the $1.87 billion project has encountered funding problems.

Construction is expected to cost $1.2 billion, with the money raised from the private sector. It is understood that the consortium has yet to raise the money necessary for construction to begin.

Dr Balakrishnan said: 'The delay is unfortunate. It's not something we wanted to happen. It was caused by, first, inflation in construction costs. Secondly, the fact there is a global financial crisis, credit became a problem. I decided and deliberately delayed it in order to get the best deal possible for Singapore.

'Yes, this has been a deliberate decision but now the signs are positive again. This is now exactly the right time to proceed and the first step is to conduct this competition for financing. I'm sure we will get good offers placed on the table and I'm sure we can then proceed.'

The SSHC had hoped to pull down the National Stadium by the first quarter of next year, but this is dependent on the final contract being signed first.

Demolition will take about three months. Construction can then begin and will take about three years.

Since the announcement of the project in 2005, the completion date has been pushed back repeatedly from next year to 2011, 2012, and then 2013.

Singapore's hosting of the South-east Asia Games in 2013 is now uncertain, as the biennial event was supposed to showcase the Hub.

Yesterday, the two YOG official mascots were unveiled at Suntec City. Named 'Lyo' after the lion and 'Merly' after the Merlion, the duo will promote the Olympic va-lues of excellence, friendship and respect through their acts and stories.

They will also be promoting the inaugural YOG - to be hosted at various venues around Singapore next August - by visiting five countries on five continents. The destinations have yet to be confirmed.

Both mascots have been given background stories.

Lyo, whose mane resembles the Olympic flame, stands for 'Lion of the Youth Olympics'. He is a basketball enthusiast and a guitarist and loves dishes like chilli crabs and chicken rice.

Merly got her name from 'mer' (meaning the sea) while 'l' and 'y' stand for 'liveliness' and 'youthfulness' respectively. She dreams of becoming an environmental scientist, and the vegetarian's favourite dessert is ice kacang.

ST : The dollars and sense of home loans

Nov 22, 2009

The dollars and sense of home loans

Get a package that matches your income profile and appetite for risk

By Lorna Tan, Senior Correspondent

Home buyers were recently advised not to throw caution to the wind in their anticipation of fulfilling the Singapore dream of snapping up a private unit.

The Monetary Authority of Singapore (MAS) earlier this month flagged two scenarios in which the private property sector could falter. Lately, it has levelled off somewhat, after a strong rebound.

MAS warned that property buyers could not assume that interest rates on home loans will stay at their current rock bottom levels indefinitely.

If the economy rebounds, interest rates are more likely to rise over the longer term, MAS cautioned.

This, in turn, would drive up monthly instalments on home loans that are not fixed.

If that happens, any home borrower who over-extended himself with a big loan could face serious problems.

The second scenario that MAS laid out: Home buyers could suffer losses from falling home prices as a result of a possible market correction if economic growth proves weaker than expected.

The Sunday Times takes a closer look at key factors to weigh up when taking out a home loan.

Affordability issues

In order to ensure prudent financial planning, Mr Dennis Ng, spokesman for www.HousingLoanSG.com - a mortgage consultancy portal - suggests that home buyers track their total monthly debt repayment obligations.

These repayments should not exceed 35 per cent of their household income.

For example, suppose your car loan instalment is $800, other monthly bills are $1,200 and your housing loan instalment is $3,000. That adds up to a total monthly debt repayment of $5,000.

Assume a monthly household income of $10,000.

That means half your income is going into debts. In the language of financial experts, that is called a debt-servicing ratio of 50 per cent.

That is not advisable as it is well above the maximum recommended debt-servicing ratio of 35 per cent.

Mortgage consultancy firm Global Creatif Financial helps its clients work out the maximum amount they can borrow. Firstly, it takes into account its

clients' individual and/or combined income (with spouse) derived from employment, trade, property or other income.

This amount would then be used to deduct monthly commitments including mortgage loans, car loans, bank loans, overdraft and credit card bills, said its managing director Annie Lim.

From there, Global Creatif calculates how much cash the client has left after fulfilling his monthly obligations. Using a desired loan term and an applied interest rate, it calculates the lump sum that the client can potentially borrow.

Another tip from Mr Ng is that prospective home buyers should not assess the affordability of a home they are eyeing by using current low interest rates.

Before the downturn in 2007, home loan interest rates were hovering at a higher rate of about 4 per cent.

So to be prudent, home buyers should calculate their instalments based on a higher interest rate of, say, 4 per cent instead. This would give them a better sense of whether they could afford the instalments if rates change.

Home buyers should set aside sufficient funds to meet future instalments should interest rates move up.

One's long-term repayment ability should take into account the stability of your source of income and the available Central Provident Fund (CPF) savings for the down payment and monthly loan servicing, said a spokesman for United Overseas Bank (UOB).

Consider a 25-year housing loan of $500,000 at a current rate of 2 per cent.

If indeed rates rise to 4 per cent, then monthly mortgage instalments will jump 24.5 per cent or about $520.

Using the same rate revision, if the loan is a higher $800,000, the hike in monthly instalments is about $830.

If the property is meant for investment and you are using the rental earned to fund your monthly loan instalments, you might want to factor in a possible drop in rental rates, added Mr Ng.

This is because rental rates fluctuate and it is only prudent to be prepared for the possibility of lower rental income to ensure you can still afford the instalments if rental rates fall.

Mr Ng advised home buyers to factor in a possible 10 to 20 per cent drop in rental.

Let's assume that the property is rented out at $3,000 a month. Rental falls of 10 and 20 per cent translate to lower rentals of $2,700 and $2,400, respectively.

Whether you are buying a house to live in or as an investment, it is prudent to have sufficient cash or CPF savings on standby to pay for at least six months of housing loan instalments in the event of unforeseen circumstances.

This means that if your loan instalment is $3,000, you should have $18,000 in cash and/or CPF monies set aside to cover six months of instalments.

Interest rates movement

Financial experts generally believe that home loan rates will stay low for the next six to 12 months.

Singapore home loan interest rates are very much affected by the Singapore Inter-bank Offered Rate (Sibor), pointed out Mr Ng. 'Sibor is in turn affected by two factors, United States Federal Reserve interest rates and the liquidity in the Singapore banking system. And the US has indicated it is likely to keep interest rates low for the time being,' he said.

Sibor is the interest rate at which banks lend to one another and is partly influenced by the supply of and demand for funds.

UOB said it expects Sibor rates to remain steady at the current level of 0.7 per cent for the next six months.

However, in the event that the US economy recovers, the US Federal Reserve might increase interest rates. If that happens in, say, about a year's time, interest rates here would likely rise as well.

Mr Ng recalled that Sibor was 3.58 per cent in 2007 and above 2 per cent last year. It dropped below 1 per cent only this year when the US cut interest rates to a historic low of 0.25 per cent. For the last 10 months, it has been about 0.7 per cent. As a result, some consumers may have the misconception that Sibor is always below 1 per cent.

'Consumers need to be mentally prepared for Sibor to go up to 2 per cent in more than one year's time,' he cautioned.

Another indication that home loan rates are likely to remain low, at least in the coming months, is the introduction of low one-year fixed rate packages by the financial institutions, said Ms Lim.

'The general sentiment in the market is that rates will remain low for the next 12 months,' she said.

Whether rates will indeed start creeping upwards a year from now depends on how long it takes for the global economy to right itself, but Ms Lim is certain that rates will move upwards more than three years from now.

Fixed or variable home loan packages

Naturally, the benefit of a fixed package is certainty: You know how much your instalments are for a set period.

The key difference between most fixed rate and variable packages is that the former comes with a lock-in period where you are penalised for any premature exit from the package.

Variable packages usually do not impose a lock-in period. Therefore they are recommended for clients who are not sure if they would be holding on to their properties. A no-lock-in package is deemed to be more suitable as the home buyer is not slapped with a penalty payment if he sells his property and redeems his loan. Also, variable packages tend to feature lower interest rates than most fixed rate packages, noted Ms Lim.

'These variable packages are also suitable for clients who feel that they are comfortable with any short-term fluctuations and/or feel that rates will generally remain low in the short term,' she added.

However, a variable rate, as the name implies, means that the bank can change the interest rate any time. For example, a three-month rate would re-set every three months. At the end of each three-month period, it could be higher or lower and you would pay more or less accordingly.

Fixed rate packages are suitable for clients who want certainty and peace of mind, and are not comfortable with rate fluctuations.

If you are unlikely to sell your house in the next three years, Mr Ng suggested that now might be a good time to lock in the low interest rates. You might want to consider fixing interest rates for the next two to three years.

Looking at present circumstances, both Mr Ng and Ms Lim would go for variable packages with no lock-in, as the sentiment is that rates would remain low at least for the next one year.

'Since Sibor is unlikely to go up in the next six to 12 months, one might be better off opting for a one-month or three-month Sibor package. In the event that the Sibor starts rising, one can opt to switch to a 12-month Sibor package,' said Mr Ng.

One-month Sibor is currently at 0.4375 per cent, three-month Sibor is 0.68 per cent while 12-month Sibor is 0.9 per cent. So if you choose the latter, you might end up paying more interest while interest rates are still low.

lorna@sph.com.sg

Concerns over demand & supply of HDB flats to be raised in Parliament

Concerns over demand & supply of HDB flats to be raised in Parliament
By Lin Jiamei, 938LIVE | Posted: 20 November 2009 1607 hrs

SINGAPORE: Concerns over the property market will be one of the main topics to be discussed in Parliament next week.

MP for Aljunied GRC Cynthia Phua will be asking the Minister for National Development about the projected supply and demand of HDB flats over the next five years while MP for Marine Parade GRC Muhammad Faishal wants to know about the waiting time for new couples applying for HDB flats.

MPs are also planning to ask the Minister of Foreign Affairs for his assessment of the recently concluded APEC meetings.

And there are three questions on Shell's S$1-per-litre fuel promotion on October 24 and the traffic jams that resulted.

Concerns over new immigrants will also be discussed.

Opposition MP Chiam See Tong will be asking the Deputy Prime Minister on the number of foreigners who have successfully applied for permanent residency in Singapore.

Parliament is also expected to introduce changes to the Moneylenders Act to enhance penalties for loansharks.

Parliament will sit at 1.30pm on Monday. - 938LIVE/vm

TODAY Online : Singing the bubble blues

Singing the bubble blues

Is the market really cooling off? Some don't think so and expect more measures if exuberance persists

05:55 AM Nov 21, 2009

by Tan Hui Leng

SINGAPORE - Sales of private homes have dipped to their second lowest level this year in October according to data released by the Urban Redevelopment Authority (URA) this week.

While market observers believe that this downward trend was the result of the recent anti-speculative measures introduced by the Government, some analysts are sceptical that the market has started to cool.

According to statistics, sales of new properties have been tapering off in the last three months from 1,805 in August, to 1,143 in September, and 811 in October.

Still, this is after a record of 2,772 units sold in July and way above the year's lowest level in January when only 108 units were sold.

Analysts reckoned that sentiment in the property market had simmered down in August and September as it coincided with the Hungry Ghost Festival, a traditionally quiet period.

Sales failed to pick up in September after the Government announced anti-speculative measures which included the removal of the Interest Absorption Scheme.

However, Chesterton Suntec International's research and consultancy head Colin Tan said that the total of 811 units sold in October was still above average when compared to some 600 homes sold a month before 2007 - the height of the last property rally. This figure, he added, does not bode well when factors such as falling rents and supply glut are taken into account as well.

According to URA's data, the vacancy rate of completed private residential units increased from 5.9 per cent as at the end of Q2 this year to 6.2 per cent as at end Q3.

"Government intervention is inevitable," said Mr Tan, who attributes the strong showing in property sales to excess liquidity from both local and foreign buyers.

"This excess money is too strong to fight," said Mr Tan. He also expects the authorities to consider reducing mortgage loan amount to a lower proportion of the sale price - down from the 80 per cent now.

"If confidence is hit badly, then at least the asset bubble will not be as large," he added.

Meanwhile, Ngee Ann Polytechnic real estate lecturer Nicholas Mak takes a more sanguine view. "I don't think the authorities will put in any measures in the next three to six months," he said. "I expect sales to move forward on a steady keel and keep within the volume of 600 to 1,500 units."

As long as there are no excessive signs of speculation and no sharp price increases, Mr Mak does not expect the authorities to take further action, particularly as the decline in rental is moderating and hitting bottom soon.

"Possible danger signs are when everything starts to go up: Prices, rentals and volume of speculation," he said. "Then that is when the Government may do something."

Jones Lang Lasalle South-east Asia's head of research, Dr Chua Yang Liang, expects transaction volume in the non-landed segment to contract by a further 10 to 20 per cent on the back of the seasonal year-end slowdown and anti-speculative measures.

"However, should housing price growth continue to surge ahead of economic fundamentals despite the recent moral persuasion by the Government to cool residential demand, further anti-speculative measures with a bigger bite could be introduced. For example, a capital gains tax say for those who flip within a two-year period of the first purchase," he said in response to the monthly sales figures released on Monday. Tan Hui Leng

ST Forum : Block eligible for other upgrading schemes

Nov 21, 2009

Block eligible for other upgrading schemes

WE THANK Ms Pamela Hoo for last Saturday's letter, 'Left out of Sers'. The Selective En-bloc Redevelopment Scheme (Sers) is implemented only for old HDB precincts that can be redeveloped to optimise land use. Blocks 110, 111, 113 and 114 Bukit Merah View were identified for Sers based on this principle.

Block 116 is physically separated from the Sers precinct by Bukit Merah View road and Block 115 (market and food centre). Together with the market and food centre, the shops and eating houses in Block 116 form an integral focal point of the community to serve the needs of the surrounding residents.

While Block 116 is not suitable for Sers, it is eligible for other upgrading programmes that can improve lift access and the conditions of the flats. Details will be announced when the plans for the block are firmed up.

Heng Mien Joo (Mrs)
Deputy Director (Projects & Development)
Housing & Development Board

ST : No stamp duty boost for Govt

Nov 21, 2009
PROPERTY BOOM

No stamp duty boost for Govt
More units sold, but these may not match up to last year's overall value
By Fiona Chan

THIS year's surprise housing boom may have provided an unexpected windfall for property owners - but not necessarily for the Government.

Developers and individual sellers will probably sell twice the number of private homes this year than they did last year, going by the latest property market figures.

However, the Government is unlikely to see an increase in its revenues from stamp duty, which is a tax on transactions such as property sales.

This is mainly because many of the homes sold in the current boom are much smaller in size and located in the cheaper suburban areas.

So the value of homes sold this year - which determines the amount of stamp duty payable - may not surpass that of last year, when more luxury homes were sold, say property consultants.

Stamp duty takings so far this year bear this out. From January to September, the Government took in $1.37 billion in stamp duty, according to figures from the Department of Statistics website.

This is about 15 per cent less than in the same period last year, even though the property market was slowing down then in anticipation of the financial crisis that hit hard in September that year.

For the whole of last year, the Government received $1.84 billion in stamp duty. This year's stamp duty collections may be about the same level or even lower, now that the property boom appears to be losing steam, say property consultants.

However, stamp duties look set to exceed the Government's initial expectations at the beginning of the year, when the recession was at its worst and the property market was in a slump.

In its January Budget, the Government projected stamp duty takings of only $1billion for the 2009 financial year, which started in April and ends in March next year. So far, between April and September, the Government has already collected $1.1 billion.

Stamp duty is a tax on commercial and legal documents used in some transactions such as property sales, which make up the bulk of stamp duty collections.

For housing transactions, stamp duty ranges from 1 per cent to 3 per cent of the purchase price. In the massive boom year of 2007, stamp duty reached a record $4.1 billion.

In the first nine months of this year alone, almost 25,800 private homes were sold - nearly double the number sold in the whole of last year.

But the sizes of the homes sold this year have generally shrunk, said Dr Chua Yang Liang, head of South-east Asia research at Jones Lang LaSalle.

'Because unit sizes have fallen, the total quantum of the home price is less,' he said. 'The market value of transactions this year actually remains at about the same level as last year.'

A spike in demand for smaller mass-market homes means that while property developers are likely to double their sales of new homes this year compared with last year, the total value of sales will be halved, according to recent research by property consultancy CB Richard Ellis (CBRE).

In the coming months to the end of the Government's 2009 financial year, there may be a pick-up in sales of upmarket homes, which could add to stamp duty collections, said Mr Li Hiaw Ho, executive director of CBRE Research.

He said the higher-end segment of the property market has not moved much in the current boom, but recent improved economic data may attract more buyers.

Foreigners, in particular, could be drawn back into the market early next year after the festive season is over, said Dr Chua.

'The economy is showing a better outlook, and there is more bullishness compared with six months ago, so there is a potential for more interest in the high-end market,' he said.

BT : Preview of Marina Bay Suites next week

Business Times - 21 Nov 2009


Preview of Marina Bay Suites next week

By KALPANA RASHIWALA

AFTER an almost two-year wait, Marina Bay Suites will finally be previewed next Wednesday to VVIPs and invited buyers, BT understands.

Pricing for the preview has not been finalised, but some market watchers suggest it could be a shade below $2,500 per sq ft on average. Others tip the average price at about $2,300 psf. No interest absorption scheme will be offered.

Early last year - when the 99-year leasehold project was expected to be released - the average price was tipped at about $2,800 psf.

The 66-storey condo block has 221 units, comprising 218 three- or four-room apartments and three penthouses.

Three-bedders range from about 1,570 to 1,620 sq ft; four-bedders will be 2,050 to almost 2,700 sq ft. The penthouses include two duplex units of about 4,700 and 8,100 sq ft and a single-level unit of around 5,600 sq ft.

Marina Bay Suites was due to be released early last year, but steadily worsening market conditions that culminated in the global financial slump meant the project could not be released in 2008. In March this year, Keppel Land - which is part of the consortium developing the condo - confirmed the project's construction was deferred.

The other members of the consortium are Hongkong Land and Cheung Kong Holdings/ Hutchison Whampoa. Marina Bay Suites will be the second residential project on the Business and Financial Centre site, which the consortium bagged in a Singapore Government tender in 2005.

The first residential project - the 428-unit Marina Bay Residences (MBR) - sold out in three days in December 2006. The 55-storey development achieved an average price in the region of $1,850 psf, according to a statement by the developer at the time.

Many buyers flipped their units - in some cases within days of their purchase - for handsome gains as high as $1 million or even more for four-bedroom units that face Marina Bay.

MBR has one and two-bedroom units in addition to three and four-bedders. The project, along with the neighbouring completed development, The Sail @ Marina Bay, continues to make news in the secondary market. Sources say a 900 sq ft bay-front unit on the 50th floor at The Sail sold recently for about $3,000 psf, while a 30-odd storey four-bedder at MBR facing the bay fetched just above $2,700 psf.

Marina Bay Suites' preview will be held on the mezzanine level of One Raffles Quay.



THE SUITE LIFE
The 66-storey condo block has 221 units, comprising 218 three- or four-room apartments and three penthouses. Market watchers suggest average price could be slightly below $2,500 per sq ft

BT : HK clamps down on marketing of apartments

Business Times - 21 Nov 2009


HK clamps down on marketing of apartments

(Hong Kong)

HONG KONG plans to tighten restrictions on marketing of uncompleted apartments, responding to concerns that misleading sales tactics by property developers have contributed to a surge in prices this year.

The measures will require developers to provide more transparency about the square footage of apartments they are selling before completing, as well as information on floor numbering, said a statement from the Transport and Housing Bureau.

Chief Executive Donald Tsang told reporters yesterday about the rules, which were reached in an agreement with the Real Estate Developers Association of Hong Kong.

Hong Kong said developers will need to spell out the usable square footage inside the homes. It also will require that developers 'provide floor numbering information in a more prominent manner in the sales brochures'.

Hong Kong developers also will need to publicly disclose transactions of uncompleted apartments within five working days of signing a preliminary sales agreement, down from the current one month. -- Bloomberg

BT : HK faces asset bubble risk: central bank

Business Times - 21 Nov 2009


HK faces asset bubble risk: central bank

It attracted record HK$567.5 billion in fund inflows in the past 13 months

(Hong Kong)

HONG KONG'S central bank chief Norman Chan warned that asset prices in the city could climb sharply next year and disconnect from fundamentals, raising the risk of a bubble, and said surging capital inflows posed a dilemma for policymakers across Asia.

'With interest rates exceptionally low and with abundant liquidity around the world, Hong Kong faces the potential risk next year that asset prices may go up sharply and become increasingly disconnected from economic fundamentals,' Mr Chan, head of the Hong Kong Monetary Authority, said in an article on its website.

While other economies could raise interest rates in a bid to curb inflation in assets such as property, that tactic could backfire and attract even more outside investors who are hungry for higher yields, Mr Chan noted.

Hong Kong faces a different challenge. Its currency peg to the US dollar forces it to track monetary policy in the United States, which is expected to keep rates low for some time.

The financial centre, a key gateway to mainland China, also prides itself on its open economy and thus would be unlikely to look at capital controls at this stage, analysts said. However, more measures to curb property speculation may be in the offing.

Emerging markets such as Brazil and Taiwan have both announced capital controls in recent weeks to keep what they say are 'hot money' speculative flows from fuelling sharp gains in their currencies and destabilising their recovering economies.

Russia said on Thursday it would consider 'soft' measures to curb inflows, while Indonesia is also studying ways to control foreign investment in one-month central bank bonds.

Hong Kong attracted a record HK$567.5 billion (S$101.8 billion) in fund inflows between Oct 1 2008 and Nov 13, 2009, according to the HKMA. That has helped Hong Kong stock prices soar 57 per cent this year and property prices surge nearly 30 per cent.

Prices of luxury property in the city, however, have surged over 40 per cent this year as mainland Chinese have been snapping up apartments. A weak dollar and expectations that US, and therefore Hong Kong interest rates will stay low for some time are also encouraging foreigners to buy Hong Kong assets.

That prompted the HKMA last month to tighten mortgage lending rules, especially on luxury property, by capping the mortgage limit for property valued at US$2.6 million or more at 60 per cent, compared with 70 per cent previously. However, as many mainland Chinese buyers are flush with cash, that may not work.

The government has also said it is ready to release more land for sale to ward off a possible property bubble. This week it announced its first large-scale land sale in two years.

Mr Chan said it was not easy to say whether Hong Kong was now seeing an asset bubble but warned that values risked deviating from fundamentals.

Massive fund flows into the city's banking system have put intense upward pressure on the Hong Kong dollar, forcing the HKMA to intervene repeatedly to keep the currency within its trading band against the US dollar.

The HKMA has injected a record HK$620 billion since October 2008.

In nearby South Korea, officials have also warned of the risk of a housing bubble and have threatened to raise interest rates from a record low 2 per cent to calm prices. -- Reuters