CNA - Analysts say new housing measures will help cool red-hot resale market

30 August 2010 2054 hrs

SINGAPORE : Market watchers said the new rules requiring private property owners to sell their homes within six months of buying an HDB flat will go some way in cooling the red-hot resale market.

New rules on second home loans may also moderate demand somewhat.

Some analysts expect the rules restricting dual home ownership to have an "almost immediate" impact on resale demand.

Chris Koh, director of Dennis Wee Group said: "Those who've dreamed of owning a HDB flat and a private at the same time now have to think harder. I would expect this will probably dampen prices a little.

"HDB owners who are hoping to find private property owners to buy their HDB flats and are willing to pay premiums, will no longer have that option. So those who buy flats today really buy it for owner occupation, which primarily is the function of public housing."

The new rules kick in on August 30, and some analysts estimate that about 10 per cent of such transactions will be affected.

HDB said those who have only recently submitted their applications to buy an HDB flat may be granted exemptions on a case-by-case basis.

But there will be no such leeway for buyers looking to finance their second home, be it private or HDB, with a bank.

Under new rules, they will have to cough up a larger cash payment - from 5 per cent previously, to 10 per cent.

And those with an outstanding loan can only get a bank loan of up to 70 per cent of the property's value, instead of the previous 80 per cent.

The idea is to prevent people from being overstretched by servicing two loans.

But those looking to buy a second home using a bank loan, may find themselves in a sticky situation. This is because a sales transaction takes a few months to complete and if you're in the midst of selling your home which has an outstanding loan, the higher cash requirements apply.

So one way around it is to complete the sale of your first property before buying your second, but this means you'll need to find a place to live in the meantime.

Koh suggested that an alternative is to take up a bridging loan from the bank to finance any cash or loan shortfall, should one buy first before selling.

Other industry watchers welcomed the wider options for the "sandwiched class" - so-called because their incomes are too high for most new HDB projects, but are too low for private condominiums.

They can now buy flats under the Design, Build and Sell Scheme (DBSS) and analysts expect some demand to move away from the resale market.

Some observers said the move will pile on more demand for DBSS projects, which tend to see strong take-up rates.

"From previous launches you can see that practically all DBSS projects are sold out, except for units leftover primarily because of the Ethnic Integration Ratios that have been exceeded. So by and large, most of the DBSS projects are all well taken up, and this was before including this 'sandwiched class'," said Eugene Lim, associate director of ERA Asia Pacific

According to HDB, two DBSS projects launched this year - The Peak in Toa Payoh and Parc Lumiere at Simei, with over 1,500 units in total - 90 per cent were sold out as of end-May.

HDB is looking to shorten waiting times for new flats from three years to two and a half years.

But some buyers said they may still stick to buying resale.

"Two and a half years is not my concern. The problem is I'm not guaranteed. For instance, I'm waiting for the balloting, and it ends up that I may not get what I want after the balloting result is released," said home-buyer Ang See Ngee.

Overall, analysts said the new rules will help to ensure that resale demand is based on real demand. - CNA /ls

CNA - Land sales sees highest potential private unit supply

SINGAPORE: Five plots of state land have been released for private residential development.

31 August 2010 1157 hrs

Together, they can potentially yield 2,045 housing units.

The Petir Road site will be put up for tender under the confirmed list of the Government Land Sales Programme.

Four other sites -- at Alexandra Road, Tanah Merah Kechil Road, West Coast Link and Pasir Ris Drive 3 -- will be put up under the reserve list.

A tender will be launched once the government receives an acceptable minimum bid.

The government said the sites are well distributed to provide developers and property buyers with more choices.

The Government Land Sales Programme for the second half of the year comprises 18 confirmed list sites and 13 sites on the reserve list.

Together, they can potentially yield 13,905 private residential units.

This is the highest potential supply in the history of the Government Land Sales Programme.

BT - Govt keeps heavy guns aside, but who will take a hit?

Business Times - 31 Aug 2010

COMMENTARY
Govt keeps heavy guns aside, but who will take a hit?

By KALPANA RASHIWALA

THE government has just announced the latest instalment in its gentle therapy of a series of calibrated measures to try and rein in the acceleration in home prices.

Is this strategy working? Or should we revisit the sledgehammer approach of May 1996 when a whole slew of anti-speculation measures were rolled out at one go?

Thus far, the measures introduced since September last year do not seem to have had their intended impact.

Last September saw the scrapping of the interest absorption scheme, which had fuelled speculation. In February this year, the government reintroduced the seller's stamp duty and lowered the loan-to-value (LTV) limit on housing loans.

On the supply side, the government is selling a record volume of land for private housing development this year in a bid to tame property prices. So far, developers - many of whose landbanks have been dried up by strong housing sales last year - have demonstrated a voracious appetite for land and continue to drive land prices up.

Yesterday, the government announced steps which property consultants say will contain prices of HDB resale flats, a key pillar supporting the entry-level, mass-market private condo market.

In the private housing market, the sellers' stamp duty is being extended to those who sell residential properties within three years of purchase; the shorter the holding period, the higher the stamp duty. Market watchers say this is directed at specuvestors.

For those already servicing one or more outstanding housing loans, the cash payment for a new property purchase will be doubled and the LTV limit lowered to 70 per cent. This also applies to HDB flat buyers who are taking loans from financial institutions.

Genuine first-time home buyers should not be affected. 'Deep-pocketed investors with a longer-time investment horizon will also not be affected,' says Knight Frank managing director (residential services) Peter Ow, who also advises individual property investors.

Weaker investors

The categories of buyers that will be affected are likely to be HDB upgraders along with speculators and weaker investors. 'Some buyers may not be speculators but tend to really stretch themselves to invest in a second or subsequent property. If the property market were to tumble or interest rates shoot up, they could be in deep trouble,' Mr Ow points out.

Such buyers could find it difficult to service their loans, and stand to lose their properties, while banks could chalk up non-performing loans.

The series of measures could temper demand at least for mass-market private housing. In addition, according to Mr Ow, investment demand for shoebox and other smallish apartments may be dented from first-time home buyers who were also planning to buy HDB resale flats for their own occupation since this is no longer allowed.

By most counts, residential property prices should start to moderate. Developers will hopefully tame land bids, knowing they cannot keep on expecting to sell their end products at higher and higher prices.

Supposing the market picks up again after an initial knee-jerk reaction, the government can still summon other ammunition from its arsenal - such as further raising cash downpayments and lowering LTV ratios, treating gains from selling properties within say three years of purchase as taxable income, banning subsales of properties bought from developers until the project is completed.

The calibrated approach may not create much bang though. An alternative would be to simply package everything together for greater impact - like in May 1996. The danger of such an approach is that the market can enter a tailspin if there is a confluence of negative factors. This can then be very difficult to reverse and spark economic, social and political problems. Looking back, the May 1996 anti-speculation measures were exacerbated by the onslaught of the Asian Financial Crisis, and later on the fallout from the dotcom bubble bust, Sept 11 terrorist attacks in the US and the 2003 Sars crisis in Singapore. This marked a long property slump until around 2004 - although there was a respite between 1999 and mid 2000.

Taming the property market - without killing it - is the challenge ahead for the authorities.

One may also ask to what extent Singapore's property prices can really be subdued given high liquidity and a lack of alternative investment options to appeal to the average investor. And then there's the government's stated objective of increasing Singapore's population vis-a-vis our limited land resources.

BT - Impact of new measures on loans growth likely to be small

Business Times - 31 Aug 2010

REACTION TO PM LEE'S NATIONAL DAY RALLY SPEECH
Impact of new measures on loans growth likely to be small

Banks see problems in extra checks needed for home loan applications

By CONRAD TAN

(SINGAPORE) New government measures to cool the property market and curb speculation in the resale market for HDB flats could cause headaches for banks here due to the extra checks needed for home-loan applicants, but the impact on loans growth will likely be small, a check by BT shows.

'Banks will certainly run into problems for any pre-existing loans which may have been approved but not drawn down yet, and housing loans not registered at the credit bureau,' said Helen Neo, head of consumer banking at Maybank Singapore. 'Banks may have to request a declaration from customers to confirm that there are no such pre-existing loans.'

Effective yesterday, home buyers with outstanding home loans must pay more cash upfront for a new house, and they may borrow no more than 70 per cent of its value, down from 80 per cent.

Housing loans have been the biggest driver of loan growth for banks here throughout the economic downturn, and the recovery since.

Total housing loans grew 22 per cent over the year to end-June, to $101.1 billion - a third of all Singapore-dollar loans by banks here, Monetary Authority of Singapore data show. Including business loans to the building and construction sector, property-related loans made up $149.7 billion, or 50.5 per cent of all Sing-dollar bank loans outstanding at the end of June.

'I don't think you'll see a collapse in loan growth' due to the new measures, said a banking analyst, who declined to be named. 'Housing loan growth is more correlated to the completions of properties - that's when the loans are drawn down. We've seen record home sales in 2007, 2009 and so far this year; those would underpin completions in the medium term.'

But if home sales slow and banks compete more aggressively to lend on fewer home purchases, that could squeeze their loan margins and hurt profits, the analyst said. 'That's the uncertainty.'

The new rules could also be a problem for people who want to buy a new house to live in, before selling their existing home, if they are still paying off an earlier mortgage, Ms Neo said. Such buyers can no longer borrow more than 70 per cent of the value of the new home from banks, even if they intend to stay in it.

Maybank Singapore had $4.1 billion in housing loans at the end of June. Of those, 'less than three- quarters' were loans for more than 70 per cent of the property's value, a proportion that hasn't changed much over time, Ms Neo said. 'We focus mainly on owner-occupied properties, so there is minimal impact on our home loan portfolio.'

While lending standards by banks here are 'still prudent', there are signs that more housing loans are being made for over 70 per cent of the property's value, the government said yesterday.

At OCBC Bank, 'we have seen an increase in the number of loan applications' asking to borrow more than 70 per cent of the value of the property, said Phang Lah Hwa, head of consumer secured lending. Most of its home loan applications are for owner occupation, but 'we have seen an increase in the number of loan applicants for investment purposes compared to a year ago', she added. The bank is assessing the new measures and their overall impact on its home loan business, she said.

'The new measures are likely to affect HDB upgraders and investors who would have to commit higher cash amounts for their down payments' if they have outstanding home loans, a DBS Group spokesman said, adding that the bank has 'robust underwriting criteria' for its loans.

'There may be some near term impact on property sentiment. But in the long run, this is good for the market,' said Chia Siew Cheng, loans division head at United Overseas Bank.

The new rules could also mean it takes longer to process home loan applications. Banks must check with the Housing & Development Board - in addition to their usual checks on a borrower's credit record with Credit Bureau (Singapore) - to see if a home-loan applicant has a home loan outstanding.

'If HDB is willing to enrol with the Credit Bureau as a member, the checks can be made more efficient in the processing of applications,' Ms Neo said.

BT - URA releases 4 residential sites for sale

Business Times - 31 Aug 2010

URA releases 4 residential sites for sale

By BERNICE BONG

SINGAPORE - The government has put a site at Petir Road up for sale under the confirmed list of the government land sales programme.

On top of this, it has made three plots on the reserve list at Alexandra Road, Tanah Merah Kechil Road and West Coast

Link/West Coast Crescent available for application.

The Urban Redevelopment Authority (URA) released details of the sites on Tuesday.

The 99-year leasehold plot at Petir Road is 2.3 hectares and can be developed into a condominium project or flats.

The site has a maximum permissible gross floor area (GFA) of 514,116 sq ft, potentially yielding 430 units.

The land parcel, in the west region of Singapore, will enjoy easy

access to other parts of the island as it is located near the future Hillview and Cashew Mass Rapid Transit (MRT) Stations, which are part of the future Downtown Line 2.

The tender for the Petir Road site will close at 12 noon on Oct 7 2010.

Over at Alexandra Road, interested developers can start submitting applications for a 99-year leasehold 1.0 ha site.

It has a maximum GFA of 524,934 sq ft and can accommodate an estimated 490 units.

Situated within an established residential estate in the central region, the site is also just a short walk away from Redhill MRT Station.

The 1.4 ha land parcel at Tanah Merah Kechil Road has a maximum GFA of 421,902 sq ft and can accommodate an estimated 470 units. It is close to the Tanah Merah MRT Interchange Station.

At the junction of West Coast Link and West Coast Crescent, the the 1.3 ha land parcel has a maximun GFA of 381,526 sq ft and can

potentially yield about 360 housing units.

Besides the four URA sites, the HDB has also made available a residential site at the junction of Elias Road and Pasir Ris Drive 3 for application for sale on the reserve list on Tuesday.

Together, the five residential sites can potentially yield about 2,045 housing units.

BT - HDB offers 3,000 BTO and SBF flats for sale

Business Times - 31 Aug 2010

HDB offers 3,000 BTO and SBF flats for sale

By BERNICE BONG

SINGAPORE - The HDB has offered 3,032 flats for sale, the largest number in a single launch this year.

Up for sale are 1,408 new flats in Yishun under the Build-to-Order (BTO) system and 1,624 balance flats spread over 10 towns and estates under the Sale of Balance Flats (SBF) exercise.

Yishun Riverwalk

The BTO site, bounded by Yishun Ring Road, Yishun Street 31 and Yishun Avenue 6, will comprise of 254 Studio Apartments, 250 three-room, 652 four-room and 252 five-room flats.

Facilities in this development include an eating house, a mini-mart, two shops, a child care centre and a Residents' Committee Centre.

The sale of balance flats comprises of 55 two-room flats; 53 three-room standard flats, eight three-room premium flats, 1,081 four-room flats, 338 five-rooms and 89 Executive flats.

These flats are located in areas such as Bukit Batok, Bukit Panjang, Choa Chu Kang, Hougang, Jurong East and West, Punggol, Sembawang, Sengkang and Woodlands.

With this latest launch, HBD would have offered 12,876 flats for sale since the start of 2010.

BT - Private home-owners can't play HDB chip any more

Business Times - 31 Aug 2010

Private home-owners can't play HDB chip any more

String of steps to douse speculation; prices and sales of mass-market private homes may be hit

By UMA SHANKARI

(SINGAPORE) The Prime Minister had hinted on Sunday that major moves were afoot to cool the property market. Even so, when the Ministry of National Development (MND) spelt out the measures yesterday, several market-watchers did a double-take. Many of them expect private home prices and sales to be hit.

Of all of MND's new measures, analysts pegged the move to disallow concurrent ownership of HDB flats and private residential properties within the minimum occupation period (MOP) as the most significant. The MOP is the time that buyers are required to stay in their flats before they can sell.

Private property owners who buy an HDB flat now have to dispose of their private homes within six months. National Development Minister Mah Bow Tan, who announced the measures, said that right now, around half of private property owners who buy an HDB flat sell their private properties. The rest hold onto both.

The MOP for non-subsidised flats was also increased to 5 years from 3 years.

PropNex chief executive Mohamed Ismail said that the mandate to dispose of one's private property when purchasing an HDB flat will have 'great ramifications' for the industry. Based on his firm's records, about 10 per cent of all HDB resale purchases are by private property dwellers.

'These may be investors who will now not be able to purchase HDB flats and keep their private property for investment purposes,' he said.

MND also targeted potential buyers of second homes with two policy changes. Those who hold an existing mortgage can now only borrow up to 70 per cent of a property's value for the second home, down from 80 per cent previously. They must also pay 10 per cent in cash, up from 5 per cent.

And owners who sell houses and apartments less than three years after buying them will also have to pay a seller's stamp duty. Previously, the seller's stamp duty was only imposed on those who sell their homes within one year of purchasing.

The Real Estate Developers' Association of Singapore (Redas) said in a statement that while the latest measures may affect affordability due to higher upfront cash component, they will not impact genuine home buyers.

But at least one developer BT spoke to felt that the measures would hit sales of mass market private homes as HDB upgraders will have to cough out 10 per cent cash and can only borrow up to 70 per cent of the property's value.

'Genuine upgraders could be turned off as they will have to sell their HDB flats and settle that loan before buying a new property,' the developer said. 'Now, the practice is to buy units from developers at new launches and then wait for their new property to be built before selling existing homes.'

CBRE Research executive director Li Hiaw Ho also pointed out that the pool of HDB upgraders looking to buy private properties will shrink as this group will now have to wait for five years instead of three.

The government acted as Singapore's strong economic growth, low interest rates and high liquidity continued to push home prices up in 2010 - sparking concerns of a property bubble. Private home prices were up 38 per cent year on year as of end Q2, while HDB resale prices climbed 15 per cent over the same period.

'If the current momentum in the market continues, what will likely happen is that a property bubble will form,' said Mr Mah. 'And when the bubble bursts - not if, but when it bursts - there will be severe implications for individuals as well as for the economy as a whole. Furthermore, the very low interest rates we are seeing today are not sustainable in the long run.'

Analysts said that the new measures will hit private home prices and sales volumes.

Colliers International's director for research and advisory Tay Huey Ying said that developers' sale volume for September to December 2010 is now predicted to come in at the lower range of her earlier forecast of between 800-1,000 units a month.

She also revised her earlier forecast of up to 5 per cent growth in the official residential property price index for Q4 2010 downwards to 'at most 2 per cent'.

HDB prices are also expected to moderate as the government plans to release up to 22,000 new build-to-order flats in 2011, up from the more than 16,000 in 2010. It will also release more land for executive condominium projects and design, build and sell scheme (DBSS) flats next year.

Yesterday's measures follow earlier demand-side measures introduced in February.

Then, the government first implemented a seller's stamp duty for all residential properties sold within one year from the date of purchase. It also lowered the loan-to-value limit to 80 per cent from 90 per cent for all housing loans provided by MAS-regulated financial institutions.

But Prime Minister Lee Hsien Loong said on Sunday that previous measures had failed to keep prices from rising.

Looking ahead, collective sales and bidding for government land sales are expected to slow down for the rest of the year as developers monitor the market and the strength of recovery in the US and European economies, said DTZ's head of South-east Asia research Chua Chor Hoon.