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Subscribe to this list via RSS Blog posts tagged in property cooling measures

Following the results of the General Election, RHB has issued a report indicating that the government now has greater flexibility to implement less stringent property cooling measures and immigration policies.

RHB analysts believe however that the government is unlikely to ease up on current policies.

This speculation is based on the Property Price Index (PPI) that has declined a mere 3.7 per cent year on year, and a slide of 6.7 per cent from its 3Q13 peak.

RHB reports that some ABSD (Additional Buyer’s Stamp Duty) cooling measures are likely to be lifted in 2016 only when islandwide property prices have fallen between 12-15 per cent.

Taken from iProperty

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Analysts are expecting private home sales volume to fall in August and September due to the seventh lunar month commonly known as the hungry ghost festival.

Buyers are less inclined to make major investment decisions during this period, which is believed to be inauspicious.

On the other hand, developers are delaying new project launches, with most of their attention focused on watching for signs of policy easing, with regards to the infamous cooling measures introduced by the Monetary Authority of Singapore (MAS).

Taken from iProperty

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Prices of high-end condos in prime districts and Sentosa Cove have been hardest hit by cooling measures introduced by the Monetary Authority of Singapore (MAS).

One seller at the 91-unit luxury condo Turquoise located in Sentosa Cove, sold a three-bedroom unit on the fifth floor for $2.9 million—a drastic 52 per cent reduction from the original purchase price.

In the prime district, Knight Frank’s auction saw a 1,894 square feet, four-bedroom loft unit at Jardin sell for $2.9 million, a loss of approximately $400,000.

In light of falling prices, buyers have indicated strong interest in properties in districts 9, 10, and 11, hoping to purchase units in older condos located near Ardmore Park, Grange Road and the Claymore area.

Taken from iProperty

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Minister of National Development Khaw Boon Wan, has asserted in an interview with TODAY that cooling measures are here to stay until the residential market’s housing demand and supply reaches equilibrium.

Property prices have fallen for seven quarters straight—the longest in 13 years.

Khaw also told TODAY that international interest rates are a major factor to consider, given that central banks throughout the world are gradually increasing them.

While this process is expected to take an extended period of time, the general concern of the government is to prevent a housing bubble that could have adverse effects on the economy.

Taken from iProperty

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A trend study has pointed towards the partial lifting of cooling measures set by the Monetary Authority of Singapore (MAS).

With prices dipping by 6.9 per cent and poor GDP figures in Q2 2015, analysts from OCBC believe that property loosening measures are in order.
These predictions were made based on scenarios in 1997, 2001, and 2008, when a negative economic outlook and price declines in the housing market heralded the relaxation of cooling measures.

According to the report, the Additional Buyer Stamp Duty (ABSD) is most likely to be adjusted, given its direct impact on demand.

While the government may also restrict government land sales (GLS), this is less likely as it would take comparatively much longer to impact the market and runs the risk of unintended, negative side effects on the banking system and create moral hazards for developers.

Taken from iProperty

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Mr Ravi Menon, Managing Director of The Monetary Authority of Singapore (MAS) said on 21 July that it is still too early to lift property curbs, dashing hopes of a market rebound this year: “Property prices have softened somewhat, but like I said last year, in the context of the price increase that had occurred — 60 per cent over three years — the softening we have seen is really not all that much.

So, it’s still premature to consider removing any of the cooling measures that are in place,” Mr Menon said at the central bank’s annual report media briefing on 21 July.

Since the global financial crisis in 2008, housing prices started increasing in 2009 and hit their peak in the third quarter of 2013.

The property market has cooled since then, but more so after MAS slapped on the Total Debt Servicing Ratio (TDSR) in June 2013 to ease buyer speculation and raise credit practices by financial institutions.

Flash estimates from Urban Redevelopment Authority (URA) in July showed that private residential properties fell for the seventh consecutive quarter since its peak in 2013.

However, the total price correction was less than seven per cent from its highest in 2013, bolstering the need for further cooling measures.

While the Real Estate Developers’ Association of Singapore (REDAS) has continuously urged the Government to relax property curbs as it “hurts foreign investment flows”, others such as Mr Leong Wai Ho, Economist at Barclays said to TODAY that the cooling measures are fair from a policy point of view to re-engineer home affordability.

Taken from iProperty

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According to CIMB, current market conditions, including property cooling measures, residential oversupply and lower development margins brought about by costly land have affected Singapore’s property developers more than the Global Financial Crisis in 2008.

“After the implementation of a series of macro-prudential measures by the government, including higher transaction costs and more prudent debt servicing measures, demand for residential property has weakened.

This, coupled with a slow rental market and rising incoming supply, has led to higher vacancies and deteriorating private home prices,” said Analyst Ms Lock Mun Yee in a CIMB report.

“With revenue growth decelerating and the bottomline being affected by narrower margins, developers are increasingly looking to overseas markets such as Australia, the UK, China and other SEA countries.

The bright spot is that developers’ balance sheets are healthy with low leverage, enabling them to seek reinvestment opportunities,” she noted.

Taken from iProperty

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Japan’s property prices are on the increase despite its declining population and stagnant economy and wages, Deutsche Bank revealed in a June report.

The country’s residential price index rose 1.5 per cent in March compared to a year ago, while Tokyo rose 4.7 per cent.

Tokyo’s condominiums, which cost nine times annual household income rose 8.9 per cent over the same period. "There are many high-net-worth individuals who invested in expensive city center condos (particularly tower condos) as a tax-saving measure," Deutsche Bank said.

"Investment in rental apartments has been also increasing. We view this to be the result of inheritance tax countermeasures." Competition is also stiff and despite an increase in prices by 10 to 20 per cent in two years, Mr Ku Swee Yong, an international property advisor at Century 21 Singapore, thinks the market is good for foreign investment, as the rise in price come after 20 years of recession.

In an interview with CNBC, Mr Ku noted that the yen’s 18 per cent decrease against the US dollar makes Japan’s properties valuable for foreign investment. Also, due to Japan’s low rates, rental cash flow is expected to be positive despite moderating interest rates.

According to Mr Ku, most investors are coming from China, Hong Kong and Taiwan. The relaxed Taiwanese property market, a drop and in rental yields and good exchange rate have caused an influx of Taiwanese investors, while the Chinese are attracted by the weakening yen and the upcoming 2020 Tokyo Olympics.

Taken from iProeprty

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The Total Debt Servicing Ratio (TDSR) framework’s limitation on car and home loans has been cited as being responsible for the sluggish private housing market, according to market observers who spoke with Channel NewsAsia.

The TDSR, which was implemented on 29 June 2013 to curb debt payments, is said to have brought about the drop in units sold from 14,938 in 2013 to 7,316 private homes sold in 2014.

With the TDSR expected to be implemented permanently, and with the private property market appearing to moderate, market watchers have urged the government to relax policies such as the Additional Buyer’s Stamp Duty (ABSD).

ABSD is meant to prevent local buyers from purchasing another home and restrict foreign buyers from entering the market.

In an interview with Channel NewsAsia, Mr. Ismail Gafoor, Chief Executive of PropNext Realty, said that there is existing demand, however buyers are hesitant due to cooling measures.

Because of buyers on a budget, developers have also been careful with their launches.

A declining number of project sales have been observed since June 2013, from 15 (June 2013) to seven (June 2014) to three this June.

PropNext Realty noted that this might pressure weaker developers to quit.

In an interview with Channel NewsAsia, Ms Chia Siew-Chuin, Research & Advisory Director at Colliers International said, "Most developers here in Singapore would have accumulated quite a bit of profits during the early years of the recent residential property boom and that has actually given them the capacity and holding power to ride out these subdued market conditions”. However she also noted that those unable to endure the weak property market may eventually leave.

Taken from iProperty

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A report from UOB Kay Hian recommended that property cooling measures are liable to be lifted by mid 2016.

UOB Kay Hian examiners Vikrant Padey and Derek Chang highlighted slow home deals in May and great reductions in area supply for private properties right now a softening in strategies is liable to happen.

Might's decrease in units sold shows a plunge in home-purchasing supposition, which could convey the legislature to straightforwardness strategies checking interest, subsequent to the lessening in supply was likely intended to keep away from a compelling value change.

Taken from iProperty

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Although cooling measures will keep on deter buyers, PropNex CEO Mr Ismail Gafoor noted to Singapore Business Review that purchasing hobby will be aroused by undertaking area and sensible estimating.

Ms Alice Tan, Director and Head of Research at Knight Frank Singapore, included that the nature of the improvement and less rivalry in the encompassing territory will likewise pull in hobby. Purchasers will likewise be pulled in to new motivations and crisp advertising battles.

Without game changers, lodging tasks will just be playing the estimating diversion, said Jones Lang LaSalle's (JLL) National Director for Research and Consultancy Mr Ong Teck Hui; undertakings need to have a special offering point.

Taken from iProperty

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For the first time in several years, home prices have fallen for an entire year, due to government cooling measures.

In 2014, prices of HDB resale and private homes dropped by six and four per cent respectively, down from the 2013 peak.

Between 2009 and now, home prices are up 37 percent, while median household income has risen by 38 per cent.

National Development Minister Khaw Boon Wan acknowledged concerns by MPs Ms Foo and Ms Lee Bee Wah about how overdoing the correction in the housing market could affect the elderly, who rely on housing assets as a backup for their retirement.

Mr Khaw noted that some of the measures taken to prevent this included reducing the number of new flats.

He said that the government will be vigilant as the property market undergoes transition.

Taken from ST Property

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The year of 2014 has seen Singapore developers venturing overseas to seek higher yields and returns. Research firm Real Capital Analytics (RCA) reported a three-fold increase of investment (US$2.32 billion) into overseas markets by companies such as City Developments and Keppel Land, in the nine months through September, compared to the same period a year before.
 
Based on the figures, Singapore emerged as the top Asian country in terms of overseas real estate investment. On the buying side, local property buyers for non-landed private housing have been dwindling since 2013. According to Nomura, Singaporeans accounted for 80 per cent of purchases in 2012 but figures have fallen since 2013 where only 76 per cent of the buyers were Singaporeans.
 
The percentage of Singapore buyers has fallen again in the first three quarters of this year to 73 per cent. Despite the substantial Additional Buyer Stamp Duty (ABSD) levy for foreigners, Nomura noted that purchases by Malaysians and Mainland Chinese are rising.
 
With the government not showing signs of reversing the cooling measures, Ms Sigrid Zialcita, Managing Director of Cushman & Wakefield predicts that the trend of developers investing in overseas properties will continue. 
 
The government is also responding to the subdued property market with its recent announcement on the first half 2015 Government Land Sales (GLS) Programme.
 
The Urban Redevelopment Authority (URA) announced on 4 December that the confirmed list for the H1 2015 GLS Programme will include land for 3,020 private residential units (including 490 EC units).
 
This is almost 30 per cent lower compared to the 3,915 private residential units (including 1,520 EC units) offered in the confirmed list for the H2 2014 GLS Programme. The reserve list for H1 2015 will yield about 5,750 private residential units and 265,000 sq m of commercial space compared to 6,305 private residential units and 193,280 sq m of commercial space in the H2 2014 reserve list. 
 
Taken from ST Property
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It should have come as no surprise that on the first anniversary of the most significant measures aimed at underpinning principles of prudent borrowing and lending, a fresh call should come from the property industry for a review of measures that have left the market here listless and lacklustre.

The Total Debt Servicing Ratio framework, which took effect on June 29 last year, was not articulated nor specifically designed as a property cooling measure but was billed as a means of ensuring that borrowers do not overstretch themselves and accumulate too much debt.

It has nevertheless been in the property market where the measure's reach and impact have been felt most significantly. Its stipulation that banks must factor in a borrower's total debt obligations before a new property loan can be granted - coupled with other new measures such as additional stamp duties - had multiple hits: on market sentiment, transaction volumes and prices.

It is perhaps fair, one year on, to ask for a reassessment of the usefulness and validity of the cooling measures. Industry veteran Kwek Leng Beng's argument is that Singapore could lose its edge as an investment destination as foreigners opt instead for property markets elsewhere. Property players assert that speculators have been weeded out, prices have dipped and a cooler, more stable market has been established. There is also the fear of a systemic downward spiral.

But the reality is that underlying concerns remain, including whether prices are currently at levels which home buyers believe are realistic and, importantly, affordable. Given that private home prices surged 60 per cent during the most recent market upswing that began in mid-2009, the decline in prices since the introduction of the cooling curbs is anything but significant. This, in part, underpins the conviction of the authorities that it is too early to consider a rollback of the measures.

Many buyers remain on the sidelines in the hope of a more substantial price correction. Developers are clearly not unaware of how to respond to a buyers market. They have recognised, for instance, that they can move existing stock at discounted re-launches, especially if their new units are reasonably priced.

Hard as the year of cooling measures might have been on certain groups of people, the steps must be viewed, however, for what they have forced on those making financial decisions about property. It has provided the time and space for all to pause and take stock of their expectations, recalibrate their finances, and weigh the outlays required for what is, without doubt, the single most significant physical asset and stake that they will have in the country - and the responsibilities that go with it.

Such determinations are more likely to be sound in a calm, unfrenzied and stable market. If the cooling measures have and continue to enable people to make such important decisions pragmatically, they have a value which must be acknowledged. Market stability, which is a boon to developers and individuals alike, is better achieved when market behaviour, too, can be characterised as both sober and stable.

 

Taken from The Straits Times via ST Property

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