Wednesday, December 10, 2008

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Deferred Payment Scheme (DPS) buyers to unload properties on credit crunch

HSR Property Consultants said there’s been an 8% jump in the number of private homes being put up for sale recently compared to previous two quarters; and about half of the sellers have bought units under the Deferred Payment Scheme (DPS).

Eric Cheng, executive director, HSR Property Consultants, said: “They are afraid that the current loans may not sustain the current price which they bought. There’s also concern that the banks may not want to loan them at least an 80% loan. So they are afraid they have to top up more cash.”

Sellers still make marginal profits or breakeven

Calculations, however, show that these sellers will still make marginal profits or break even if they cash in on their properties now. Agents expect the market to hold up without heading to a fire sale situation where assets go at 20% to 30% below valuation.

No widespread fire sales, said property agents

Despite the negative sentiment, market players said there’s still demand for properties especially those that are realistically priced. These are sold at between 3%-5% below market value. Eugene Lim, associate director, ERA Asia Pacific, said: “There are cases of fire sales but they are confined to sellers who generally need to raise cash fast. For example, they may be running a business and run into some cashflow problems.”

Extract from CNA - 9 Dec 2008

May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase


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