ST: Home loan curbs 'will hit older buyers'

Home loan curbs 'will hit older buyers'

Recent changes similar in effect to higher interest rates, say analysts. -ST
Magdalen Ng

Thu, Oct 11, 2012
The Straits Times
Investors in a weak financial position and buyers in their 40s and 50s will feel the effects of the latest property rules most acutely, analysts say.

Related Links

• MAS imposes cap on housing loan tenures
• Many not aware of HDB loan cap but are OK with it

The changes, unveiled by the Monetary Authority of Singapore last Friday, are similar, in effect, to higher interest rates, they said.

Some older buyers who already have a loan may abandon plans to buy an investment property, the analysts added.

The central bank set a maximum of 35 years on all home loans. For new loans, the loan-to-value ratio has been lowered if the loan exceeds 30 years, or if the loan period extends beyond the retirement age of 65.

Savills Singapore research head Alan Cheong said the "weak investor" can come from any age group. An example would be someone in his 40s earning less than his peers who wants to get ahead by entering the property market, thinking he can make money in the rental market.

"The new rules create an effect similar to rising interest rates, and increase the monthly cash outflow of home buyers," he said.

Older buyers will be forced to take shorter loans if they do not wish to pay a larger amount upfront. In some cases, the monthly rental received from these properties may not even be sufficient to cover their monthly mortgage.

R'ST Research director Ong Kah Seng said: "Most investors will rethink buying the property if the monthly repayment exceeds the monthly rental, unless there are other sources to make up for the shortfall."
Mr Png Poh Soon, head of research at Knight Frank Singapore, said the new measures would make buyers more cautious when buying properties for investment.

For instance, a 50-year-old investor will now be able to get a maximum loan term of only 15 years if he wants to avoid the stricter loan-to-valuation limits.

This means that if he buys a three-bedder at Sunville in the Serangoon area for $1.2million, his monthly repayment on a 15-year loan will be $4,367 (assuming he has another loan). Previously, assuming he met the bank's credit assessment criteria, he could have taken a 25-year loan with a monthly mortgage of only $2,773. The rent for such a unit would be about $3,800.

SLP International research head Nicholas Mak noted that the calculations "assume that interest rates remain low, which I do not expect for the next 20 years".

While the new rules are not the sole factors putting off Ms Vivian Lee from upgrading to a suburban condominium, they will affect her eventual decision.

The 39-year-old bank manager said: "We intended to take out a 30-year loan, but now I don't think so. Probably 25, which will affect our monthly cashflow."

The new rules may sway smaller and middle-aged investors towards the "very frothy" industrial and commercial property market, said International Property Advisor chief executive Ku Swee Yong. "We should now look for new curbs in the industrial and commercial sector. Some are selling at $1,000 per sq ft. It is completely insane in terms of pricing."

Asiaone: MAS to restrict loan tenure for residential properties

MAS to restrict loan tenure for residential properties

The maximum tenure of all new residential property loans will be capped at 35 years from Oct 6 onwards. -AsiaOne

Fri, Oct 05, 2012
AsiaOne 
 
SINGAPORE - The Monetary Authority of Singapore (MAS) will start to restrict the tenure of loans granted by financial institutions for the purchase of residential properties from Oct 6 this year.
The maximum tenure of all new residential property loans will be capped at 35 years.

Loans exceeding 30 years' tenure will face significantly tighter loan-to-value (LTV) limits. This will apply to both private properties and HDB flats.

MAS said in a statement that this is part of the Government's broader aim of avoiding a price bubble and instilling long term stability in the property market.

Such a move will also curb continued upward pressure on residential property prices, driven by low interest rates and rapid credit growth.

According to MAS, a significant supply of housing will come onto the market over the next two years.
However, prices in both the HDB resale market and private residential property have continued to rise in the second and third quarters of this year.

Financial institutions have also been lengthening the tenures of residential property loans.
The average tenure for new residential property loans has increased from 25 to 29 years over the past three years.

More than 45 per cent of new residential property loans granted by financial institutions have tenures exceeding 30 years.

MAS said such long tenure loans pose risks to both lenders and borrowers.

"Lower initial monthly repayments, made possible by long loan tenures and the current low interest rates, may lead borrowers to over-estimate their ability to service the loans, and take a bigger loan than they can really afford.

"A rising property market may give false confidence to both borrowers and lenders that should there be difficulty in servicing the loan, they can always sell the property at a higher price," it said.
However, in reality, long tenure loans impose a larger debt repayment burden on borrowers as interest accumulates over a longer period.

When interest rates eventually rise, borrowers who have overextended themselves will have difficulties repaying their loans. If property prices fall, financial institutions may be caught holding the bad loans.
MAS chairman Mr Tharman Shanmugaratnam said the central bank is taking this step to require more prudent lending, and will continue to watch the property market carefully.
"We will do what it takes to cool the market, and avoid a bubble that will eventually hurt borrowers and destabilise our financial system," he said.

The new MAS rules impose an absolute limit of 35 years on the tenure of all loans for residential property. This will apply to loans to both individual and non-individual borrowers, as well as refinancing loans

In addition, MAS will lower the LTV ratio for new residential property loans to borrowers who are individuals, if the tenure exceeds 30 years or if the loan period extends beyond the retirement age of 65 years.

For these loans, the LTV limit will be 40 per cent for a borrower with one or more outstanding residential property loans, 60 per cent for a borrower with no outstanding residential property loan.
MAS will also lower the LTV ratio for residential property loans to non-individual borrowers from 50 per cent to 40 per cent.

BT: MAS imposes cap on housing loan tenures

MAS imposes cap on housing loan tenures

MAS said it will set an absolute limit of 35 years on the tenure of all residential property loans - both new loans and refinancings. -BT
Emilyn Yap and Mindy Tan

Mon, Oct 08, 2012
The Business Times
SINGAPORE regulators signalled their concerns over still rising home prices yesterday, announcing fresh mortgage curbs to cap upward price pressures caused by low interest rates and fast credit growth.

The Monetary Authority of Singapore (MAS) said it will set an absolute limit of 35 years on the tenure of all residential property loans - both new loans and refinancings. It will also lower loan-to-value (LTV) ratios for new loans with a tenure of more than 30 years. The new rules will apply to both private homes and HDB flats and will take effect today.

"Monetary conditions worldwide are far from normal," said Deputy Prime Minister Tharman Shanmugaratnam, noting that the latest round of quantitative easing (QE3) in the United States and low interest rates have made credit easy, though this will eventually change.

"We are taking this step now to require more prudent lending, and will continue to watch the property market carefully," said Mr Tharman, who is also Finance Minister and MAS chairman. "We will do what it takes to cool the market, and avoid a bubble that will eventually hurt borrowers and destabilise our financial system."

The new rules - Singapore's sixth round of cooling measures - look set to affect not just home buyers and existing owners looking to refinance their mortgages, but also property developers and banks.
According to the central bank, over 45 per cent of new home loans have tenures exceeding 30 years. "We will not be surprised to see more measures being introduced if property prices do not stabilise (or correct slightly) over the next few months," said Barclays Capital economist Leong Wai Ho. MAS will cap the tenure of all new residential property loans at 35 years.

For refinancings, the tenure of the refinancing facility and the number of years since the first home loan for that property was disbursed cannot add up to more than 35 years.

Also, MAS will lower the LTV ratio for new home loans to individual borrowers if the tenure exceeds 30 years, or the loan period extends beyond the retirement age of 65 years.

The LTV will be 60 per cent for a borrower with no outstanding residential property loan, compared with 80 per cent previously, and 40 per cent for a borrower with one or more outstanding home loans, compared with 60 per cent before the new rules.

For non-individual borrowers, the LTV ratio for home loans will be lowered to 40 per cent from 50 per cent.

The MAS move comes after the Hong Kong Monetary Authority announced a 30-year limit on the maximum term of all new mortgages last month, following the launch of QE3. With the Federal Reserve looking to pump US$40 billion into the US economy each month until sustained jobs growth kicks in, worries about hot money inflows into Asia and asset price inflation have again emerged.
Stretched tenures.

Previous rounds of cooling measures had a moderating effect on home prices in Singapore, and a significant supply of housing will also come onstream in the next two years, MAS noted. "However, prices in both the HDB resale market and private residential property have continued to rise in Q2 and Q3 of 2012."

According to official flash estimates on Monday , HDB resale prices rose 2 per cent in Q3 from Q2, while private home prices gained 0.5 per cent over the same period. Separately, the SRX Residential Property Flash Report yesterday showed resale prices of non-landed private homes rising 3.2 per cent in Q3.

Low interest rates globally and locally are likely to persist and will continue to spur residential property demand, pushing up prices beyond sustainable levels, MAS warned, stressing that "the eventual correction could be painful to borrowers and destabilise the economy".

Meanwhile, financial institutions have stretched the durations of home loans, and long tenure loans pose risks to both lenders and borrowers, the central bank said. The average tenure for new residential property loans climbed to 29 from 25 years over the last three years, it revealed.
Also, more than 45 per cent of new home loans granted by financial institutions have tenures exceeding 30 years.

Lower initial monthly repayments from long loan tenures and low interest rates may cause borrowers to overestimate their loan servicing ability and take a bigger loan than they can afford, MAS said. In fact, long tenure loans create a larger debt repayment burden as interest accumulates over a longer period.

"When interest rates eventually rise, borrowers who have overextended themselves will have difficulties repaying their loans," MAS said. "If property prices fall, financial institutions may be caught holding the bad loans."

Banks which offer home loans with a tenure of over 35 years will feel the impact of the new rules almost immediately. DBS and OCBC are among those providing mortgages stretching up to 40 years.
"We will reduce our existing maximum home loan tenure of 40 years to 35 years, with immediate effect," said OCBC group corporate communications head Koh Ching Ching.
A DBS spokeswoman said that most of the bank's home loans have a tenure of under 35 years. "It will take some time to ascertain the impact of the new measures while homebuyers assess the market."
Resale impact
United Overseas Bank (UOB), which introduced 50-year housing loans in July, did not respond to media queries. Some market watchers then had questioned if the product would cause borrowers to overextend themselves, and National Development Minister Khaw Boon Wan subsequently called it a "gimmick".

Maybank said its maximum loan tenure for home loans is 35 years. "With an ageing population and couples marrying and setting up home at a later age, the new rules will have impact on these segments," said Alan Yet, head of lending (consumer banking) for Singapore.

The jury is out on how the new rules will affect the residential property market. The Real Estate Developers' Association of Singapore (Redas) does not expect a significant impact. "Based on past experience, not many buyers take long tenure loans," it said. Just last week, Redas said the property sector does not need more cooling measures - at least not before a thorough review of the impact of earlier policies.

Jones Lang LaSalle South-East Asia research head Chua Yang Liang believes that the new rules may be more keenly felt in the secondary market, particularly for buyers with existing housing loans as the lower LTV applies to them.

"The property market is likely to see a knee jerk reaction with a slowdown in resale activity while new sales should remain fairly stable," he said. "Given the potential economic slowdown and with this new policy risk, developers are likely to adopt a more cautionary stance and land bid prices could be more modest."

BT: UBS sees more downside to property on gov't new cooling measures

Business Times - 08 Dec 2011

UBS sees more downside to property on gov't new cooling measures

By YEO AIQI

UBS Investment Research on Thursday sees further weakness in the physical prices of property given the severity of the government's new measures unveiled on Wednesday.

'We believe it is not in the government's interest to drive down property prices. But, given the severity of the new measures, it is hard to see how physical prices will not start falling. Assuming stocks fall as per Jan 2011, first quarter of 2012 may be a good time to start putting cash to work in the developers. In 2009, stocks recovered in Mar 2009, even as property prices fell another 14 per cent quarter on quarter in first quarter 2009 and 4.7 per cent quarter on quarter in second quarter of 2009,' said UBS.

It cited historical data where stocks typically bottomed ahead of physical market prices. In 2009, the Singapore market index bottomed in March 2009, even though the URA property price index continued falling.

Similar experiences happened during the Asian crisis in 1998, post the 9/11 incident, in 2001 and SARS period in 2003.

On Wednesday, the government announced harsh new measures that will raise buyer's stamp duties to as high as 13 per cent for foreigners and companies, 6 per cent for permanent residents buying beyond their first property and 6 per cent for citizens buying beyond their second property.

BT: New terms may hit large collective sales

Business Times - 09 Dec 2011

New terms may hit large collective sales

To avoid paying ABSD, developers must build, sell all units on residential sites within 5 years

By KALPANA RASHIWALA

(SINGAPORE) The latest measures unveiled by the government are expected to have major implications for developers buying residential land, especially involving collective sale sites. They will have to develop any residential sites they buy from Dec 8 and sell all the units in the new project within five years - if they want to avoid paying the new 10 per cent additional buyer's stamp duty (ABSD).

'This can be very onerous especially when the property market is slow,' said Credo Real Estate executive director Ong Teck Hui.

Drew & Napier head of tax practice Ong Sim Ho said: 'For developers, it has become more difficult and costly to land bank.' He suggested one intention of the new rule could be to give more certainty to supply numbers on the completion of private homes.

Information in the Inland Revenue Authority of Singapore e-tax guide on the ABSD indicates that the new 10 per cent ABSD is payable by corporate entities buying vacant land and development sites for residential use - although they can apply for upfront remission if the buyer (developer) undertakes to develop and dispose of all units in the new development (which must have more than four residential units) within five years of the date of contract or agreement to buy the site, among other conditions.

If this condition is not met, the ABSD (with interest) becomes payable immediately upon the expiry of five years. The residential sites include Government Land Sales (GLS) plots and private-sector sites including en bloc sales.

Market watchers say that with the five-year limit to complete the project and sell all units, developers will have to weigh their land purchase decisions more carefully.

'They must be confident of developing the project and disposing of all residential units in it within five years - taking into account the possibility of any turn in market conditions and in the case of en bloc sales, the risk of a possible delay in court approval,' says Lee Liat Yeang, partner in real estate practice group at law firm Rodyk & Davidson.

For en bloc sales, the date of contract or agreement refers to the date when the site is awarded by the Sales Committee. From this point, it can take six to 12 months or even longer for legal completion of the site's purchase (including court approval of the en bloc sale).

This additional time eats into the five-year limit the developer has to complete building the new residential project on the site and selling all the units, said Mr Lee.

But for sites bought through the GLS programme, the impact will be less as there is certainty that the legal completion of the land purchase will take place by the 90th day of the site's award (the latter is deemed date of contract), added Mr Lee.

Credo's managing director Karamjit Singh said the new rules will hit big collective sales very badly. 'For the small and medium-sized en bloc sale sites, most developers would already aim to buy the site, develop it and sell new units within five years, even before the new rules kicked in - whereas for the bigger sites it can be very difficult to be certain that you can clear all your units within five years.'

This will further reduce the attraction of bigger en bloc sale sites, which have already put developers off due to their steep pricing, say analysts.

There has not been any collective sale deal this year exceeding $200 million.

KPMG partner, tax services, Leonard Ong, said: 'The ABSD will certainly increase the costs of acquisition by developers who are unable to meet the conditions for remission.

'These costs are then likely to be passed on to end-buyers when the developed residential properties are sold. This would be regardless of who the properties are eventually sold to, including first-time home buyers. This cannot be the intention of the government.'

Under the new rules that took effect yesterday, foreigners and non-individuals (that is, corporates) buying any private residential property in Singapore will pay the 10 per cent ABSD. However, foreigners of certain nationalities - the United States, Switzerland, Liechtenstein, Norway and Ireland - who fall within the scope of respective free trade agreements will be accorded the same treatment as Singapore citizens.

Singaporeans pay a 3 per cent ABSD for their third or subsequent residential property purchase. Permanent residents pay the same ABSD rate when they buy their second or subsequent home in Singapore.

Even before the ABSD kicked in yesterday, any developer buying a GLS residential site has been given a five-year limit by the state to complete the project, although the GLS conditions do not stipulate any timeframe on the sale of units.

However, when it comes to buying a private sector residential site (for example, through an en bloc sale), foreign developers have to obtain a Qualifying Certificate, conditions for which include a five-year limit to obtain Temporary Occupation Permit (TOP) for the project and another two years from TOP date to finish selling all the units in the project.

Any developer with even a single non-Singaporean shareholder or director is deemed 'foreign'. Hence all the big listed developers, including City Developments and CapitaLand, are counted as foreign developers.

Hitherto, Singapore developers (such as Far East Organization and Hoi Hup) have been spared any time limit for completing or selling a residential project on a private site, although they face the five-year limit to complete GLS projects.

'So now the Singapore developers too will face a time limit to complete and sell units in all residential projects on sites bought from Dec 8, - if they wish to avoid ABSD,' said Mr Lee.

BT: Stocks fall, sales stall as new normal kicks in

Business Times - 09 Dec 2011

Stocks fall, sales stall as new normal kicks in

Analysts project big drop in private home prices and sales with new measures in place

By CHEN HUIFEN

(SINGAPORE) Bank and property stocks tumbled yesterday as investors reacted with shock to the latest round of measures to curb foreign and speculative buying in Singapore's private property market, potentially setting the stage for a period of uncertainty with implications for the economy.

Counters of City Developments Ltd, DBS, UOB, UOL, CapitaLand and OCBC shed between 2 and 9 per cent, as increasingly shrill and sombre analyst reports flagged the pitfalls facing these companies.

Developers, especially those in the luxury markets, are seen to be the most vulnerable, given that their projects tend to attract a sizeable pool of foreigners who, together with corporate entities, will have to fork out 10 per cent more in buyer's stamp duty from now on.

This is higher than the 1-3 per cent that they paid previously, depending on the purchase price or market value of the transacted property.

As well, permanent residents will have to pay 3 per cent more in additional stamp duty on their second and subsequent homes, while Singaporeans will be taxed similarly on their third and beyond.

These measures are expected to dampen the residential property market by lowering overall demand in the purchase of private residential properties for investment.

Coupled with the release of new government land sites in the first half of next year that will give rise to about 14,100 private homes, the measures are aimed at giving Singaporean households the chance to own or upgrade to private housing.

While the intent is laudable, industry players and observers are questioning the timing of the announcement.

One economist has suggested that the latest moves could potentially tip Singapore into a recession, given that there could be spillover effects on peripheral sectors such as legal, banking and construction. Consumer spending may be hurt as well if falling property values lead to shrinking wealth.

'Given that the economy is already fairly weak and we are sort of bouncing on the edge, it may have tipped the balance into recession given that our readings are already pointing to a possible recession,' said Bank of America Merrill Lynch economist Chua Hak Bin.

Already, sales agents have indicated that clients who had previously shown interest in projects here are now holding back on decisions. Developers are said to be deferring upcoming launches as they take stock of the situation. It remains to be seen if any buyers who have signed options to purchase may back out of their deals in the coming weeks.

Analysts are projecting a fall of up to 30 per cent, in terms of both home prices and monthly sales volume, next year. But of significance is the message that the calibrated taxes may send to foreign talent and investors.

'In cosmopolitan Singapore, property and housing not only showcase the country but are the best key expression of our city,' said Norman Ho, a partner at Rodyk & Davidson LLP. 'To our foreign friends and investors one of the few things Singapore can offer is a good environment for living and place to call their own while they invest their talents and time here.

'This past year, the financial crises in Europe, struggling recovery in the United States, civil uprisings in the Arab Spring as well as slowing economies amidst our region are cause for consolidation and reflection.

'The measures should only be announced with careful and prior consultation with the stakeholders in the real estate industries and with the view of the possible macro 'knock-out' effect which may have on the already fragile economy.'

BT: Govt to release smaller supply of residential land in H1 2012

Business Times - 08 Dec 2011

Govt to release smaller supply of residential land in H1 2012

Industry players fear it may still be too much, given latest cooling measures

By UMA SHANKARI

(SINGAPORE) The government will release a slightly smaller supply of residential land in the first half of 2012. But industry players feared that it would still be too much, given the latest cooling measures and the substantial supply of private homes already in the pipeline.

The Ministry of National Development (MND) said yesterday that it would release new land for about 14,100 private homes in the first half of 2012 as part of its twice-yearly land sales programme. This includes 3,500 executive condominium (EC) units.

Of that amount, around 7,000 units (including 2,900 ECs) will be rolled out through the confirmed list.

This is slightly less than the 8,100 units offered under the confirmed list in H2 2011. Land parcels under the confirmed list are sold according to scheduled dates.

MND said that it took into account the new policy measures announced yesterday and the large supply pipeline of 81,600 private homes when it decided on the land sales programme for the first half of 2012.

'In deciding on this supply, which is slightly less than the 8,100 units in the H2 2011 confirmed list, MND has taken into consideration the large supply of 81,600 private residential units - including 5,300 EC units - that are already available in the pipeline as at Q3 2011, as well as the possible moderation in investment demand for private housing due to the policy measure announced today,' MND said.

Of the 81,600 units available in the pipeline, about 41,000 units (including 1,900 EC units) were still unsold, the ministry added.

But while it cut the total land supply for private homes, more land for building EC units will be up for sale.

Sites for 3,500 EC units will be made available in H1 2012 - including 2,900 EC units on the confirmed list. This is comparable to the 2,985 EC units from five sites sold in 2011.

Demand for EC units is expected to climb after the government raised the monthly income ceiling for the purchase of new EC units to $12,000 from $10,000 in August 2011.

National Development Minister Khaw Boon Wan pointed out that the EC supply is being ramped up. 'This will help higher-income Singaporeans own private condominium units in an affordable way, as the sale of new EC units is restricted to Singaporean households only,' he said.

EC units are initially sold with eligibility and ownership restrictions similar to HDB's public housing flats, but will be converted to private housing after 10 years.

Analysts were worried that the total supply of residential land for H1 2012 is excessive as it comes on top of the new cooling measures.

'I think that under normal circumstances, the market will probably be able to absorb the supply,' said Bank of America Merrill Lynch economist Chua Hak Bin. 'But with the kind of measures that have just been announced, there is a danger that demand could collapse altogether.'

International Property Advisor chief executive Ku Swee Yong similarly said that the upcoming supply seems to be 'abundant'.

He also noted that more than half of the supply from the confirmed list will be concentrated in the north-east of Singapore (specifically, in Sengkang, Pasir Ris and Punggol). 'The concentration of supply is a risk for home owners in those locations,' he added.

Jones Lang LaSalle's head of research Chua Yang Liang said that in the slightly longer term, the rate of immigration will play a large factor in whether the supply will be absorbed.

'Currently in the market, there is a mis-match between supply and demand due to the quick growth in population over the last few years,' Dr Chua noted. 'The measures will reduce some of the demand. But a lot will also depend on the rate of immigration next year and the years after.'

In addition to the supply of residential land, the H1 2012 government land sales programme will also comprise some 2.35 million square feet of commercial space as well as 4,800 hotel rooms.

The programme also includes a commercial plot in Paya Lebar at the junction of Sims Avenue and Tanjong Katong Road - which was put up for tender in 2011 but not awarded as the sole bid from UOL Group and Singapore Land was deemed to be too low. It will be added to the reserve list for H1 2012.

BT: Developers fear impact of targeted stamp duty

Business Times - 08 Dec 2011

Developers fear impact of targeted stamp duty

Extra 10% duty for foreigners set to help cool prices for S'poreans

By KALPANA RASHIWALA

(SINGAPORE) The government yesterday announced significant steps that could bring private home prices back within the reach of Singaporeans. Developers, however, have called these steps, which are expected to hit sales and prices, untimely.

Starting today, foreigners and corporate entities buying private homes in Singapore will have to pay an extra 10 per cent by way of an additional buyer's stamp duty. This duty will also apply to permanent residents (PRs) buying their second or subsequent homes and Singaporeans buying their third residential property or more - though only to the tune of 3 per cent. Overseas properties are excluded from the count of properties owned.

The move is aimed at reining in private property prices, which some felt were slipping beyond the reach of many Singaporeans. Real Estate Developers Association of Singapore (Redas) said, however, that the measures are untimely given that the local economy is expected to slow down next year. 'Redas is disappointed in the lack of consultation on the latest measures. They came as a surprise as the current market outlook is uncertain. The good take-up rate in the primary market is driven by the increased number of new launches and unique selling points of certain projects. It is not indicative of a return to a speculative market.'

The government also boosted the supply of land for executive condos in H1 2012 as part of its land sales programme.

Though the additional buyer's stamp duty (ABSD) kicks in today, remission will be given for options granted on or before Dec 7 and exercised within three weeks (that is, on or before Dec 28) or the option validity period, whichever is earlier.

Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said: 'We have always had open markets and must keep them that way. However, the reality is that investment flows into our property market are now larger than before, and unlikely to recede as long as interest rates remain low. The additional buyer's stamp duty should help cool investment demand, and avoid the prospect of a major, destabilising correction further down the road.'

A joint release from the Ministry of Finance and the Ministry of National Development yesterday evening said: 'A higher ABSD rate for foreign buyers in particular is necessary, in view of the large pool of external liquidity and strong buying interest from abroad, and the relatively small size of the Singapore market.'

It added: 'Excessive investment demand will . . . make the property cycle more volatile, and thus increase the risks to our economy and banking system.'

Foreign purchases accounted for 19 per cent of all private residential property purchases in H2 2011, up from 7 per cent in H1 2009, it noted.

Credo Real Estate's analysis showed that foreigners' presence is much stronger in the prime and mid-prime districts, where they accounted for nearly a quarter of caveats lodged in Q3 2011 - up from 16 per cent in 2010 and 13 per cent in 2009.

For the suburban mass- market segment (Outside Central Region), the proportion has also been rising, from 5 per cent in 2009 to 7 per cent in 2010 and nearly 15 per cent in Q3 2011.

'The suburban mass market is probably of greater concern as buyers of first private homes would feel threatened by increasing number of foreign purchasers,' said Credo executive director Ong Teck Hui.

DTZ's Southeast Asia chief operating officer Ong Choon Fah said the ABSD is not a blunt policy tool. 'They have made distinctions between foreigners and PRs and whether they are buying for owner occupation or investment. This is very carefully calibrated to strike a balance between the price that Singapore has to pay for being an open economy and ensuring property prices remain within the reach of Singaporeans.'

She reckons developers will take a wait-and-see attitude, evaluate their options and watch how buyers react.

'Prices should fall but activity has to drop significantly first before developers re-price their projects. The likelihood is that some may first take soft measures to mitigate the situation - such as absorbing the additional buyer's stamp duty or giving furnishing vouchers - before resorting to a price cut.'

Knight Frank chairman Tan Tiong Cheng too acknowledged that prices will soften. 'With so much supply coming into the market, developers will either have to revise their prices to move units, or absorb the additional buyer's stamp duty.' The latter will be tantamount to a price cut as far as a developer is concerned, note analysts.

'This set of measures will definitely help to cool prices. The concern has been that foreign buying is pushing up prices,' said Mr Tan. With the 10 per cent ABSD on foreign buyers, the long-awaited recovery in demand in the luxury sector will take even longer, he added.

Standard Chartered Bank said in a research note last night: 'We expect the policy to induce a 20 per cent decline in sales volume in Q1 2012. . . We continue to expect residential prices to fall 20-30 per cent next year.'

BT: Rise in private, HDB home prices slowing

Business Times - 02 Apr 2011

Rise in private, HDB home prices slowing

Govt cooling measures working, say analysts, as URA index climbs 2.1% in Q1 while HDB resale prices see slowest rise in 7 quarters

By KALPANA RASHIWALA

IN a sign that the property cooling measures are taking effect, Urban Redevelopment Authority's overall private residential price index posted a 2.1 per cent quarter-on-quarter increase in Q1, compared with a q-on-q increase of 2.7 per cent in Q4 last year, latest government flash estimates show.

'The rate of increase has moderated for six consecutive quarters since Q4 2009,' URA said in its release.

Similarly, the Housing & Development Board's resale flat price index registered a 1.6 per cent q-on-q gain in the first quarter, the slowest increase in seven quarters.

URA's sub-index for prices of non-landed private homes posted a q-on-q gain in Q1 2011 of 0.9 per cent for Core Central Region (which includes the prime districts 9, 10 and 11, as well as the financial district and Sentosa Cove) - a smaller hike than the 2.2 per cent q-on-q rise for Q4 2010.

However, the index for Rest of Central Region (which covers places like Bukit Merah, Queenstown, Geylang, Toa Payoh and Katong) increased 2.2 per cent in Q1 over the preceding quarter - a bigger gain than the 1.9 per cent q-on-q gain in Q4 2010. The index for Outside Central Region (covering suburban mass-market locations like Woodlands, Clementi, Jurong, Hougang, Tampines and Bedok) posted a 3.1 per cent q-on-q rise in the first three months of 2011, after rising 2.1 per cent q-on-q in Q4 2010.

Credo Real Estate executive director Ong Teck Hui said: 'The cooling measures did not affect genuine home buyers as much as they did investors and speculators. And demand for OCR is sustained by genuine buyers.' Some market watchers suggest there may be some diversion of investment demand from high-end property to lower-priced segments as the cooling measures stretched budgets.

However, some analysts point out that the rate of q-on-q price increases for OCR had moderated in Q3 and Q4 last year before rising again in Q1. And the Q1 flash estimate for the region reflected a year-on-year appreciation of 13.6 per cent; this figure has been easing since peaking at 36.1 per cent in Q2 last year.

CB Richard Ellis executive director Li Hiaw Ho attributes the 3.1 per cent rise in the Q1 flash estimate for OCR to projects like Waterfront Isle along Bedok Reservoir, The Lakefront Residences near Jurong Lake, and The Tennery in Bukit Panjang which registered strong take-up at median prices (in the first two months of this year) of about $990 psf, $1,050 psf and $1,200 psf respectively. 'These projects attracted home buyers mainly because of their proximity to an MRT station,' Mr Li said.

He attributes the 2.2 per cent appreciation in the RCR's price index to Spottiswoode 18 and The Cape - both transacting at a median price of about $2,000 psf - as well as projects with small-format units like Palmera East ($1,225 psf).

URA said that as at end-2010, there were about 33,000 yet-to-be-sold private homes in uncompleted projects with planning approval - of which 40 per cent is in OCR. In addition, there were 1,500 executive condominium units (a hybrid of public and private housing) that were still unsold.

The above supply figures do not take into account new sites that were recently sold (which can generate about 8,100 units) or which will be made available for development through the confirmed list of the Government Land Sales (GLS) Programme in H1 2011 (which can generate about 5,360 units). Additional supply may also come from private land sources, such as en bloc sales.

Nomura Singapore analyst Sai Min Chow said: 'The combination of more completions (tempering rental expectation), government measures that cap home buying capability, and supply that could be launched from sites (both GLS and en-bloc) sold will continue to weigh on home prices. We expect this to translate into a flattish outlook for mass prices and up to 8 per cent correction for luxury prices this year.

Colliers International, however, predicts that overall private home prices will rise by up to 8 per cent for the whole of this year.

Knight Frank chairman Tan Tiong Cheng said: 'Certainly the cooling measures are working. If developers' sales continue to come off, prices may ease. But any price drop may be mitigated in a scenario of rising construction costs amid the increase in oil prices and expected reconstruction efforts in Japan.

'Interest rates are likely to remain low for the foreseeable future and the fact that HDB resale prices are still strong will continue to create a push for upgrading to the private market.'

HDB yesterday said it will launch about 17,800 build-to-order flats in the first nine months of this year - close to the 17,700 new flats offered for the whole of 2010.

ERA Realty Network and Propnex said cash-over-valuation amounts have stabilised at about $20,000 in Q1 based on transactions handled by their firms.

ERA's key executive officer Eugene Lim said: 'We estimate the total HDB resale volume for Q1 to be just below 7,000 deals.' The figure for Q4 was 6,454.

For the whole of 2011, he predicts HDB's resale price index to increase about 6-9 per cent with total resale applications of about 28,000-30,000. The index rose 14.1 per cent last year, when there were 32,257 resale applications.

PropNex CEO Mohamed Ismail predicts a 6-8 per cent hike in HDB's resale price index this year.

BT: New steps rain on speculators' parade

Business Times - 14 Jan 2011

New steps rain on speculators' parade

Big hike in seller's stamp duty and mortgage restrictions to cool property market

By UMA SHANKARI

(SINGAPORE) Starting today, speculators in the Singapore property market will find their ardour cooled by a severe new regime. The seller's stamp duty for private homes will rise to as high as 16 per cent, from up to 3 per cent previously, while tighter mortgage restrictions will be put in place.

The government yesterday unveiled a new and stronger round of demand-side cooling measures - the third set in less than 12 months.

The killer move, according to analysts, is a sharp hike in the seller's stamp duty to 16 per cent, 12 per cent, 8 per cent and 4 per cent respectively for properties that are bought on or after Jan 14 this year and are sold in the first, second, third and fourth year after purchase.

Previously, owners who sold houses and apartments less than three years after buying them had to pay a seller's stamp duty of only up to 3 per cent.

Related link: Click here to read the government's news release

Singapore also further slashed the Loan-To-Value (LTV) limit on housing loans for both individual and corporate buyers.

Its move follows Hong Kong's, which in late November 2010 announced some of its toughest-ever measures to cool the property market - including a stamp duty of as high as 15 per cent on apartments sold within six months of purchase. Hong Kong also tightened mortgage restrictions.

Analysts expect the higher seller's stamp duty will wipe out most speculators' gains and keep them out of Singapore's property market.

'For those buyers who intend to flip their properties within one or two years, the increased seller's stamp duty erases their potential gains,' said Merrill Lynch economist Chua Hak Bin. 'So this measure is pretty targeted and will take away a big chunk of these potential investors.'

But most analysts found the unexpected sharp hike in the seller's stamp duty to be harsh. In addition to hindering short and medium-term investors, it could also hurt genuine owner-occupiers looking to change homes.

International Property Advisor chief executive Ku Swee Yong said that a staggered-down capital gains tax - one that could perhaps be imposed only on capital gains from real estate - might have been more advisable. This would spare those who sell their properties at a loss.

'The government's intention of forcing people to treat real estate as a long-term investment is admirable,' said Mr Ku. 'But this (the higher seller's stamp duty) will force people to hold, including some genuine cases where there might be a real need to sell off a property.'

In addition, Singapore lowered the LTV limit on housing loans from 70 per cent to 60 per cent for individual buyers with one or more outstanding housing loans at the time of the new home purchase.

And for corporate purchasers (such as firms, trusts and collective investment schemes), the LTV limit has been cut to an even lower 50 per cent - regardless of the number of outstanding housing loans at the time of the new home purchase.

In August 2010, the government reduced the LTV ratio from 80 per cent to 70 per cent.

Yesterday's measures follow three gentler sets in September 2009, and February and August 2010.

'Previous government measures have to some extent moderated the market, but sentiment remains buoyant,' said the National Development and Finance Ministries in a joint statement with Singapore's central bank, the Monetary Authority of Singapore.

'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.'

Private home prices rose 17.6 per cent last year, according to flash estimates. A record 15,500-16,500 new private homes are also estimated to have been sold in 2010.

In a statement, the Real Estate Developers' Association of Singapore (Redas) said it has 'taken note' of the latest measures.

The measures will discourage speculative demand and will encourage longer-term holding of properties which will contribute to the stability of the market, Redas said: 'It is in the interest of the market to see a more gradual trend in growth and value for genuine home owners and investors.'

Merrill Lynch's Dr Chua also said that in addition to curbing speculators, the government could be concerned by aggressive mortgage lending by banks.

Analysts expect the volume of new home sales to fall in 2011 but were spilt on whether the new measures will cause private home prices to decline.

'There will be a sense of uncertainty in the market leading to hesitation among buyers and sellers and we can expect to see transactions easing in the short term,' said Credo Real Estate executive director Ong Teck Hui.

But the measures may not lead to an immediate price decline in Q1 2011, he said. This round of measures is still not as severe as the anti-speculation measures announced in May 1996, which resulted in a 1.9 per cent drop in prices in Q3 1996. But any upside in prices in Q1 2011 will be 'minimal', Mr Ong added.

But in any case, analysts said that the 5-10 per cent growth in private home prices for the whole of 2011, which they predicted just one week ago, now looks highly unlikely. They also expect property stocks to fall today in reaction.

BT: Luxury home prices defy market lethargy

Business Times - 04 Jan 2011

Luxury home prices defy market lethargy

Overall price growth for private homes, HDB resale flats slowed in Q4 but high-end hit new high

By UMA SHANKARI

(SINGAPORE) A surge of interest in high-end and luxury homes pushed prices in the segment, which has underperformed the rest of the market over the last two years, to a fresh all-time high in Q4 2010.

But in the rest of the market, prices of private homes as well as HDB resale flats grew more slowly in the fourth quarter compared to the first three quarters of last year.

Flash estimates released by the Urban Redevelopment Authority (URA) yesterday show that overall private housing prices edged up 2.7 per cent in Q4 to a fresh record high.

Private home prices in Singapore first surpassed the former all-time peak achieved in 1996 in Q2 2010, and then continued to inch upwards in Q3 and Q4. For the whole of 2010, prices climbed 17.6 per cent.

But the gain in fourth-quarter prices was the smallest in six quarters, URA's data shows.

The high-end market was a notable exception. Non-landed home prices in the Core Central Region (CCR) micro-market, which includes the prime districts Marina Bay and Sentosa Cove, rose 2.3 per cent in Q4, faster than the 1.6 per cent growth seen in Q3.

This pushed luxury home prices to a new all-time high, outstripping the previous peak in Q1 2008.

By contrast, the price index for Rest of Central Region (RCR) rose by 1.7 per cent in Q4, down from 2.3 per cent in Q3. And in the Outside Central Region or OCR (where suburban condos are located), prices climbed 1.6 per cent in Q4 after increasing 2.2 per cent in Q3.

Analysts attributed the slowdown in price growth in the RCR and OCR areas to resistance from buyers for increasingly expensive projects.

Price growth in the CCR region, by contrast, rose on the back of the prevailing strong economy and low interest rates, which once again enticed foreign investors to pick up luxury homes in Singapore.

'In 2010, much of the activity was focused on the mass and mid-market segments,' said Joseph Tan, CBRE's executive director for residential. 'Foreigners stayed away, thinking that the lack of transaction activity in the high-end segment would lead to a fall in prices and allow them to buy the properties for less.'

But since most high-end home owners proved to have 'holding power', the anticipated fall in luxury home prices did not occur and foreign buyers are slowly returning to the luxury market, Mr Tan said.

The number of foreign home buyers rose by 14 per cent in 2010 compared to 2009, said Knight Frank's head of consultancy & research Png Poh Soon.

'The tightened regulations in Hong Kong and aggressive anti-speculation rules in China caused some investors to shy away from those markets and directed them to Singapore,' Mr Png said. 'High net worth foreign buyers would definitely consider the Singapore property market to park their money.'

Analysts also noted that while the latest round of cooling measures introduced by the government on Aug 30 have not dampened transaction volumes, they appear to have at least moderated price growth. A record 15,500-16,500 new private homes are estimated to have been sold in 2010, despite demand-side and supply-side measures introduced periodically throughout the year.

CBRE's Mr Tan said that transaction volumes were still high in 2010 as many potential buyers are still out looking for units.

But the price growth has slowed as these buyers - especially those house-hunting in the mass-market segment - are sticking to a budget.

Over at the HDB market, prices of resale flats rose 2.4 per cent in Q4 2010 - a slower rate of growth than the 4 per cent increase in Q3 2010 - according to flash estimates from the Housing & Development Board.

But while the resale price index was pushed to yet another all-time record, the transaction volume fell.

The resale volume declined by about 21 per cent in Q4, HDB said. And the median cash-over-valuation (COV) amount is also estimated to have fallen by $7,000 or 23 per cent, from $30,000 in Q3 2010 to $23,000 in Q4 2010.

In fact, COV levels declined progressively over the last three months of 2010, according to data from PropNex.

The firm's chief executive, Mohamed Ismail, said that according to monthly transactions handled by his company in Q4 2010, the median COV fell from $26,000 in October to $23,000 in November and to $20,000 in December.

But overall resale prices are still climbing in spite of falling COV levels due to a time lag, he explained

'Valuations for resale flats that were transacted in Q4 2010 were based on prevailing caveats for flats in the vicinity,' Mr Ismail said.

'There is therefore a certain lag time of about two months and hence the (HDB) prices overall are still climbing.'

Looking ahead, growth in private home prices may slow to anywhere between 3 per cent and 10 per cent in 2011, analysts predicted.

But most are more bullish on luxury home prices, which some said could climb by up to 15 per cent this year.

In the mass-market segment, the ample supply of new homes coming onstream from the beefed-up 2010 Government Land Sales programme should help to keep price growth to less than 5 per cent, analysts said.

And in the HDB resale market, prices are expected to grow by 5-10 per cent in 2011. The overall median COV level should also fall to about $18,000 to $20,000 in Q1 2011, said Mr Ismail.

BT: 11,849 homes left unsold in launched private projects

Business Times - 16 Dec 2010

11,849 homes left unsold in launched private projects

Twenty eight projects have more than 100 unsold units each

By UMA SHANKARI

DEVELOPERS are sitting on close to 12,000 unsold units in private residential projects that have already been launched.

Data compiled by The Business Times using information from the Urban Redevelopment Authority (URA) shows that as at end-November this year, developers had a stockpile of 11,849 units in projects that they have already started marketing - that is, projects in which at least one unit has been sold.

While some developments have just a handful of units left unsold, a total of 138 launched projects scattered across the island have 10 or more unsold units left. And of these, 28 projects have more than 100 unsold units each.

The more recently-launched projects include Kheng Leong's The Minton; Frasers Centrepoint's Flamingo Valley; and City Developments' Residences At W Singapore Sentosa Cove - all of which were put on the market in the first half of this year when sentiment was buoyant.

But six projects with more than 100 unsold units each have been on the market for at least three years. These include prime developments such as Keppel Land's Reflections at Keppel Bay; SC Global Developments' Hilltops; Allgreen Properties' The Cascadia; and Wheelock Properties' Scotts Square.

The 11,849 units are held by the entire range of both big and small developers and include landed projects, though the majority are condominium developments.

Market observers say the stockpile could have been accumulated as developers typically roll out units in large developments in phases.

Those with strong holding power may also hold back some units in their projects as part of a larger marketing strategy. Keppel Land, for instance, did this with its Caribbean At Keppel Bay condominium.

But the ample supply of ready-to-buy homes should show prospective homebuyers that there is no need to rush to pick up units in new launches, said another industry veteran.

Homebuyers snapped up 1,909 new private homes in November even as developers launched a strong supply of 2,329 new homes for sale. The strong demand from buyers took the total sales volume for 2010 to a record 15,025 units - even higher than the then-record 14,811 homes sold in 2007 during the last property boom.

'The fact that we have recovered so quickly from the financial crisis has given a lot of false confidence to many people with money,' the industry veteran said. 'They think that it is the right time to jump into property.'

In October, URA said that at the end of Q3 2010, there was a total supply of 64,358 uncompleted units of private housing from projects in the pipeline. Of these, 33,771 units were still unsold. The numbers include both launched and unlaunched projects.

But data compiled using URA's monthly update on the number of units launched, sold and unsold in residential projects in Singapore, released yesterday, showed that as at end-November, there were 11,849 units left unsold in launched projects.

BT: Developers hold back on luxury projects in Q4

Business Times - 17 Dec 2010

Developers hold back on luxury projects in Q4

This despite higher buying interest for high-end homes in October, November

By UMA SHANKARI

DEVELOPERS continued to hold back on launching new luxury projects in the fourth quarter even as buyer interest in such projects grew slightly in October and November.

No new luxury projects were launched in the fourth quarter, noted CB Richard Ellis (CBRE) in a report yesterday.

This was even though there was increased buying interest for high-end homes - that is, units that sell for more than $2,000 per square foot (psf) - in both October and November.

Around 230 units were sold in this segment in October and another 160 units last month. By comparison, the number of new homes that cost more than $2,000 psf did not cross the 100-mark from June to September 2010.

And for units priced at above $3,000 psf, the number sold doubled to 12 units last month compared to October. Analysts also noted that older launches such as Paterson Suites, The Trizon and The Laurels also saw renewed buying interest in November.

But despite this, most of the launch activity was centred in the mass market segment as developers capitalised on the strong demand from upgraders for cheaper private homes.

'Contrary to expectations that developers would look to unload previously accumulated land for high-end properties to ride on the building up of buying momentum for such properties, developers have only launched 9 per cent more of high-end homes in November,' noted Colliers International's director of research and advisory Tay Huey Ying. 'Instead, developers have surprised many by launching primarily mass-market homes in November.'

The 1,638 units of new mass-market homes released by developers last month was more than triple the 513 units launched in October and accounted for 70 per cent of all new homes released in November.

Buyers responded well, picking up 1,229 mass market units last month - 64 per cent of the 1,909 private homes sold in the month. The strong demand took total sales volume for this year to 15,025 units - even higher than the record 14,811 new private homes sold in 2007.

'Projects located close to MRT stations remain popular among homebuyers,' said Joseph Tan, CBRE's executive director for residential. 'Besides location, other selling points include government plans for future development and new transport network, amenities, tenure and product attributes.'

The trend was true for the first 11 months of the year as well. Data compiled by CBRE shows that out of the 10 best-selling projects, eight were in the outside central region (OCR), which is a proxy for mass market locations.

The three projects that drew the most buyer interest were: UOL Group's 616-unit Waterbank at Dakota (all but one unit sold as of end-November); MCL Land's 608-unit The Estuary (fully sold); and Kheng Leong's The Minton (482 units out of 1,145 sold).

The lack of activity in the high-end segment has also kept prices of such homes dampened despite gains in other categories.

The official URA private residential price index, which already went up 14.4 per cent in the first three quarters of this year, is expected to register another marginal climb in the final quarter, translating to a total rise of 15 per cent to 16 per cent for the whole year.

But most of the growth has been led by mass market homes, analysts noted.

'Overall, prices for prime, mid-tier and mass-market homes have more or less caught up with the peak levels in end-2007. However, prices of new luxury properties were still lagging behind by around 15 per cent,' said Mr Tan.

Equity analysts are getting increasingly wary of residential stocks with large exposures to the mass market segment on concerns that the government could announce more policy measures to cool the market.

'With sales activity largely centred on mass market condos, we believe this will lead to more demand-side and supply-side tightening measures ahead,' said DMG & Partners Research analyst Brandon Lee. 'As such, we are maintaining our preference towards high-end developers, which are less susceptible to policy concerns.'

He reiterated his 'buy' calls on Wing Tai Holdings and SC Global Developments.

DBS Group Research, on the other hand, said in a fresh report that it prefers companies with greater office exposure and laggards such as Keppel Land, UOL Group and Singapore Land, which have the largest office content in their revised net asset values.

BT: Hot home sales raise odds of govt cooling

Business Times - 16 Dec 2010

Hot home sales raise odds of govt cooling

Sales of new private homes in November hit 1,909; analysts expect Dec to stay buoyant

By UMA SHANKARI

(SINGAPORE) Demand for new private homes rose again in November, despite the measures to cool the property market announced barely three months ago.

The number of units sold by developers in the first 11 months of this year has already set a new yearly record - even though there is one more month to go.

Figures released by the Urban Redevelopment Authority (URA) yesterday showed November's sales volume at a strong 1,909 units. This takes total sales volume for 2010 to 15,025 units - more than the 14,688 units sold in 2009 and even higher than the record 14,811 homes sold in 2007.

'It is clear from November's sales figure that the Aug 30 set of measures have been less than effective in taming the buying frenzy. If left unchecked, there is a potential that the current buying fever could put upward pressure on home prices again,' said Tay Huey Ying, Colliers International's director of research & advisory.

'There is now an increased risk for more and stiffer demand-side cooling measures to be announced within the next two to three months,' she added.

In fact, prices may already be on the way up. Jones Lang LaSalle (JLL) noted in an analysis that the pick-up in buying activity is mirrored in the prices of caveats lodged.

Based on data retrieved on Dec 15 for transactions up to Nov 30, the firm found that the island-wide median price for non-landed properties under the 'new sale' category rose by 13 per cent month on month in November after falling by 9 per cent in October.

To ride on the strong demand and anecdotal price increases, developers launched 2,329 new private homes in November - second only to the record 2,878 units launched in July 2009, data from the URA showed.

In particular, developers were especially bullish about the mass-market segment, where the number of new homes launched rose to hit a 16-month high last month. Developers launched 1,638 homes in the outside central region (OCR), which is a proxy for mass-market locations, in November.

Buyers were also particularly keen on mass-market units; 1,229 such homes were sold in November, accounting for 64 per cent of all homes sold in the month. But the continuing strong demand for mass-market homes is surprising as prices in the segment are currently at a peak, analysts noted.

The strong sales in this segment over the last few months could be in part due to investors opting for properties that require a lower capital outlay compared to the high-end homes in order to minimise investment risks, they noted. But the fact that the buying volume was led by mass-market homes means that the total amount spent by homebuyers is still less than what it was in 2007, when the buying spree was led by high-end homes.

An analysis by CB Richard Ellis, based on URA's statistics, showed that the total transaction value of the homes sold up to November 2010 was $16.98 billion, 30 per cent lower than the $24.11 billion worth of homes sold in 2007.

'It is unlikely that the total transaction value of 2010 will be able to exceed the 2007 value even if the volume reaches 15,500-16,000 units for the whole year,' said Li Hiaw Ho, executive director of CBRE Research.

Analysts expect sales in December to stay buoyant at above 1,000 units given that the market is awash with liquidity and interest rates remain low.

The sales tally for the whole of 2010 is likely to be in excess of 16,500 units, putting 2010's sales volume at more than 10 per cent above the historical high seen in 2007.

In the light of this, more demand-side cooling measures could be coming. Said JLL's head of research for South-east Asia Chua Yang Liang: 'The low interest rate environment, coupled with the strong urban regenerative plans and overall market demand in these areas, have encouraged more speculative buying into the market. As such, we believe the risk of further policy intervention has been elevated with the soonest policy to be introduced within a month if not by early next year.'

Nomura analyst Tony Darwell said that one area that the government may want to curb is property purchases by foreigners.

'While the representation of foreign private homebuyers declined for the second consecutive quarter (albeit slightly) in Q3 2010, the representation is still high relative to historical levels. Foreign buyers also appear to have been buying more in the mass and mid-market segment during Q3,' he said.

BT: Sim Lian is top bidder for Punggol Central condo plot

Business Times - 08 Dec 2010

Sim Lian ahead in tight race for Punggol site

Top bid of $363m, or $406 psf ppr, is just 0.4% higher than nearest rival's

By KALPANA RASHIWALA

IN one of the tightest races for a site at a state tender, a joint venture between Sim Lian Land and Sim Lian Development edged out Qingdao Construction by just 0.4 per cent to emerge as the highest bidder for a 99-year leasehold private housing plot near Punggol MRT Station.

The site, which can be developed into a condo with about 810 units, includes Matilda House, the only remaining historic bungalow in Punggol New Town.

Sim Lian plans to restore Matilda House, which is gazetted as a conservation building, for use as a clubhouse in the proposed condo.

Sim Lian bid $363 million or $406.32 per square foot per plot ratio (psf ppr), inclusive of Matilda House's gross floor area. Qingdao Construction (Singapore) offered $361.7 million or $404.86 psf ppr.

The tender attracted seven bids. The lowest bid, from Allgreen Properties, was $288.76 psf ppr.

Credo Real Estate executive director Ong Teck Hui observed that the $406 psf ppr top bid for yesterday's tender is significantly above winning bids of $320-345 psf ppr for 99-year private housing sites offered at recent state tenders.

'This is due to the Punggol site's superior attributes, including proximity to an MRT station, and not necessarily indicative of higher bidding trends,' Mr Ong added.

In fact in late October when the Punggol site was launched, Mr Ong had predicted top bids of around $400-450 psf ppr for it. Hence, yesterday's top bid was at the lower end of that range.

'If it had not been for the August 30 property cooling measures coupled with the substantial Government Land Sales Programme for H1 2011 announced recently, the top bid at today's tender would have been even higher,' he said.

Agreeing, Sim Lian Group executive director Diana Kuik said: 'Developers are becoming cautiously optimistic even for sites that are well located near MRT stations.'

The biggest risk factor for a developer for the Punggol plot is the project's substantial size. 'However, this is mitigated by the site's proximity to an MRT station. Punggol is becoming a key feature of the north-east region boasting waterfront living,' Ms Kuik said.

As well, a commercial/ residential development on a plot next to Punggol MRT Station that was launched more recently will help make Punggol an even more exciting New Town, Ms Kuik added.

Sim Lian plans to pump in about $5 million to restore Matilda House. The group's proposed 16-storey condo on the 2.75 hectare site tendered yesterday will have about 800-odd units comprising two to four-bedroom apartments as well as penthouses. But the group will fine tune its plans and is not ruling out having some one-bedders.

'We expect to launch the project by Q4 2011,' Ms Kuik said.

CBRE Research executive director Li Hiaw Ho estimates Sim Lian's breakeven cost at about $750 psf.

'A new project on the site may be able to fetch around $800 psf on average when it is ready for launch,' he said.

'One attraction about a new development on the latest plot in Punggol is Matilda House, which will enhance the lifestyle of the future residents with a piece of history of old Punggol,' Mr Li added.

Others who bid at yesterday's tender include Hong Leong Group's Intrepid Investments ($359 psf ppr), Keppel Land Realty ($357 psf ppr), a tie-up between Frasers Centrepoint, Far East Organization and Japan's Sekisui House ($332 psf ppr) and Ho Lee Group unit Khai Wah Development.

SLP International Property Consultants' executive director Nicholas Mak said the 0.4 per cent spread between the top two bids at yesterday's tender is the smallest for a 99-year private condo site offered at a state tender since 2000.

Business Times - 07 Dec 2010

Sim Lian is top bidder for Punggol Central condo plot

By KALPANA RASHIWALA

A joint venture between Sim Lian Land and Sim Lian Development has emerged as the highest bidder for a 99-year leasehold private condo plot at Punggol Central/Punggol Walk.

The tie-up bid $363 million or $406 per square foot per plot ratio (psf ppr).

The tender attracted seven bids. The lowest, from Allgreen Properties, was $288.76 psf ppr.

The plot includes a single-storey conservation building, Matilda House.

BT: URA explains why DPS is still available for exec condos

Business Times - 07 Dec 2010

URA explains why DPS is still available for exec condos

By EMILYN YAP

PROPERTY developers can continue to offer the deferred payment scheme (DPS) for executive condominiums (ECs) because eligibility and ownership rules keep speculation in such projects at bay.

But homebuyers hoping that the interest absorption scheme (IAS) and interest- only housing loans (IOL) will also be available for ECs are in for a disappointment. The withdrawal of these two schemes in September last year applies to all types of private residential projects.

The Urban Redevelopment Authority (URA) issued clarifications on the various payment schemes in response to queries from BT.

Many in the property industry thought the government had scrapped the DPS for all types of uncompleted private homes in 2007 to curb speculation. It was not until last week that they realised DPS would still be available for ECs.

The news spread when developers of Prive - an EC in Punggol - said they would offer the scheme.

As at 5pm yesterday, 823 applications had poured in for the 680 apartments available in Prive.

Asked why developers can still offer the DPS for executive condominiums, URA said that ECs 'are different from other private residential developments' as they are meant for owners to live in and are subject to eligibility criteria and ownership conditions. For instance, EC buyers must form a family unit and they have to occupy their units for five years before selling them in the open market.

In addition, the subsale of booked ECs is not allowed.

'With these conditions, there is no need to remove DPS for ECs,' URA said. The 2007 move was meant to 'discourage excessive property investments in a buoyant market'.

According to URA, when the DPS was cancelled in October 2007, it had informed the Real Estate Developers' Association of Singapore, the Law Society of Singapore and all licensed developers in writing that the withdrawal would not apply to ECs and flats under the design, build and sell scheme.

Developers which intend to offer DPS for ECs have to seek the Housing and Development Board's approval to vary the terms in the standard sales and purchase agreement.

Then what about the IAS and IOL, which the government disallowed last year for all private residential projects to also discourage speculation? The news release made no mention of ECs then.

URA said that the ban on IAS and IOL 'is effected via the Monetary Authority of Singapore's housing loan rules for financial institutions', which apply to all residential properties, including ECs.