RESIDENTIAL MARKET
Home sales will fall, even prices may slide
In what could be the first rumblings of a long-raging storm, property counters fell while analysts predicted that private home sales would drop and even prices may dip.
Some expect property stocks to fall by up to 15 per cent in the wake of the most comprehensive round of cooling measures to hit the sector.
The more dire estimates expect property prices, which have climbed despite previous cooling measures, to fall by up to 10 per cent and for transaction volumes to crash by up to 50 per cent.
Analysts have also warned that more measures could be in the works.
The immediate impact of the measures was evident in the stock market, where property counters took a beating. Some of the biggest losers included Wing Tai Holdings which lost 18 cents (8.9 per cent) to close at $1.84, City Developments which lost 95 cents (7.54 per cent) to close at $11.65, and Keppel Land which lost 31 cents (7.2 per cent) to close at $3.97.
SC Global Developments, the subject of a privatisation bid by chairman and chief executive Simon Cheong, bucked the trend, climbing half a cent to close at $1.805.
Yesterday, Mr Cheong bought an additional 3.042 million shares at $1.795-$1.80 each. With the public float standing at 14.52 per cent, any additional acquisition by Mr Cheong and/or other non-public shareholders that in aggregate exceeds 4.5 per cent will bring the public float below the minimum 10 per cent that is required for the company to stay listed. Mr Cheong's privatisation offer closes tomorrow.
Source: Business Times –15 January 2013
New curbs could benefit office, retail space
The commercial property sector could benefit from the latest cooling measures, analysts believe, as investors look for alternative places to park their money.
The residential market bore the brunt of the latest moves by the Government to curb buoyant prices and demand, with measures that affect all residential properties as well as those specific to public housing and the hybrid executive condominium (EC) market that mostly took effect from Saturday.
As for the industrial sector, a Seller's Stamp Duty has been put in place for the first time.
That means potential investments meant for these two sectors may spill over to the commercial sector, in the form of demand for strata-titled office and retail units.
Investors could also start to look beyond Singapore for growth opportunities as their options become more limited, analysts said.
The Iskandar region in Johor, Malaysia; London; Melbourne and Sydney were some of their picks to see an influx of hot money.
Source: Business Times –15 January 2013
Private home rentals seen remaining stable
Private property rentals are likely to remain stable as the latest property cooling measures take effect, analysts have said.
The pool of potential buyers may be shrunken by measures such as a greater minimum upfront cash required from second-time and subsequent home buyers, a higher additional buyer's stamp duty and tighter loan-to-value (LTV) limits on individuals with one or more outstanding housing loans.
The residential sector curbs may benefit the rental market, as those who are priced out or who withhold their buying decisions, particularly the permanent residents, would probably turn to the leasing market instead.
Trading volumes should be healthy, given the demand, analysts said.
Eugene Lim, key executive officer at ERA Realty, expects the market for units with rents at or below $6,000 a month to be more active.
Rentals for private non-landed homes in the fourth quarter of 2012 had slipped one per cent from the previous quarter, data from the Singapore Real Estate Exchange showed on Friday.
Market watchers said other factors may apply downward pressure on prices and rents over the next two to three years, such as a cautious economic outlook and a strong pipeline of projects near completion.
ERA's Mr Lim said the latest round of property measures has made sellers and buyers more realistic. All parties are more willing to negotiate now and this will translate itself to the rental market; landlords may accept lower bids than they used to demand.
ERA's Mr Lim, referring to the measure that now bars PRs from subletting the entire flat they own, said this will keep supply constrained, and may inevitably push rentals upwards.
Source: Business Times –15 January 2013
Khaw lauds EC scheme but will stay vigilant to prevent abuses
The executive condominium (EC) scheme is a "wonderful" one and should continue, as the government addresses prior abuses, Minister for National Development Khaw Boon Wan said yesterday.
Responding to queries from Members of Parliament (MPs), he said ECs are relevant, protecting middle-income Singaporeans from competition and ensuring them a market- friendly way to buy condominiums at affordable prices.
"And if I may give an analogy, it's like offering you a Lexus at a Corolla price," he told Parliament.
"But only Singaporeans have this privilege of doing so and they know that in due course the price will go up to Lexus and above Lexus levels."
However, he said the scheme had been taken advantage of by some developers and buyers, which prompted new measures targeted at this segment of the residential market.
Developers had taken to building super-sized ECs, Mr Khaw said, and in some instances had exploited planning rules.
A 4,349-square-foot (sq ft) penthouse at Citylife@ Tampines that included a 1,600 sq ft roof terrace sold for $2.05 million in December.
Previously, development charges need not be paid on the roof terrace, and there were no restrictions on the size of the unit.
Two new measures that came into effect on Saturday: limiting each new EC unit to 160 square metres (1,722 sq ft); and counting private enclosed spaces and roof terraces as gross floor area, sought to address this.
Mr Khaw also explained the move to restrict new dual-key ECs to multi-generational families.
He said some buyers had taken advantage of the concept, meant to offer privacy, to instead rent units out for immediate yield.
Overall, the abuses had led to families that can afford private properties entering the EC market.
"They were very much encouraged by these large units, huge units," Mr Khaw said.
"So now that we have fixed this rule, I will continue to be vigilant and see, and if indeed the abuse continues on, we may have to think of other ways of fixing this problem," he added.
MPs raised some suggestions of their own. Mountbatten MP Lim Biow Chuan asked if a price cap to prevent buyers from overstretching their finances would be considered, to which Mr Khaw responded: "The selling price of ECs were very much dependent on the size of the EC, so by capping the size of the EC, I think automatically the price will become more sober."
Nee Soon Group Representation Constituency MP Lee Bee Wah asked if it was possible to reintroduce new multi-generational flats. She said some of her residents had appealed for such housing units as they could not afford an EC.
Mr Khaw said he will "take a look" but noted that the popularity of the dual- key EC units was down to demand from buyers who were not multi-generational families.
Source: Business Times –15 January 2013
9 in 10 first-timers opt for new HDB flats
Almost all first-time buyers of public housing are now opting for a brand new Housing Board flat instead of a resale unit.
The HDB said yesterday that while 55 per cent of first-timers had gone for new flats in 2009, this figure had shot up to 92 per cent last year. The rest had bought a resale flat with a housing grant.
Property analysts attribute this to the ramped-up supply of new Build-to-Order (BTO) flats - including in mature estates popular with buyers - and a higher monthly income ceiling of $10,000 for applicants.
Some first-timers eyeing resale units have also been put off by rising prices and high cash-over-valuation (COV), which requires stumping up a cash quantum above the property's valuation.
Data from property agencies in the last quarter showed that overall HDB median resale prices had hit a historical high of $455,000 while overall median COV amounted to $34,000.
The HDB has said all BTO flats are kept affordable and sold below market prices of resale units in the vicinity. For example, a four-room flat launched last year in Punggol was priced up to $341,000, compared with its resale counterpart of up to $471,000.
The greater supply of BTO flats in more places has also boosted the chances of getting one and a shorter waiting time to move in.
To calm the red-hot housing market, the Government has rolled out more new flats, from 9,000 four years ago to a record 27,000 last year.
Some projects last year were in developed estates such as Ang Mo Kio, Queenstown and Toa Payoh, and at least 85 per cent of new units are reserved for first-timers. It has also committed to offer at least 23,000 units this year.
ERA Realty key executive officer Eugene Lim noted that the schedule of BTO flat launches is now more transparent and units are released in larger batches compared with the past, "which means first-timers can plan their purchases better".
He said the higher income ceiling - raised from $8,000 to $10,000 in 2011 - has also widened the pool of potential buyers.
Coupled with grants which can go up to $60,000, first-timers last year on average used less than a quarter of their monthly income to pay off their housing loans, said the HDB. This debt-service ratio, between 21 per cent and 24 per cent, has remained relatively stable in the past four years.
Source: The Straits Times –15 January 2013