Showing posts with label 0.3 Property News Analysis Nov 2008. Show all posts
Showing posts with label 0.3 Property News Analysis Nov 2008. Show all posts
Monday, December 1, 2008
About this Blog
Buyers paying less cash for HDB resale flats
by Sunday Times, November 30, 2008, HDB resale flats buyers are paying less cash above valuation (COV). This may be yet another sign that the financial crisis would eventually impact all market segments. The private property market is at a standstill and prices have fallen as the global financial crisis scares buyers away.
While HDB resale flat market remains active and prices are still fairly strong, there are increasing signs that this segment of the market is no longer immune to the economic slowdown.
While prices have not dropped, the cash amount that buyers typically pay on top of the flat’s valuation has fallen more significantly, according to market analysts. ‘In view of the current sentiment, HDB resale flat valuations should stay flat going forward. If COV is coming down, prices will eventually come down.’ said Mr Eugene Lim, associate director of ERA Asia Pacific
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
HDB Resale Flats Buyers Paying Less COV
According to the report,Buyers paying less cash for HDB resale flats
by Sunday Times, November 30, 2008, HDB resale flats buyers are paying less cash above valuation (COV). This may be yet another sign that the financial crisis would eventually impact all market segments. The private property market is at a standstill and prices have fallen as the global financial crisis scares buyers away.
While HDB resale flat market remains active and prices are still fairly strong, there are increasing signs that this segment of the market is no longer immune to the economic slowdown.
While prices have not dropped, the cash amount that buyers typically pay on top of the flat’s valuation has fallen more significantly, according to market analysts. ‘In view of the current sentiment, HDB resale flat valuations should stay flat going forward. If COV is coming down, prices will eventually come down.’ said Mr Eugene Lim, associate director of ERA Asia Pacific
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
About this Blog
1. Location - Very good, about 8 min walk to Newton MRT station and Newton Hawker Centre
2. Surrounding - Acceptable, residential zone
3. Car Park - 1 unit to 1 lot. OK given that you can take the MRT
4. Price - Reasonable but not yet a steal
5. Take-up: About 30%-40% sold, mostly smaller units going at about $6xxK reflecting a cautious market, so don't expect to do a profitable subsale quickly.
6. TOP 2011, with DPS only need 20% downpayment (5% cash + 15% CPF)
7. Studios going at $6xxK attractive for small-budget investors but note that these units either face east or west sun.
Conclusion: For eager property investors who are afraid to miss the boat, maybe OK to buy but for the die-hard bargainers who don't mind missing the boat altogether, can wait for market to plunge further.
Extracted from the Singapore Property Forum
Private New Launch Project 29 November 2008
Prices Starting from high $5xxk up
Price Starting from $11xx psf to $13xx psf. Excellent investment development.
Include 1 / 1+study / 2 / 2+Study / 2 bedroom penthouse / 3 bedroom penthouse / 1 unit 4 +1 strata house
Register your interest now and Get earliest VIP invite for showflat viewing
Freehold development with private pool and two towers of 104 units, sited at District 9.
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
Newton Edge @ Makeway Road : Buyer's Review
Just visited the Newton Edge showflat today. My honest review:1. Location - Very good, about 8 min walk to Newton MRT station and Newton Hawker Centre
2. Surrounding - Acceptable, residential zone
3. Car Park - 1 unit to 1 lot. OK given that you can take the MRT
4. Price - Reasonable but not yet a steal
5. Take-up: About 30%-40% sold, mostly smaller units going at about $6xxK reflecting a cautious market, so don't expect to do a profitable subsale quickly.
6. TOP 2011, with DPS only need 20% downpayment (5% cash + 15% CPF)
7. Studios going at $6xxK attractive for small-budget investors but note that these units either face east or west sun.
Conclusion: For eager property investors who are afraid to miss the boat, maybe OK to buy but for the die-hard bargainers who don't mind missing the boat altogether, can wait for market to plunge further.
Extracted from the Singapore Property Forum
Brief Description of Newton Edge @ Makeway Road
Private New Launch Project 29 November 2008
Prices Starting from high $5xxk up
Price Starting from $11xx psf to $13xx psf. Excellent investment development.
Include 1 / 1+study / 2 / 2+Study / 2 bedroom penthouse / 3 bedroom penthouse / 1 unit 4 +1 strata house
Register your interest now and Get earliest VIP invite for showflat viewing
Freehold development with private pool and two towers of 104 units, sited at District 9.
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
About this Blog
Jurong East ‘white’ site joins reserve list
by Business Times - 29 Nov 2008, the Urban Redevelopment Authority has made available for application a reserve list site in an attractive location, despite the cool market.
The site is a 1.9-hectare ‘white’ site next to Jurong East MRT Station. At least 30 per cent of the 1.15 million square foot maximum gross floor area must be set aside for office use and the rest for additional office use or other uses permitted under the white site zoning such as commercial (like retail and entertainment), hotel and residential uses. The 99-year leasehold plot is the first sale site being offered in URA’s Jurong Gateway precinct since Singapore’s planning authority unveiled plans for the Jurong Lake District earlier this year.
However, market watchers said the site is not likely to be triggered anytime soon. ‘Given the current uncertain business environment, it’s unlikely there will be any interest in the Jurong East site. There’s also difficulty in getting funding. Investors would rather go for completed, income-generating assets that can give immediate returns than to embark on a fresh development with higher risks,’ DTZ executive director Ong Choon Fah said.
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
Jurong East White Site on reserve list
According to the report,Jurong East ‘white’ site joins reserve list
by Business Times - 29 Nov 2008, the Urban Redevelopment Authority has made available for application a reserve list site in an attractive location, despite the cool market.
The site is a 1.9-hectare ‘white’ site next to Jurong East MRT Station. At least 30 per cent of the 1.15 million square foot maximum gross floor area must be set aside for office use and the rest for additional office use or other uses permitted under the white site zoning such as commercial (like retail and entertainment), hotel and residential uses. The 99-year leasehold plot is the first sale site being offered in URA’s Jurong Gateway precinct since Singapore’s planning authority unveiled plans for the Jurong Lake District earlier this year.
However, market watchers said the site is not likely to be triggered anytime soon. ‘Given the current uncertain business environment, it’s unlikely there will be any interest in the Jurong East site. There’s also difficulty in getting funding. Investors would rather go for completed, income-generating assets that can give immediate returns than to embark on a fresh development with higher risks,’ DTZ executive director Ong Choon Fah said.
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
About this Blog
Jurong East ‘white’ site joins reserve list
by Business Times - 29 Nov 2008, the Urban Redevelopment Authority has made available for application a reserve list site in an attractive location, despite the cool market.
The site is a 1.9-hectare ‘white’ site next to Jurong East MRT Station. At least 30 per cent of the 1.15 million square foot maximum gross floor area must be set aside for office use and the rest for additional office use or other uses permitted under the white site zoning such as commercial (like retail and entertainment), hotel and residential uses. The 99-year leasehold plot is the first sale site being offered in URA’s Jurong Gateway precinct since Singapore’s planning authority unveiled plans for the Jurong Lake District earlier this year.
However, market watchers said the site is not likely to be triggered anytime soon. ‘Given the current uncertain business environment, it’s unlikely there will be any interest in the Jurong East site. There’s also difficulty in getting funding. Investors would rather go for completed, income-generating assets that can give immediate returns than to embark on a fresh development with higher risks,’ DTZ executive director Ong Choon Fah said.
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
Jurong East 'white’ site joins reserve list
According to the report,Jurong East ‘white’ site joins reserve list
by Business Times - 29 Nov 2008, the Urban Redevelopment Authority has made available for application a reserve list site in an attractive location, despite the cool market.
The site is a 1.9-hectare ‘white’ site next to Jurong East MRT Station. At least 30 per cent of the 1.15 million square foot maximum gross floor area must be set aside for office use and the rest for additional office use or other uses permitted under the white site zoning such as commercial (like retail and entertainment), hotel and residential uses. The 99-year leasehold plot is the first sale site being offered in URA’s Jurong Gateway precinct since Singapore’s planning authority unveiled plans for the Jurong Lake District earlier this year.
However, market watchers said the site is not likely to be triggered anytime soon. ‘Given the current uncertain business environment, it’s unlikely there will be any interest in the Jurong East site. There’s also difficulty in getting funding. Investors would rather go for completed, income-generating assets that can give immediate returns than to embark on a fresh development with higher risks,’ DTZ executive director Ong Choon Fah said.
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
Thursday, November 27, 2008
About this Blog
Property market to soften
PROPERTY prices are set to soften and demand will weaken as the Singapore economy slows down, Minister for National Development Mah Bow Tan said on Wednesday evening. Private housing prices have declined by 2.4 per cent in the third quarter of this year, and further price movements will 'depend on the severity of the economic slowdown', he added. Speaking at the 49th anniversary dinner of the Real Estate Developers' Association of Singapore (REDAS) at the Shangri-La Hotel, Mr Mah said: 'Going forward, price movements will depend on the...ability of the industry to make adjustments in response to the changes in economic conditions.' The good news is that home-ownership rate is high in Singapore - at more than 90 per cent - and the government has an important role in ensuring the long-term stability and smooth functioning of the property market, he said. Among the measures it should take, he said, is to guard against 'irrational market behaviour such as excessive speculation that is not in sync with economic fundamentals.' But there are limits to what the government can do. The government cannot, for example, dictate to banks that they should extend loans to companies or individuals with weak financial standing. It also cannot work against market forces and try to prop up property prices artificially. Mr Mah explained: 'Such efforts are not sustainable and will not be beneficial to the health of the property market in the long-run. Any measure seen to be knee-jerk or excessive might even weigh market sentiment down further. 'It is in our interest to ensure that the property prices move in line with economic fundamentals, as it affects home ownership, asset values, retirement savings and other sectors of the economy.'
The situation is so obvious that the govt has never felt the need to say it. The speech is probably in response to the recent calls to prop up prices, and of course, it's a big NO because the fundamentals reveal a big property bubble. And bubbles have to burst before the economy can move ahead. The high housing cost makes Singapore business uncompetitive and the govt worries that FT are leaving. (Posted by Anonymous in the Singapore Property Forum)
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
Developers want sales, Drop the Price
"There, official slap in the face for REDAS. Good riddance to their hubris. See what $2 COE has done for cars? You want sales, drop prices. "; was Ann's straight-forward response to the following news report (extracted from the Singapore Property Forum) :Property market to soften
PROPERTY prices are set to soften and demand will weaken as the Singapore economy slows down, Minister for National Development Mah Bow Tan said on Wednesday evening. Private housing prices have declined by 2.4 per cent in the third quarter of this year, and further price movements will 'depend on the severity of the economic slowdown', he added. Speaking at the 49th anniversary dinner of the Real Estate Developers' Association of Singapore (REDAS) at the Shangri-La Hotel, Mr Mah said: 'Going forward, price movements will depend on the...ability of the industry to make adjustments in response to the changes in economic conditions.' The good news is that home-ownership rate is high in Singapore - at more than 90 per cent - and the government has an important role in ensuring the long-term stability and smooth functioning of the property market, he said. Among the measures it should take, he said, is to guard against 'irrational market behaviour such as excessive speculation that is not in sync with economic fundamentals.' But there are limits to what the government can do. The government cannot, for example, dictate to banks that they should extend loans to companies or individuals with weak financial standing. It also cannot work against market forces and try to prop up property prices artificially. Mr Mah explained: 'Such efforts are not sustainable and will not be beneficial to the health of the property market in the long-run. Any measure seen to be knee-jerk or excessive might even weigh market sentiment down further. 'It is in our interest to ensure that the property prices move in line with economic fundamentals, as it affects home ownership, asset values, retirement savings and other sectors of the economy.'
The situation is so obvious that the govt has never felt the need to say it. The speech is probably in response to the recent calls to prop up prices, and of course, it's a big NO because the fundamentals reveal a big property bubble. And bubbles have to burst before the economy can move ahead. The high housing cost makes Singapore business uncompetitive and the govt worries that FT are leaving. (Posted by Anonymous in the Singapore Property Forum)
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
Wednesday, November 26, 2008
About this Blog
MARKET crashes are the greatest redistributor of wealth. This has been true of previous crashes. But in the current turmoil, there are few beneficiaries, a friend noted. It is more a great destruction of wealth on a global scale so far.
Well, okay, some short-sellers may have profited from some of their trades. But many get wiped out in their next trade. Perhaps it is those who are not invested at all and who have the cash to pick through the carnage in the next few years who will really come out ahead. Who knows? Nobody is certain of anything anymore.
A lot of people have been hit hard this time around. There are a few reasons for this. One, prior to this, we've had four years of a bull market where prices had gone in only one direction. Success, notes a friend, is one of life's worst enemies. It engenders overconfidence and, as a result, one tends to let down one's guard - in some instances, to the extent of recklessness. Economist Hyman Minsky sees the cycle of risk-taking in the economy as following a pattern: stability and absence of crises encourage risk-taking, complacency, and lowered awareness of the possibility of problems.
But even for those who are conservative and have their heads centred and feet firmly planted on the ground, the economics just a few months back suggested that being invested was the right course of action. Then, inflation was running at 5 or 6 per cent and banks' interest rates were at less than one per cent.
For someone who didn't want to have his or her purchasing power eroded, keeping the money in the bank wasn't the most logical of options. Which was why a lot of people are invested - and, worse, a lot took loans to invest. If the borrowing cost was so low, and one was expecting to make a return higher than that cost of borrowing, it made sense to borrow.
Of course, we know now that a lot of people had underestimated or even ignored the risk of trying to earn those extra percentage points of returns.
Continue with: 'Lessons learnt from many investments that have gone wrong ..real life stories'
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
Property Buyers and Investors, Know the Risk of Leveraging
Current turmoil has few beneficiaries
MARKET crashes are the greatest redistributor of wealth. This has been true of previous crashes. But in the current turmoil, there are few beneficiaries, a friend noted. It is more a great destruction of wealth on a global scale so far.
Well, okay, some short-sellers may have profited from some of their trades. But many get wiped out in their next trade. Perhaps it is those who are not invested at all and who have the cash to pick through the carnage in the next few years who will really come out ahead. Who knows? Nobody is certain of anything anymore.
Why people have been hit hard this time around?
A lot of people have been hit hard this time around. There are a few reasons for this. One, prior to this, we've had four years of a bull market where prices had gone in only one direction. Success, notes a friend, is one of life's worst enemies. It engenders overconfidence and, as a result, one tends to let down one's guard - in some instances, to the extent of recklessness. Economist Hyman Minsky sees the cycle of risk-taking in the economy as following a pattern: stability and absence of crises encourage risk-taking, complacency, and lowered awareness of the possibility of problems.
High Inflation, Low Interest Suggested Being Invested
But even for those who are conservative and have their heads centred and feet firmly planted on the ground, the economics just a few months back suggested that being invested was the right course of action. Then, inflation was running at 5 or 6 per cent and banks' interest rates were at less than one per cent.
For someone who didn't want to have his or her purchasing power eroded, keeping the money in the bank wasn't the most logical of options. Which was why a lot of people are invested - and, worse, a lot took loans to invest. If the borrowing cost was so low, and one was expecting to make a return higher than that cost of borrowing, it made sense to borrow.
Of course, we know now that a lot of people had underestimated or even ignored the risk of trying to earn those extra percentage points of returns.
Continue with: 'Lessons learnt from many investments that have gone wrong ..real life stories'
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
About this Blog
A friend shared with me some of the horrendous stories of how an enormous amount of wealth was destroyed in the last few months.
Up till last year, one man had $100 million of his worth in only one stock. Towards the end of last year, that stock started to decline. By early this year, the stock was down more than 50 per cent from its peak just a few months before. The man picked up quite a few additional shares - on margin - thinking that the stock had bottomed and would eventually rebound. Since then, the stock has plunged by another 80 per cent. The $100 million is more than wiped out! The stock is Cosco Corp, which went from 10 cents in March 2003 to $8.20 in October last year - an 82 times jump. It is now trading at less than 70 cents.
Another guy had relatively much more modest means. His net worth was estimated at $2-3 million. He heard from 'reliable' sources that a particular company would be taken over by another at a significantly higher price than the stock's then market price. He bet all he had and, if I remember correctly, also took margin financing to buy that stock. The stock was FerroChina, which has since been suspended because it had run out of money to pay its suppliers and debtors.
One value investor thought Thailand was cheap a few years back. One particular company, a very big one, was trading at 1.2 baht - significantly below its book value. The investor concentrated his bet on that company. And, indeed, the market began to recognise the value of the company and the stock tripled to over 3 baht. The value investor's portfolio grew to $26 million. In the last year or so, the stock has plunged to below 0.7 baht. The investor is now down some 50 per cent on his original capital.
Another man was shrewd enough to think that the market was overvalued towards the end of 2007. So he got out of the market, and even shorted it. He was happy that the market went the way he predicted. He was the smartest guy in town.
By June or July, thinking that the market had fallen enough, he loaded up on shares. Like the guys above, he too used margin financing to pick up the shares. As we know, the market took an even more severe turn in September and October. He too was dealt a severe blow.
A friend was also bearish about the market towards the end of last year. He had put in some shorts. Then last October, the market went on to hit record highs. He lost his resolve, and reversed his trades and got hit as well.
Another made quite a bit of money in the Singapore market. His confidence grew. He wanted a bigger stage. He bought US shares on margin. US stocks took a precipitous plunge a few months back. He has had a few rounds of margin calls.
A young banker in his late 20s made $2-3 million from the property market in the last few years. He ploughed all the profits into a $10 million property, and took loans of some $7 million. He's now saddled with a mortgage payment of some $30,000 a month.
Many of the real-life examples above show just how lethal leverage can be. In a rising market, leverage is your friend; in a down market, the blow dealt by leverage can knock one out for good.
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
Tales of fortunes made and lost in recessions
Riches gone in a flash
A friend shared with me some of the horrendous stories of how an enormous amount of wealth was destroyed in the last few months.
Up till last year, one man had $100 million of his worth in only one stock. Towards the end of last year, that stock started to decline. By early this year, the stock was down more than 50 per cent from its peak just a few months before. The man picked up quite a few additional shares - on margin - thinking that the stock had bottomed and would eventually rebound. Since then, the stock has plunged by another 80 per cent. The $100 million is more than wiped out! The stock is Cosco Corp, which went from 10 cents in March 2003 to $8.20 in October last year - an 82 times jump. It is now trading at less than 70 cents.
He bet all he had
Another guy had relatively much more modest means. His net worth was estimated at $2-3 million. He heard from 'reliable' sources that a particular company would be taken over by another at a significantly higher price than the stock's then market price. He bet all he had and, if I remember correctly, also took margin financing to buy that stock. The stock was FerroChina, which has since been suspended because it had run out of money to pay its suppliers and debtors.
The value investor
One value investor thought Thailand was cheap a few years back. One particular company, a very big one, was trading at 1.2 baht - significantly below its book value. The investor concentrated his bet on that company. And, indeed, the market began to recognise the value of the company and the stock tripled to over 3 baht. The value investor's portfolio grew to $26 million. In the last year or so, the stock has plunged to below 0.7 baht. The investor is now down some 50 per cent on his original capital.
The Smartest Guy In Town
Another man was shrewd enough to think that the market was overvalued towards the end of 2007. So he got out of the market, and even shorted it. He was happy that the market went the way he predicted. He was the smartest guy in town.
By June or July, thinking that the market had fallen enough, he loaded up on shares. Like the guys above, he too used margin financing to pick up the shares. As we know, the market took an even more severe turn in September and October. He too was dealt a severe blow.
The Investor who Reversed His Trades
A friend was also bearish about the market towards the end of last year. He had put in some shorts. Then last October, the market went on to hit record highs. He lost his resolve, and reversed his trades and got hit as well.
The Investor Who Made Money, His confidence Grew
Another made quite a bit of money in the Singapore market. His confidence grew. He wanted a bigger stage. He bought US shares on margin. US stocks took a precipitous plunge a few months back. He has had a few rounds of margin calls.
The Young Banker Investor Saddled With Huge Mortgage
A young banker in his late 20s made $2-3 million from the property market in the last few years. He ploughed all the profits into a $10 million property, and took loans of some $7 million. He's now saddled with a mortgage payment of some $30,000 a month.
Many of the real-life examples above show just how lethal leverage can be. In a rising market, leverage is your friend; in a down market, the blow dealt by leverage can knock one out for good.
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
Friday, November 21, 2008
About this Blog
Some property industry players are yearning for the good old days, hoping the government will reverse some of the changes in property policies made in the past two years and thus go beyond the usual exemptions and rebates on property taxes with its off-Budget/Budget packages.
Such a strategy may be timely in helping to stimulate currently flagging property demand given that the measures were rolled out when the market was sparkling.
Developers are hoping the government will reinstate the deferment of stamp duty on property purchases where the property is under development (this was removed in December 2006) and revert to the old formula for computing development charge (DC) rates, based on 50 per cent of the appreciation in land value arising from changing the use of a site or building a bigger project on it. This was raised to 70 per cent in July last year.
Following the December 2006 rule change on stamp duty, property buyers are now required to pay stamp duty within 14 days from the date that the option to purchase is accepted.
The previous concession, introduced in June 1998, had allowed stamp duty payment to be deferred to the date of issuance of Temporary Occupation Permit for a project or date of sale of interest in the property, whichever was earlier, for properties under development.
Deferring payment of stamp duty for projects under development once more would lower upfront cash commitment for home buyers, some of whom may be stretched, especially since it could take a few years for the new homes they've bought to be completed, says Knight Frank managing director Tan Tiong Cheng.
Most developers are hoping the government will reinstate the DPS. They say DPS helped genuine home buyers, especially upgraders who may be able to sell their existing homes only when their new private home has been built.
Also high on the developers' wish-list is a revival of the deferred payment scheme (DPS) - which was scrapped in October last year - to boost home purchases, with a qualifier that safeguards be introduced to address concerns that such schemes had spurred speculation.
Although developers are currently not in a race to redevelop their sites given the property slump, many argue that going back to the pre-July 2007 formula for computing DC rates - which creamed off a smaller portion of the enhancement in land value - 'would provide greater incentive for land owners to explore more productive use for their properties and could spur some activity', the head of a listed property group said.
A major property developer also suggested a demand-boosting measure in the form of changing the investment criteria for Economic Development Board's Global Investor Programme to allow a higher quantum for property purchase or even lowering the total threshold value.
Under a new option to the Programme announced in July 2005, a foreigner can be considered for permanent resident status if he invests at least $2 million in business set-ups, other investment vehicles, and/or private residential properties, with up to half of the investment allowed in private residential properties.
'More people taking up permanent residence or citizenship and landing on our shores will help the property market,' said the developer.
KPMG Tax Services executive director Leonard Ong said that granting exemptions or rebates on property taxes for completed commercial and industrial buildings will help landlords and hopefully they will pass on some of the savings to their tenants.
'Earlier this year, when property prices were on the rise, the government also raised Annual Values of properties. So based on this, owners would be paying more property taxes than last year. This makes it all the more important to introduce exemptions or rebates for property taxes,' he added. Property tax is calculated as a percentage of a property's annual value.
Developers are also hoping for property tax exemption for vacant land and land under development to reduce costs.
'During this period, the market is so quiet we cannot launch projects,' notes Ho Bee Investment chairman and CEO Chua Thian Poh.
Ho Bee's Mr Chua suggests modifications be made to DPS to allay concerns that it also facilitated speculation in the past.
'The most important thing is to require the buyer to secure a housing loan even if he does not need to draw down the loan immediately, to ensure a credit assessment of the buyer is done by the banks,' he said.
However, Ho Bee's Mr Chua disagreed with the suggestion by some analysts that the initial payment by the buyer - before the deferred payment kicks in - be raised from 10-20 per cent previously to 30 per cent, as that 'would not help home buyers much'.
Developers are also concerned about banks tightening financing to home buyers and to businesses in general, and hope the Monetary Authority of Singapore will use 'moral suasion' to send the right signal to banks.
Source: B.T. Published November 19, 2008
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
Developers want govt to turn back clock on several policies
Wish-list includes reinstatement of deferred payment, old formula for DC
Some property industry players are yearning for the good old days, hoping the government will reverse some of the changes in property policies made in the past two years and thus go beyond the usual exemptions and rebates on property taxes with its off-Budget/Budget packages.
Such a strategy may be timely in helping to stimulate currently flagging property demand given that the measures were rolled out when the market was sparkling.
Deferment of stamp duty until TOP
Developers are hoping the government will reinstate the deferment of stamp duty on property purchases where the property is under development (this was removed in December 2006) and revert to the old formula for computing development charge (DC) rates, based on 50 per cent of the appreciation in land value arising from changing the use of a site or building a bigger project on it. This was raised to 70 per cent in July last year.
Following the December 2006 rule change on stamp duty, property buyers are now required to pay stamp duty within 14 days from the date that the option to purchase is accepted.
The previous concession, introduced in June 1998, had allowed stamp duty payment to be deferred to the date of issuance of Temporary Occupation Permit for a project or date of sale of interest in the property, whichever was earlier, for properties under development.
Deferring payment of stamp duty for projects under development once more would lower upfront cash commitment for home buyers, some of whom may be stretched, especially since it could take a few years for the new homes they've bought to be completed, says Knight Frank managing director Tan Tiong Cheng.
Most developers are hoping the government will reinstate the DPS. They say DPS helped genuine home buyers, especially upgraders who may be able to sell their existing homes only when their new private home has been built.
Revival of the deferred payment scheme
Also high on the developers' wish-list is a revival of the deferred payment scheme (DPS) - which was scrapped in October last year - to boost home purchases, with a qualifier that safeguards be introduced to address concerns that such schemes had spurred speculation.
Old formula for DC
Although developers are currently not in a race to redevelop their sites given the property slump, many argue that going back to the pre-July 2007 formula for computing DC rates - which creamed off a smaller portion of the enhancement in land value - 'would provide greater incentive for land owners to explore more productive use for their properties and could spur some activity', the head of a listed property group said.
Economic Development Board's Global Investor Programme to allow a higher quantum for property purchase
A major property developer also suggested a demand-boosting measure in the form of changing the investment criteria for Economic Development Board's Global Investor Programme to allow a higher quantum for property purchase or even lowering the total threshold value.
Under a new option to the Programme announced in July 2005, a foreigner can be considered for permanent resident status if he invests at least $2 million in business set-ups, other investment vehicles, and/or private residential properties, with up to half of the investment allowed in private residential properties.
'More people taking up permanent residence or citizenship and landing on our shores will help the property market,' said the developer.
Exemptions or rebates on property taxes for completed commercial and industrial buildings
KPMG Tax Services executive director Leonard Ong said that granting exemptions or rebates on property taxes for completed commercial and industrial buildings will help landlords and hopefully they will pass on some of the savings to their tenants.
'Earlier this year, when property prices were on the rise, the government also raised Annual Values of properties. So based on this, owners would be paying more property taxes than last year. This makes it all the more important to introduce exemptions or rebates for property taxes,' he added. Property tax is calculated as a percentage of a property's annual value.
Property tax exemption for vacant land and land under development
Developers are also hoping for property tax exemption for vacant land and land under development to reduce costs.
'During this period, the market is so quiet we cannot launch projects,' notes Ho Bee Investment chairman and CEO Chua Thian Poh.
Require the buyer to secure a housing loan
Ho Bee's Mr Chua suggests modifications be made to DPS to allay concerns that it also facilitated speculation in the past.
'The most important thing is to require the buyer to secure a housing loan even if he does not need to draw down the loan immediately, to ensure a credit assessment of the buyer is done by the banks,' he said.
However, Ho Bee's Mr Chua disagreed with the suggestion by some analysts that the initial payment by the buyer - before the deferred payment kicks in - be raised from 10-20 per cent previously to 30 per cent, as that 'would not help home buyers much'.
Developers are also concerned about banks tightening financing to home buyers and to businesses in general, and hope the Monetary Authority of Singapore will use 'moral suasion' to send the right signal to banks.
Source: B.T. Published November 19, 2008
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
Wednesday, November 19, 2008
About this Blog
It stressed that long-term measures to help these owners manage their mortgage payment is the best solution, and that compulsory acquisition of the flat is a last resort.
As of October 2008, some 33,000 flat owners owed HDB arrears of three months or more. They make up less than 8 per cent of the 420,000 households with outstanding HDB loans.
Giving this update in Parliament on Tuesday, Parliamentary Secretary for National Development Mohamad Maliki Osman said home owners should buy within their means.
But he recognised that there are some who are affected by the economic downturn and one option for them is to downgrade to a smaller unit.
More 2 and 3-room HDB flats will be coming on stream next year to cope with the growing demand for smaller flats.
Dr Maliki also said heavily subsidised rental flats should be given to those who are in dire need. - CNA
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
HDB Mortgage Defaults Up 33,000 in October: More 2-room HDB flats to be built
The Housing and Development Board (HDB) will continue to keep tabs on flat owners who default on their HDB mortgage payments.It stressed that long-term measures to help these owners manage their mortgage payment is the best solution, and that compulsory acquisition of the flat is a last resort.
As of October 2008, some 33,000 flat owners owed HDB arrears of three months or more. They make up less than 8 per cent of the 420,000 households with outstanding HDB loans.
Giving this update in Parliament on Tuesday, Parliamentary Secretary for National Development Mohamad Maliki Osman said home owners should buy within their means.
But he recognised that there are some who are affected by the economic downturn and one option for them is to downgrade to a smaller unit.
More 2 and 3-room HDB flats will be coming on stream next year to cope with the growing demand for smaller flats.
Dr Maliki also said heavily subsidised rental flats should be given to those who are in dire need. - CNA
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
Tuesday, November 18, 2008
About this Blog
Bull is getting increasingly marginalised. Even buyers are backing out.
About 50 homebuyers walked away from deals in October
Business Times - 18 Nov 2008
But trend not likely to escalate as it was a month when bourses tanked
THE number of private homes returned to developers shot up last month on the back of a sharp dive in confidence due to the stockmarket crash.
Homebuyers returned 50-odd units to developers in October, compared with 10-plus units each in the preceding month and in October last year. The figures were estimated by BT from statistics on developers’ sales released by the Urban Redevelopment Authority (URA) yesterday. The figures exclude executive condos.
October also saw developers launching and selling the lowest number of private homes since URA started making monthly housing sales data available in June last year. Developers sold 112 private homes in October, down about 70 per cent from 376 units in the preceding month and 80 per cent below the 566 units sold in October last year. The 159 private homes developers launched last month was also 79 per cent lower than September and 75 per cent below that in the same year-ago period.
Buyers who returned the 50-plus units last month probably did so before the options were due to be exercised, industry observers reckon. Buyers who walk away from a deal before the option is exercised forfeit a quarter of the 5 per cent option fee, equivalent to 1.25 per cent of the purchase price of the unit.
‘The stock market was at its worst in October. So some buyers may have got jittery and decided it was better to forego 1.25 per cent of the purchase price - that’s $12,500 for a $1 million property purchase - than to be saddled with uncertainty. They worry that property prices may drop much further in the next six months. So it’s a matter of weighing risks, even for people who can afford to take the hit,’ said a seasoned property agent.
Another industry observer said another factor for the forfeitures could be if buyers failed to secure the required quantum of housing loan from banks, which have become more cautious in lending. ‘Some buyers may also have observed developers trimming prices and got cold feet,’ he added.
On a brighter note, he does not expect the number of units returned to developers to keep rising in the months ahead. ‘Anybody who buys now must have done his homework. Things are a lot clearer now.’
Agreeing, DTZ executive director Ong Choon Fah said: ‘October was an exceptional month with so much stockmarket turmoil and fear all around. Hopefully, we won’t get a repeat of this. People will be much more considered when buying homes henceforth and therefore the number of units returned should revert to a more normal situation.’
October saw a total of 14 units returned at Concourse Skyline at Beach Road, 11 units at The Peak @ Balmeg in the Pasir Panjang area and five units each at Silversea at Amber Road, Tresalveo at Marymount Terrace and VIVA at Thomson Road/Suffolk Walk. Nonetheless, all these projects still saw units being sold in October.
CB Richard Ellis (CBRE) said, based on transacted prices, prices have ‘remained fairly stable for the past two months, with due consideration that factors such as floor height, orientation and liveable space affect prices’.
‘However, it is very likely that the persistent thin volume will have a downward effect on prices. The sluggish sales momentum is likely to remain for the rest of the year as macro factors such as the economic recession and retrenchment will erode consumer confidence,’ CBRE’s executive director Li Hiaw Ho added. He predicts Q4 may see sales volume of around 500 units, a level last seen in Q1 2003.
Knight Frank director Nicholas Mak said that homebuying sentiment is expected to weaken in the face of economic and job market uncertainties. ‘Launches are expected to be held back till at least after Chinese New Year 2009,’ he added. The lowest-priced apartment/condo sold in October was a unit at The Linear ($554 psf) while the highest-priced unit was an apartment at Orchard Scotts ($2,407 psf).
Savills Singapore’s Ku Swee Yong noted that despite a weak month, The Lakeshore in Jurong and Hillvista in the Hillview area crossed $1,000 psf. The $2,169 psf of land area achieved at Sandy Island on Sentosa Cove is probably the highest price for a landed home in Singapore, he added.
Around 63 per cent of the 112 units sold in October were in Outside Central Region. However, in terms of the 159 units launched in the month, the lion’s share (46.5 per cent) were in the Core Central Region.
Posted by Anonymous in the Singapore Property Forum
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
Private Property Buyers Backing Out of Sale for Concourse Skyline, The Peak @ Balmeg, Silversea @ Amber, Tresalveo at Marymount, VIVA @ Thomson
Goodness, developers sold 112 units in October, and 50 got returned!Bull is getting increasingly marginalised. Even buyers are backing out.
About 50 homebuyers walked away from deals in October
Business Times - 18 Nov 2008
But trend not likely to escalate as it was a month when bourses tanked
THE number of private homes returned to developers shot up last month on the back of a sharp dive in confidence due to the stockmarket crash.
Homebuyers returned 50-odd units to developers in October, compared with 10-plus units each in the preceding month and in October last year. The figures were estimated by BT from statistics on developers’ sales released by the Urban Redevelopment Authority (URA) yesterday. The figures exclude executive condos.
October also saw developers launching and selling the lowest number of private homes since URA started making monthly housing sales data available in June last year. Developers sold 112 private homes in October, down about 70 per cent from 376 units in the preceding month and 80 per cent below the 566 units sold in October last year. The 159 private homes developers launched last month was also 79 per cent lower than September and 75 per cent below that in the same year-ago period.
Buyers who returned the 50-plus units last month probably did so before the options were due to be exercised, industry observers reckon. Buyers who walk away from a deal before the option is exercised forfeit a quarter of the 5 per cent option fee, equivalent to 1.25 per cent of the purchase price of the unit.
‘The stock market was at its worst in October. So some buyers may have got jittery and decided it was better to forego 1.25 per cent of the purchase price - that’s $12,500 for a $1 million property purchase - than to be saddled with uncertainty. They worry that property prices may drop much further in the next six months. So it’s a matter of weighing risks, even for people who can afford to take the hit,’ said a seasoned property agent.
Another industry observer said another factor for the forfeitures could be if buyers failed to secure the required quantum of housing loan from banks, which have become more cautious in lending. ‘Some buyers may also have observed developers trimming prices and got cold feet,’ he added.
On a brighter note, he does not expect the number of units returned to developers to keep rising in the months ahead. ‘Anybody who buys now must have done his homework. Things are a lot clearer now.’
Agreeing, DTZ executive director Ong Choon Fah said: ‘October was an exceptional month with so much stockmarket turmoil and fear all around. Hopefully, we won’t get a repeat of this. People will be much more considered when buying homes henceforth and therefore the number of units returned should revert to a more normal situation.’
October saw a total of 14 units returned at Concourse Skyline at Beach Road, 11 units at The Peak @ Balmeg in the Pasir Panjang area and five units each at Silversea at Amber Road, Tresalveo at Marymount Terrace and VIVA at Thomson Road/Suffolk Walk. Nonetheless, all these projects still saw units being sold in October.
CB Richard Ellis (CBRE) said, based on transacted prices, prices have ‘remained fairly stable for the past two months, with due consideration that factors such as floor height, orientation and liveable space affect prices’.
‘However, it is very likely that the persistent thin volume will have a downward effect on prices. The sluggish sales momentum is likely to remain for the rest of the year as macro factors such as the economic recession and retrenchment will erode consumer confidence,’ CBRE’s executive director Li Hiaw Ho added. He predicts Q4 may see sales volume of around 500 units, a level last seen in Q1 2003.
Knight Frank director Nicholas Mak said that homebuying sentiment is expected to weaken in the face of economic and job market uncertainties. ‘Launches are expected to be held back till at least after Chinese New Year 2009,’ he added. The lowest-priced apartment/condo sold in October was a unit at The Linear ($554 psf) while the highest-priced unit was an apartment at Orchard Scotts ($2,407 psf).
Savills Singapore’s Ku Swee Yong noted that despite a weak month, The Lakeshore in Jurong and Hillvista in the Hillview area crossed $1,000 psf. The $2,169 psf of land area achieved at Sandy Island on Sentosa Cove is probably the highest price for a landed home in Singapore, he added.
Around 63 per cent of the 112 units sold in October were in Outside Central Region. However, in terms of the 159 units launched in the month, the lion’s share (46.5 per cent) were in the Core Central Region.
Posted by Anonymous in the Singapore Property Forum
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
Monday, November 17, 2008
About this Blog
Nov 16, 2008
Home loans harder to get as prices fall
Check if bank can meet unit's valuation to avoid overpaying for the property
A couple of telling anecdotes illustrate the unexpected glitches that home buyers can face as property prices start to fall.
A Spring Grove condominium unit owner was denied the chance to take advantage of lower interest rates by refinancing his devalued property without coughing up more hard-earned cash.
The owner had to make up the shortfall because the reduced value of the Grange Road unit meant the bank could not extend a large enough loan.
Another buyer had to cancel his purchase recently after he learnt that banks' valuation of the property was less than what he was supposed to pay.
The banks could not offer him the loan he needed as the collateral was inadequate.
This is the brave new world of home loans as property values fall amid the global financial crisis and banks tighten lending.
Banks are still dishing out home loans but are much more selective these days, mortgage consultants said.
Banks can grant only up to 90 per cent of the purchase price or valuation, whichever is lower. So if the sale price of a property exceeds the valuation - which is determined by an independent professional - the buyer will have to make up the shortfall.
Amid poor demand and falling prices, banks are sticking to lower property valuations in anticipation of further price falls.
'OCBC Bank engages independent, third-party valuers to determine the open market value of properties and there has been evidence of a fairly strong downward trend in property valuation,' said its head of consumer secured lending Gregory Chan.
The buyer who cancelled his property deal realised that the yet-to-be-completed 1,000 sq ft condo unit was worth less than the $2 million he was going to pay.
'No bank can match the property's valuation as there was a recent sub-sale deal done at 15 per cent below the developers' price of $2,000 per sq ft,' said Mr Dennis Ng, spokesman for mortgage consultancy portal www.HousingLoanSG.com
Buyers can avoid overpaying for a property by checking to see if the banks can match the valuation to the property's purchase price, he said.
In today's market, those still keen on taking out a loan for a home they intend to live in should also know that most banks now prefer to offer up to only 80 per cent financing, said Ms Ally Yang, a chief mortgage consultant at www.homeloan.com.sg
OCBC Bank said it continues to offer housing loan packages for 80 per cent financing. It also offers 90 per cent financing on a case-by-case basis if the applicant meets its credit assessment criteria.
HSBC Singapore's head of personal financial services, Mr Sebastian Arcuri, said: 'Customers can still obtain home loans of up to 90 per cent valuation or purchase price if their financial profile can support it and their application meets the bank's criteria.'
But there are signs that banks are starting to be more stringent in their credit criteria and they are very selective in granting a 90 per cent loan, said Mr Ng.
'A 90 per cent home loan is now more selectively granted to consumers with very good profile who are buying a property as their first home.'
Investors will find it tougher to get a bigger loan these days. Banks used to offer more than 85 per cent financing for investment properties but all of them, except DBS Bank, no longer do so, said Ms Yang.
This means buyers have to be prepared to cough up more cash for investment property buys.
Those looking at refinancing may be in for a surprise if they bought their properties in last year's booming market.
The Spring Grove unit in question was bought by a South Korean expatriate for $2.58 million or $1,442 per sq ft on a floating rate package.
He now pays 3.5 per cent interest on his 80 per cent loan and was looking to halve his interest payments by switching to a package pegged to the three- month Singapore Interbank Offered Rate, said Ms Yang.
But a check with two banks found that the valuation for his property was $2 million or $2.22 million. If he wants to refinance at these valuations, he would need to pay up to $180,000 to top up his loan, currently at $1.78 million.
Consumers seeking a loan for their property purchase should get prior approval or have more cash on hand. 'They should approach a mortgage specialist for a joint assessment if they are unsure whether they can afford the home purchase,' said OCBC's Mr Chan.
'Things are quite fluid these days so buyers should re-check their loan eligibility after one month,' said Mr Ng.
Posted by Anonymouse in the Singapore Property Forum
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
Home loans harder to get as property prices fall
If you had read the article below, this is the same events that is going on in US mortgage market. Banks had turn very conservative in lending and it is not due to the shrinking money supply but rather fear, and it is a feature of depression economics when the normal monetary tools (i.e lowering interest rates) are not working anymore....Fyi, the SIBOR rate is now 1.25% and yet banks are afraid to over-stretch themselves...Conclusion is less transaction (let's just wait for the 08 4th quarter figures) and dropping prices...Nov 16, 2008
Home loans harder to get as prices fall
Check if bank can meet unit's valuation to avoid overpaying for the property
A couple of telling anecdotes illustrate the unexpected glitches that home buyers can face as property prices start to fall.
A Spring Grove condominium unit owner was denied the chance to take advantage of lower interest rates by refinancing his devalued property without coughing up more hard-earned cash.
The owner had to make up the shortfall because the reduced value of the Grange Road unit meant the bank could not extend a large enough loan.
Another buyer had to cancel his purchase recently after he learnt that banks' valuation of the property was less than what he was supposed to pay.
The banks could not offer him the loan he needed as the collateral was inadequate.
This is the brave new world of home loans as property values fall amid the global financial crisis and banks tighten lending.
Banks are still dishing out home loans but are much more selective these days, mortgage consultants said.
Banks can grant only up to 90 per cent of the purchase price or valuation, whichever is lower. So if the sale price of a property exceeds the valuation - which is determined by an independent professional - the buyer will have to make up the shortfall.
Amid poor demand and falling prices, banks are sticking to lower property valuations in anticipation of further price falls.
'OCBC Bank engages independent, third-party valuers to determine the open market value of properties and there has been evidence of a fairly strong downward trend in property valuation,' said its head of consumer secured lending Gregory Chan.
The buyer who cancelled his property deal realised that the yet-to-be-completed 1,000 sq ft condo unit was worth less than the $2 million he was going to pay.
'No bank can match the property's valuation as there was a recent sub-sale deal done at 15 per cent below the developers' price of $2,000 per sq ft,' said Mr Dennis Ng, spokesman for mortgage consultancy portal www.HousingLoanSG.com
Buyers can avoid overpaying for a property by checking to see if the banks can match the valuation to the property's purchase price, he said.
In today's market, those still keen on taking out a loan for a home they intend to live in should also know that most banks now prefer to offer up to only 80 per cent financing, said Ms Ally Yang, a chief mortgage consultant at www.homeloan.com.sg
OCBC Bank said it continues to offer housing loan packages for 80 per cent financing. It also offers 90 per cent financing on a case-by-case basis if the applicant meets its credit assessment criteria.
HSBC Singapore's head of personal financial services, Mr Sebastian Arcuri, said: 'Customers can still obtain home loans of up to 90 per cent valuation or purchase price if their financial profile can support it and their application meets the bank's criteria.'
But there are signs that banks are starting to be more stringent in their credit criteria and they are very selective in granting a 90 per cent loan, said Mr Ng.
'A 90 per cent home loan is now more selectively granted to consumers with very good profile who are buying a property as their first home.'
Investors will find it tougher to get a bigger loan these days. Banks used to offer more than 85 per cent financing for investment properties but all of them, except DBS Bank, no longer do so, said Ms Yang.
This means buyers have to be prepared to cough up more cash for investment property buys.
Those looking at refinancing may be in for a surprise if they bought their properties in last year's booming market.
The Spring Grove unit in question was bought by a South Korean expatriate for $2.58 million or $1,442 per sq ft on a floating rate package.
He now pays 3.5 per cent interest on his 80 per cent loan and was looking to halve his interest payments by switching to a package pegged to the three- month Singapore Interbank Offered Rate, said Ms Yang.
But a check with two banks found that the valuation for his property was $2 million or $2.22 million. If he wants to refinance at these valuations, he would need to pay up to $180,000 to top up his loan, currently at $1.78 million.
Consumers seeking a loan for their property purchase should get prior approval or have more cash on hand. 'They should approach a mortgage specialist for a joint assessment if they are unsure whether they can afford the home purchase,' said OCBC's Mr Chan.
'Things are quite fluid these days so buyers should re-check their loan eligibility after one month,' said Mr Ng.
Posted by Anonymouse in the Singapore Property Forum
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
About this Blog
"Just read in today Straits Times "Surge in layoffs expected" and numbers likely to jump beyond the peak suffered during the 1998 Asian financial crisis. About 30,000 jobs were lost then... This spells doom for Singapore private property market, most people will go for HDB be it for newly weds or down grading, it's a safer choice."
"Singapore has yet to feel the full force of the ongoing crisis but there are already signs that it would be ugly and long—drawn. Apart from sharp dips in export figures, job cuts have already hit the manufacturing, finance and banking sectors. "
"With unemployment expected to rise, Singaporeans are bracing themselves for more bad news on the job front... Be prepared for the worst don't commit to those overpriced condo."
"Agreed .....save for a rainy day buying HDB is a safer choice. "
"Agree .. PM just said this recession is going to be a fat-U recession ... it's haunting"
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
PM Lee: Singapore in recession .. expect a U-shaped recovery with a fat U
Forum discussion extracted from the Singapore Property Forum:"Just read in today Straits Times "Surge in layoffs expected" and numbers likely to jump beyond the peak suffered during the 1998 Asian financial crisis. About 30,000 jobs were lost then... This spells doom for Singapore private property market, most people will go for HDB be it for newly weds or down grading, it's a safer choice."
"Singapore has yet to feel the full force of the ongoing crisis but there are already signs that it would be ugly and long—drawn. Apart from sharp dips in export figures, job cuts have already hit the manufacturing, finance and banking sectors. "
"With unemployment expected to rise, Singaporeans are bracing themselves for more bad news on the job front... Be prepared for the worst don't commit to those overpriced condo."
"Agreed .....save for a rainy day buying HDB is a safer choice. "
"Agree .. PM just said this recession is going to be a fat-U recession ... it's haunting"
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
Friday, November 14, 2008
About this Blog
The big property sale has begun. Prices have been slashed by half at Luma, a 75-unit freehold luxury condominium at River Valley Grove. Relaunching this weekend, units at Luma are being offered at $1,450 per square foot, down almost 50% from $2,800 psf when it was first launched last year. The relaunch of Luma at halved priced is believed to be the first among luxury condominiums.
SISV-Realink data shows two units on the 25th floor changed hands at $2,837 psf and $2,586 psf in April this year. These prices were already much lower than those for two units on the 20th and 26th floors, which went for $3,349 psf and $3,291 psf in August 2007. At that time when the property market was feverish, some people even speculated that prices could reach $4,000 psf.
Luma (which will be completed in 2011) has three units on each floor, ranging from 743 sq feet to 1,173 sq feet. The developer behind the project is the mid-sized Novelty Group. Luma sits on an en-bloc site at St Thomas Walk which Novelty bought in 2006 for $76.5 million, or about $810 psf of potential gross floor area. The Novelty Group also bought White House Park Apartments in Stevens Road for $22 million from Asia General Holdings. It also has developments in Pasir Panjang, Geylang, Yio Chu Kang and Pasir Ris.
Nicholas Mak, director of research and consultancy at Knight Frank, said more of the smaller developers could be relaunching at lower prices. 'The bigger ones are discreetly offering soft discounts, such as lifestyle vouchers,' he said. 'I think the chief aim is to move units, to increase sales. They've probably done their sums - they expect to do a level of sales to achieve breakeven point, which will lower their borrowings and feel more comfortable,' Mr Mak added.
Banks are probably repricing loans, and some developers especially the smaller ones that have revolving facilities or variable-rate loans may feel the pinch.
Comments on the above article extracted from the Singapore Property Forum:
"WOW! Cheap Sale!"
"If you look in terms of % drop is WOW but if you look in terms of returns, it's not so WOW .. URA data shows rental rate is about $4 psf for river valley area like Aspen Ht, Valley Park, .. even at halved price, rental yield works out to be only 2% lah.. for such a high risk?!"
"it just goes to show how over-valued spore property is"
"Luma today relaunch at half the price....Hahaha! What do you think the price of condo around that area now? it will be around $1400 in no time.....You think buyers stupid is it? Novelty is droping price becasue they have at least 6 other developments haven't sell or not selling well. Do you think he can hold all these units....through the crisis? That's why. You will see another developer doing the same in the next couple of days and next follow suit...... then, afterthat, owners will have no choice but to follow.....that is how the market will crash! Hahahaha! "
"Lol.. You sound really happy.. And how will that benefits you? Or did you had beer.."
"I am happy because I live in a hdb. I'm always an advocate of prudency. I think buying a condo is like buying a Ferrari. Will you burn your money like buying and depreciating a Ferrari? Singaporean have such a liking for condo that he don't mind burning away hard earn money into something that really make no sense compared to a hdb. If he is a businessman making lots of money.....I agree. But most of the S'porean who buy condo are wage earner. They don't know how to invest other than buying property. They will end up working for 3 persons in their whole life: Bank, govt and boss. Their life revolve around working, pay loan and working harder. In crisis time, they might not even keep their jobs. Even dbs is axing people. Rich man make the money FIRST, then spend. Poor man spend the money first, then try to make payment. Singaporean will wake up one day, just like how the American woke up 2 months ago."
"moron, this is marketng gimmick & a irresponsible small company selling.
They bought the land at $800 psf, development cost of $500 psf, they are still making money at $1500 psf.
This is just a blood-suc-ker company, should let them bankrupt.
What so good about River Valley area? walking distance no ammenity, no MRT, in/out of ERP, bad traffic, no good school, no big megamall, no sport hub....."
"but once upon a time during the boom, morons were even thinking about paying $4000 psf for it ... now both bulls and bears can see how over-valued property has become with all the speculation ... even at $1500psf your return is only at about 2% lah."
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
River Valley condo Luma relaunches with prices halved
Units going for $1,450 psf, down from $2,800 psf at launch last year
The big property sale has begun. Prices have been slashed by half at Luma, a 75-unit freehold luxury condominium at River Valley Grove. Relaunching this weekend, units at Luma are being offered at $1,450 per square foot, down almost 50% from $2,800 psf when it was first launched last year. The relaunch of Luma at halved priced is believed to be the first among luxury condominiums.
SISV-Realink data shows two units on the 25th floor changed hands at $2,837 psf and $2,586 psf in April this year. These prices were already much lower than those for two units on the 20th and 26th floors, which went for $3,349 psf and $3,291 psf in August 2007. At that time when the property market was feverish, some people even speculated that prices could reach $4,000 psf.
Luma (which will be completed in 2011) has three units on each floor, ranging from 743 sq feet to 1,173 sq feet. The developer behind the project is the mid-sized Novelty Group. Luma sits on an en-bloc site at St Thomas Walk which Novelty bought in 2006 for $76.5 million, or about $810 psf of potential gross floor area. The Novelty Group also bought White House Park Apartments in Stevens Road for $22 million from Asia General Holdings. It also has developments in Pasir Panjang, Geylang, Yio Chu Kang and Pasir Ris.
Nicholas Mak, director of research and consultancy at Knight Frank, said more of the smaller developers could be relaunching at lower prices. 'The bigger ones are discreetly offering soft discounts, such as lifestyle vouchers,' he said. 'I think the chief aim is to move units, to increase sales. They've probably done their sums - they expect to do a level of sales to achieve breakeven point, which will lower their borrowings and feel more comfortable,' Mr Mak added.
Banks are probably repricing loans, and some developers especially the smaller ones that have revolving facilities or variable-rate loans may feel the pinch.
Comments on the above article extracted from the Singapore Property Forum:
"WOW! Cheap Sale!"
"If you look in terms of % drop is WOW but if you look in terms of returns, it's not so WOW .. URA data shows rental rate is about $4 psf for river valley area like Aspen Ht, Valley Park, .. even at halved price, rental yield works out to be only 2% lah.. for such a high risk?!"
"it just goes to show how over-valued spore property is"
"Luma today relaunch at half the price....Hahaha! What do you think the price of condo around that area now? it will be around $1400 in no time.....You think buyers stupid is it? Novelty is droping price becasue they have at least 6 other developments haven't sell or not selling well. Do you think he can hold all these units....through the crisis? That's why. You will see another developer doing the same in the next couple of days and next follow suit...... then, afterthat, owners will have no choice but to follow.....that is how the market will crash! Hahahaha! "
"Lol.. You sound really happy.. And how will that benefits you? Or did you had beer.."
"I am happy because I live in a hdb. I'm always an advocate of prudency. I think buying a condo is like buying a Ferrari. Will you burn your money like buying and depreciating a Ferrari? Singaporean have such a liking for condo that he don't mind burning away hard earn money into something that really make no sense compared to a hdb. If he is a businessman making lots of money.....I agree. But most of the S'porean who buy condo are wage earner. They don't know how to invest other than buying property. They will end up working for 3 persons in their whole life: Bank, govt and boss. Their life revolve around working, pay loan and working harder. In crisis time, they might not even keep their jobs. Even dbs is axing people. Rich man make the money FIRST, then spend. Poor man spend the money first, then try to make payment. Singaporean will wake up one day, just like how the American woke up 2 months ago."
"moron, this is marketng gimmick & a irresponsible small company selling.
They bought the land at $800 psf, development cost of $500 psf, they are still making money at $1500 psf.
This is just a blood-suc-ker company, should let them bankrupt.
What so good about River Valley area? walking distance no ammenity, no MRT, in/out of ERP, bad traffic, no good school, no big megamall, no sport hub....."
"but once upon a time during the boom, morons were even thinking about paying $4000 psf for it ... now both bulls and bears can see how over-valued property has become with all the speculation ... even at $1500psf your return is only at about 2% lah."
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
About this Blog
And on 29 Oct in ST, the developer had said
'We're very confident that there'll be a strong demand for our flats, which are new and attractively priced compared to resale flats in Bishan.'
Well, lets see how many percent of applications actually convert finally into real sales. If there's one thing previous DBSS launches have taught us, do not count your chickens before they hatch.
Nov 13, 2008
Higher-end HDB mkt cooling? (I'd replace the "?" with a ".")
By Jessica Cheam
THE higher-end of the public housing market is showing its first signs of cooling, with the Housing Board's latest condo-style flats receiving a lacklustre response.
With only one day left to the closing of applications, Natura Loft at Bishan has drawn about 600 applications for 480 flats, its developer told The Straits Times yesterday. This is in stark contrast to the previous three projects built under HDB's design, build and sell scheme (DBSS), which attracted overwhelming demand.
The first project, Premiere @ Tampines, was a hit, with 6,000 applications for 616 homes; City View @ Boon Keng had 3,500 buyers vying for 714 flats while the third project, Park Central at Ang Mo Kio, drew 2,300 bids for 578 units.
Industry watchers say Natura Loft is a victim of the latest turn in market sentiment, which has seen companies retrenching staff and economies worldwide entering recession.
'Announcements such as DBS Bank laying off 900 jobs has caught everyone off-guard, and local sentiment has turned very bad,' said Mr Colin Tan, head of research and consultancy at Chesterton Suntec International.
Other analysts such as ERA Asia-Pacific's assistant vice-president Eugene Lim said Natura Loft's pricing was 'on the high side'. (Hmm, you don't say! Well, someone has to send the developers this message)
'The pricey units were launched at a time when the market is jittery, making a double whammy for the project,' he said.
Posted by Ann in the Singapore Property Forum
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
Higher-end HDB market cooling: Natura Loft at Bishan sees far fewer applicants
I'm not surprised, are you?And on 29 Oct in ST, the developer had said
'We're very confident that there'll be a strong demand for our flats, which are new and attractively priced compared to resale flats in Bishan.'
Well, lets see how many percent of applications actually convert finally into real sales. If there's one thing previous DBSS launches have taught us, do not count your chickens before they hatch.
Nov 13, 2008
Higher-end HDB mkt cooling? (I'd replace the "?" with a ".")
By Jessica Cheam
THE higher-end of the public housing market is showing its first signs of cooling, with the Housing Board's latest condo-style flats receiving a lacklustre response.
With only one day left to the closing of applications, Natura Loft at Bishan has drawn about 600 applications for 480 flats, its developer told The Straits Times yesterday. This is in stark contrast to the previous three projects built under HDB's design, build and sell scheme (DBSS), which attracted overwhelming demand.
The first project, Premiere @ Tampines, was a hit, with 6,000 applications for 616 homes; City View @ Boon Keng had 3,500 buyers vying for 714 flats while the third project, Park Central at Ang Mo Kio, drew 2,300 bids for 578 units.
Industry watchers say Natura Loft is a victim of the latest turn in market sentiment, which has seen companies retrenching staff and economies worldwide entering recession.
'Announcements such as DBS Bank laying off 900 jobs has caught everyone off-guard, and local sentiment has turned very bad,' said Mr Colin Tan, head of research and consultancy at Chesterton Suntec International.
Other analysts such as ERA Asia-Pacific's assistant vice-president Eugene Lim said Natura Loft's pricing was 'on the high side'. (Hmm, you don't say! Well, someone has to send the developers this message)
'The pricey units were launched at a time when the market is jittery, making a double whammy for the project,' he said.
Posted by Ann in the Singapore Property Forum
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
About this Blog
The developer held a sneak preview to test the market a fortnight ago and then a soft launch last weekend, when it sold half of the 60 units launched.‘We tested the market…and we were pleasantly surprised that the response was good, so we are going ahead with the launch,’ said Mr Lim Yew Soon, managing director of EL Development, a unit of local builder Evan Lim & Co.‘If we had waited till next year, there would be a lot of competition. It’s better to have a first-mover advantage.’
‘Our earlier price expectations were higher. We benchmarked current prices against the prices of older condos in the area,’ said Mr Lim. Those who bought at the soft launch received a 2% discount from these price levels, he said. Mr Lim said the buyers were mostly dwellers of nearby flats and condominiums.
There are two other condominiums in Rosewood Drive - Casablanca and Rosewood. At Casablanca, two caveats lodged in September and October showed that two 1,184sqft units were sold at $541psf and $549psf, or $640,000 and $650,000. Caveats lodged in the same months at the 437-unit Rosewood showed that two 1,173sqft units were sold for $537psf to $550psf, or at $630,000 and $645,000.
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
200-unit Rosewood Suites to launch at $580 psf
EL Development is launching the 99-year leasehold Rosewood Suites at an average price of $580 psf this weekend. Rosewood Suites is a five-storey development with 1-4bedroom apartments. Prices start from $435,000 for a two-bedroom unit and go up to $1.1 million for a four-bedroom ground-floor unit.The developer held a sneak preview to test the market a fortnight ago and then a soft launch last weekend, when it sold half of the 60 units launched.‘We tested the market…and we were pleasantly surprised that the response was good, so we are going ahead with the launch,’ said Mr Lim Yew Soon, managing director of EL Development, a unit of local builder Evan Lim & Co.‘If we had waited till next year, there would be a lot of competition. It’s better to have a first-mover advantage.’
‘Our earlier price expectations were higher. We benchmarked current prices against the prices of older condos in the area,’ said Mr Lim. Those who bought at the soft launch received a 2% discount from these price levels, he said. Mr Lim said the buyers were mostly dwellers of nearby flats and condominiums.
There are two other condominiums in Rosewood Drive - Casablanca and Rosewood. At Casablanca, two caveats lodged in September and October showed that two 1,184sqft units were sold at $541psf and $549psf, or $640,000 and $650,000. Caveats lodged in the same months at the 437-unit Rosewood showed that two 1,173sqft units were sold for $537psf to $550psf, or at $630,000 and $645,000.
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
About this Blog
In February this year, HDB also launched Punggol Spring, which is twice the distance away from the MRT/LRT station. Launch prices of Punggol Spring were about 20 per cent lower in comparison to Punggol Arcadia.
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
HDB BTO Punggol Arcadia Priced Higher than Punggol Sapphire
The Housing and Development Board (HDB) has launched the 750-unit Punggol Arcadia with five-room flats going for as much as $356,000 to $416,000. This represents an increase of between 7-8% compared to the nearby Punggol Sapphire which HDB launched six months ago. Punggol Arcadia and Punggol Sapphire are both are about the same distance to the Punggol MRT/LRT station.In February this year, HDB also launched Punggol Spring, which is twice the distance away from the MRT/LRT station. Launch prices of Punggol Spring were about 20 per cent lower in comparison to Punggol Arcadia.
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
Monday, November 10, 2008
About this Blog
"Here are the good words of our own MM Lee whom some Bears had reminded us that property will go down in cyclical..seems like MM Lee is very optimistic of Singapore property market. And the fact that the government is controlling supply and ensuring stability, a crash is extremely unlikely. So who to believe now? The bears or MM Lee? Hahaha ... Minister Mentor Lee said property values are bound to go up in the long run because the government is continuously building more infrastructure and attracting higher-value investments that provide higher wages to employees. "
"well said, MM. The surge time will come, swift & just happen overnight.
Global rate cut is good for property, globally is trying to flood US$10 Trillion... Spore govt also will come out with a stimulus budget to drive Spore economy. Once engine starts, you will see buyers coming back."
"the mean property price of a country with sound economy will rise in tandem with its economic growth is pretty much common sense .. MM Lee said property price will rise in the long run .. he didn't say it'll surge from where it is now, in fact he implies that it'll crash in the short term .. and he's trying reassure ppl that after the crash, it'll again rise in the long run. "
"MM Lee mentioned of our reserve to see us through this crisis is chilling. He has said NO to touching the reserve in past recessions...global rate cut is not going to save spore overvalued-property price because banks are tight with their lendings because of a credibility crisis, not just a credit crisis .. China stimulus is to boost its domestic economy ... if it can save itself is already very good .. don't depend on china to save our economy, much less our property...Spore stimulus package is likely for public spendings on long-term infrastructure as we have seen in the past .. and as tharman mentioned, to help business's cash flow .. we've never seen a recession this bad that cash flow of business is severely impaired that it needs to be in our budget .. it's frightening .. the more the govt is doing way more than past recessions, the more it signals the severity of this recession. BEWARE!"
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
MM Lee: Property Price will continue to rise in the long term
In response to the news reportby CNA 9 Nov 2008, "MM Lee believes property values will continue to rise in long term"; forumers in the Singapore Property Forum wrote:"Here are the good words of our own MM Lee whom some Bears had reminded us that property will go down in cyclical..seems like MM Lee is very optimistic of Singapore property market. And the fact that the government is controlling supply and ensuring stability, a crash is extremely unlikely. So who to believe now? The bears or MM Lee? Hahaha ... Minister Mentor Lee said property values are bound to go up in the long run because the government is continuously building more infrastructure and attracting higher-value investments that provide higher wages to employees. "
"well said, MM. The surge time will come, swift & just happen overnight.
Global rate cut is good for property, globally is trying to flood US$10 Trillion... Spore govt also will come out with a stimulus budget to drive Spore economy. Once engine starts, you will see buyers coming back."
"the mean property price of a country with sound economy will rise in tandem with its economic growth is pretty much common sense .. MM Lee said property price will rise in the long run .. he didn't say it'll surge from where it is now, in fact he implies that it'll crash in the short term .. and he's trying reassure ppl that after the crash, it'll again rise in the long run. "
"MM Lee mentioned of our reserve to see us through this crisis is chilling. He has said NO to touching the reserve in past recessions...global rate cut is not going to save spore overvalued-property price because banks are tight with their lendings because of a credibility crisis, not just a credit crisis .. China stimulus is to boost its domestic economy ... if it can save itself is already very good .. don't depend on china to save our economy, much less our property...Spore stimulus package is likely for public spendings on long-term infrastructure as we have seen in the past .. and as tharman mentioned, to help business's cash flow .. we've never seen a recession this bad that cash flow of business is severely impaired that it needs to be in our budget .. it's frightening .. the more the govt is doing way more than past recessions, the more it signals the severity of this recession. BEWARE!"
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
Thursday, November 6, 2008
About this Blog
(SINGAPORE) When Ministry of National Development announced last week that it was suspending sales of state land through the confirmed list till June next year, jubilant developers lauded the swiftness of the government action that will hopefully stem the poor sentiment in the property market.
Some developers were also hopeful that the government will reintroduce the Deferred Payment Scheme (DPS), which was scrapped in October last year to deter speculation.
Under DPS, home buyers had to pay only 10 per cent, or more typically 20 per cent, of the price of the residential property they bought from developers.
The next payment would be made when the project was completed, perhaps two to three years down the road. Very often, buyers could make the 10-20 per cent initial downpayment using cash and CPF savings, without having to commit to a bank loan, which could be delayed till the project was closer to completion, when the bulk of the purchase price had to be paid to the developer.
Under a normal progress payment scheme, buyers have to secure a housing loan much sooner, as they are billed by the developer in stages, according to the progress of the project's construction.
When DPS was scrapped in October 2007, many industry watchers said it had come too late as sentiment in the Singapore property market had already started to soften with the onset of the US sub-prime crisis.
And now, most property agents agree that restoring the scheme will help bring some buyers back into the market, especially foreign buyers - although not in as great a number as during the height of property fever in early 2007.
The head of a big property consulting group estimated that in some instances, up to 70 per cent of foreign buyers in luxury residential projects bought on deferred payment schemes in 2006-2007.
Buyers have to pay up to 5 per cent more under the DPS compared with the normal progress payment scheme. Yet the ease of making a small initial downpayment made buying attractive for speculators eyeing huge gains from disposing of their properties before the projects were completed.
However, other market watchers and analysts say a restoration of DPS could potentially create Singapore's own version of a sub-prime crisis.
When home buyers purchase a property on DPS, without committing to any bank loan, there is no credit assessment done to see if they have the means to complete the purchase. So this scheme could draw less credit-worthy buyers who may have difficulty securing housing loans later when it is time to pay up.
If substantial numbers of buyers default and return their units to the developer, the banks that had extended loans to the developers may not be too happy.
'The land loan and construction loan may be required to be priced differently because the risk has increased,' as Savills Singapore's director of marketing and business development Ku Swee Yong puts it.
Agreeing, the head of the major property consulting group said: 'There will be implications for banks' exposure to property loans extended to developers, and that was probably a major reason the authorities considered in scrapping DPS in the first instance.'
To be sure, DPS is helpful to genuine home buyers. For instance, an HDB upgrader who buys a private home under construction would prefer to sell his existing HDB flat only when the private condo he's moving into has been completed; so DPS helps him to tide over until then, says Mr Ku.
But market watchers point out that DPS - because it does not entail credit checks - also has a tendency to draw speculators. 'There's a penchant for optimism, especially among the young. Whereas if you take a housing loan, you will be psychologically more aware of your financial obligations and tend to be more careful,' says a property veteran.
To cut this risk of fuelling speculation, the DPS could be reincarnated but with modifications, suggests Savills' Mr Ku. For one, home buyers making a purchase under the DPS could be required to sign up for a housing loan first, even if they need to make a drawdown only a few years later. 'That way, the credit assessment is done upfront. And secondly, such home buyers will have to pay a penalty to the bank in the form of an admin charge of $3,000 to $6,000 if they decide to sell their property before the project is completed and not use the home loan or if they make an early repayment,' Mr Ku says.
Another way to reduce the negative effects of DPS is to raise the initial payment from 10-20 per cent previously to 30 per cent, Mr Ku suggests. 'That way, the developer would have collected more equity and that will provide a bigger cushion to protect the developer as well as its banks in the event of a default by buyers not able to hold on to their units,' he adds.
Then there's another view. The government should continue to keep DPS at bay and instead leave banks to offer innovative housing loans to home buyers that replicate the benefits of DPS - if it makes commercial sense to them. The interest absorption and zero instalment schemes offered by some banks highlighted in a BT article in September allow buyers to make a 20 per cent downpayment and then nothing until the project is completed.
Under such schemes, buyers have to sign up for a bank loan for the property, thus entailing a credit-worthiness check to ensure they are not dabbling in properties beyond their means. Afterall, nobody wants a sub-prime crisis here.
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
DPS can create Singapore sub-prime crisis, analysts caution
Some developers hopeful that the government will reintroduce DPS
(SINGAPORE) When Ministry of National Development announced last week that it was suspending sales of state land through the confirmed list till June next year, jubilant developers lauded the swiftness of the government action that will hopefully stem the poor sentiment in the property market.
Some developers were also hopeful that the government will reintroduce the Deferred Payment Scheme (DPS), which was scrapped in October last year to deter speculation.
Under DPS, home buyers had to pay only 10 per cent, or more typically 20 per cent, of the price of the residential property they bought from developers.
The next payment would be made when the project was completed, perhaps two to three years down the road. Very often, buyers could make the 10-20 per cent initial downpayment using cash and CPF savings, without having to commit to a bank loan, which could be delayed till the project was closer to completion, when the bulk of the purchase price had to be paid to the developer.
Under a normal progress payment scheme, buyers have to secure a housing loan much sooner, as they are billed by the developer in stages, according to the progress of the project's construction.
When DPS was scrapped in October 2007, many industry watchers said it had come too late as sentiment in the Singapore property market had already started to soften with the onset of the US sub-prime crisis.
Property Agents said Restoring DPS will bring back Foreign Buyers
And now, most property agents agree that restoring the scheme will help bring some buyers back into the market, especially foreign buyers - although not in as great a number as during the height of property fever in early 2007.
The head of a big property consulting group estimated that in some instances, up to 70 per cent of foreign buyers in luxury residential projects bought on deferred payment schemes in 2006-2007.
Buyers have to pay up to 5 per cent more under the DPS compared with the normal progress payment scheme. Yet the ease of making a small initial downpayment made buying attractive for speculators eyeing huge gains from disposing of their properties before the projects were completed.
DPS Restoration may create Singapore's Sub-prime crisis
However, other market watchers and analysts say a restoration of DPS could potentially create Singapore's own version of a sub-prime crisis.
When home buyers purchase a property on DPS, without committing to any bank loan, there is no credit assessment done to see if they have the means to complete the purchase. So this scheme could draw less credit-worthy buyers who may have difficulty securing housing loans later when it is time to pay up.
If substantial numbers of buyers default and return their units to the developer, the banks that had extended loans to the developers may not be too happy.
'The land loan and construction loan may be required to be priced differently because the risk has increased,' as Savills Singapore's director of marketing and business development Ku Swee Yong puts it.
Agreeing, the head of the major property consulting group said: 'There will be implications for banks' exposure to property loans extended to developers, and that was probably a major reason the authorities considered in scrapping DPS in the first instance.'
Ku Swee Young: DPS is helpful to genuine home buyers
To be sure, DPS is helpful to genuine home buyers. For instance, an HDB upgrader who buys a private home under construction would prefer to sell his existing HDB flat only when the private condo he's moving into has been completed; so DPS helps him to tide over until then, says Mr Ku.
DPS has a tendency to draw speculators
But market watchers point out that DPS - because it does not entail credit checks - also has a tendency to draw speculators. 'There's a penchant for optimism, especially among the young. Whereas if you take a housing loan, you will be psychologically more aware of your financial obligations and tend to be more careful,' says a property veteran.
Ku Swee Yong: DPS could be reincarnated but with modifications
To cut this risk of fuelling speculation, the DPS could be reincarnated but with modifications, suggests Savills' Mr Ku. For one, home buyers making a purchase under the DPS could be required to sign up for a housing loan first, even if they need to make a drawdown only a few years later. 'That way, the credit assessment is done upfront. And secondly, such home buyers will have to pay a penalty to the bank in the form of an admin charge of $3,000 to $6,000 if they decide to sell their property before the project is completed and not use the home loan or if they make an early repayment,' Mr Ku says.
Another way to reduce the negative effects of DPS is to raise the initial payment from 10-20 per cent previously to 30 per cent, Mr Ku suggests. 'That way, the developer would have collected more equity and that will provide a bigger cushion to protect the developer as well as its banks in the event of a default by buyers not able to hold on to their units,' he adds.
Another view: Leave banks to offer innovative housing loans to home buyers
Then there's another view. The government should continue to keep DPS at bay and instead leave banks to offer innovative housing loans to home buyers that replicate the benefits of DPS - if it makes commercial sense to them. The interest absorption and zero instalment schemes offered by some banks highlighted in a BT article in September allow buyers to make a 20 per cent downpayment and then nothing until the project is completed.
Under such schemes, buyers have to sign up for a bank loan for the property, thus entailing a credit-worthiness check to ensure they are not dabbling in properties beyond their means. Afterall, nobody wants a sub-prime crisis here.
May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase
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