Government's Latest Measures Might Hit Property Market...

[Dennis Ng]

19 Feb 2010 - government announced anti-speculative measures to cool down property market.

Elections is likely coming soon...the government seems to be trying to stop rise in property prices to appease Singaporeans who complain property prices are too high...

1. impose stamp duty on Sellers who sell property within 1 year after purchase. Stamp Duty is about 3% on Purchase and with another round of Stamp Duty imposed on Sale, total stamp duty incurred by "speculator" would be close to 6%, plus property agent commissioon of 1%, other miscellaneous fees eg. legal fees, it would mean that it will take close to 10% appreciation in price for speculator to "break-even".

This measure likely to dampen speculation in property, and might lead to a fall in property prices.

2. Max 80% Loan instead of 90% loan. In recent months, there are cash tight buyers who would need 90% loan in order to purchase properties. This measure will deter such people from buying properties, thereby dampening demand on properties.

These measures announced might mark a "turning point" in Property Market in Singapore, which has been going up and up non-stop since April 2009. If China property market bubble burst in year 2010, this would further exert downward pressures on Property prices in Asia, especially Hong Kong and Singapore.

Note: above are just the personal comments of Dennis Ng and not to be construed as investment advice of any sort.

Regards.

Dennis Ng, http://www.HousingLoanSG.com

[Dennis Ng]

20 Feb 2010

More gentle therapy to cool the property fever

Seller's stamp duty and tighter loan limits reintroduced in bid to discourage speculation

By KALPANA RASHIWALA

(Singapore)

THE government yesterday administered another measured dose to cool the resurgent property fever. While mild by themselves, the latest steps could foreshadow more severe therapy if the fever refuses to subside, said industry watchers. And this could plant seeds of uncertainty in an investor's mind.

It was announced that a seller's stamp duty (SSD) will be levied on those who buy a residential property from today and sell it within a year. This is aimed at curbing short-term speculation. Also, the Loan-to-Value (LTV) limit on housing loans will be lowered from 90 per cent to 80 per cent.

The SSD applies to all residential properties and residential lands, except for HDB flats. The date of purchase for the purpose of computing the one-year holding period shall be the option exercise date. This raises the possibility that some speculators who have been granted options to purchase residential properties recently but have yet to exercise them may allow their options to lapse - and lose typically 1.25 per cent of the purchase price - rather than face the rule change.

'True-blue speculators or flippers may fall out and return their options to developers,' said a market watcher. 'But specuvestors with the means of raising funding to make progress payments and who see prospects beyond a one-year horizon will likely continue with the purchase,' he added.

Currently, stamp duty is levied only for the purchase of property, not its sale. SSD will be applied at the same rate as the buyer's stamp duty - one per cent for the first $180,000 of the consideration, 2 per cent for the next $180,000 and 3 per cent for the balance.

The Inland Revenue Authority of Singapore released an e-tax guide, listing more details including exceptions on the payment of SSD - for instance housing developers when they sell residential properties within a year of purchase, or for an estate of a deceased person when interest in residential property is passed to the beneficiary.

The Real Estate Developers' Association of Singapore (Redas) said: 'The introduction of the SSD should not impact adversely activities in the property market. The reduced mortgage cap is also unlikely to have significant impact on genuine buyers and investors. Lending institutions have already been more prudent especially in the aftermath of the global financial crisis.'

The lower LTV ratio on housing loans applies to home buyers granted options to purchase from today and covers all housing loans given by financial institutions for private homes, executive condos, HUDC flats and HDB flats. However, loans granted by the Housing Board for HDB flats will still have a 90 per cent cap as such flats are already subject to other criteria to prevent speculation and encourage financial prudence, the government said.

Redas CEO Steven Choo says the lowering of the LTV ratio is not unexpected. 'What was unexpected was when the limit was previously raised from 80 per cent to 90 per cent in July 2005.'

Currently, less than 10 per cent of housing loans are granted an LTVs greater than 80 per cent, 'although there are signs that more housing loans are originating at higher LTV bands', a joint statement by the Ministry of National Development, Ministry of Finance and Monetary Authority of Singapore (MAS) said. Besides instilling financial prudence among property buyers, the move is aimed at sending a 'clear signal to financial institutions to maintain credit standards', the statement added.

Banks' total outstanding housing loans increased from $79.6 billion at end-2008 to $91.4 billion at end-2009, according to preliminary estimates released yesterday by MAS.

Market watchers note the latest two cooling measures bear some resemblance to tools used by the government in the historic May 1996 anti-speculation measures, which, compounded by the Asian crisis, led to a long property slump. However, the government's approach now is to administer smaller doses, rather than to prescribe a massive dose that may prove lethal to the market. Previous cooling measures were announced on Sept 14 last year.

'The government will continue to monitor the property market closely and will introduce additional measures, if required later, to promote a stable and sustainable property market,' the joint statement read.

Credo Real Estate managing director Karamjit Singh said: 'We suspect the market would have preferred the latest measures to have been part of last September's package so that all the measures came out at one go rather than in instalments, as this creates uncertainty about what further measures could be in store. That can be unsettling in the minds of investors and developers.'

Mr Singh also argues while the latest measures may seek to address speculation and overgearing, these are not the real reasons driving up prices. 'The real reason is a physical supply crunch in the lower end of the housing market - HDB as well as entry-level private.'

Last September, the government scrapped the interest absorption scheme and interest-only housing loans which had been blamed for fuelling speculation, and announced the resumption of confirmed list land sales in the first half 2010.

While those measures had some effect, developers' private home sales resurged last month. Prices of private homes also continued to increase after the sharp hike in H2 2009, the government noted. 'Mortgage lending has also increased steadily by around 12 per cent year on year through 2009,' it added.

[Dennis Ng]

19 Feb 2010 - government announced anti-speculative measures to cool down property market.

Elections is likely coming soon...the government seems to be trying to stop rise in property prices to appease Singaporeans who complain property prices are too high...

1. impose stamp duty on Sellers who sell property within 1 year after purchase. Stamp Duty is about 3% on Purchase and with another round of Stamp Duty imposed on Sale, total stamp duty incurred by "speculator" would be close to 6%, plus property agent commissioon of 1%, other miscellaneous fees eg. legal fees, it would mean that it will take close to 10% appreciation in price for speculator to "break-even".

This measure likely to dampen speculation in property, and might lead to a fall in property prices.

2. Max 80% Loan instead of 90% loan. In recent months, there are cash tight buyers who would need 90% loan in order to purchase properties. This measure will deter such people from buying properties, thereby dampening demand on properties.

These measures announced might mark a "turning point" in Property Market in Singapore, which has been going up and up non-stop since April 2009. If China property market bubble burst in year 2010, this would further exert downward pressures on Property prices in Asia, especially Hong Kong and Singapore.

Note: above are just the personal comments of Dennis Ng and not to be construed as investment advice of any sort.

Regards.

Dennis Ng, http://www.HousingLoanSG.com

People are still thronging the showflats.

Looks like the property market is really hot and crazy. The latest measures are probably not going to change market direction....

But it seems like S'pore government is really concerned about the property market, reading some of the comments by our Prime Minister, Mah Bow Tan etc, ....and year 2010 is likely to have General Elections....so the government might NOT hesitate to come up with more measures to cool down the property market if necessary.

If you're looking to buy a property to sell in 1 to 2 years' time, the Risks have definitely gone up in view of above.

[Dennis Ng]

19 Feb 2010 - government announced anti-speculative measures to cool down property market.

Elections is likely coming soon...the government seems to be trying to stop rise in property prices to appease Singaporeans who complain property prices are too high...

1. impose stamp duty on Sellers who sell property within 1 year after purchase. Stamp Duty is about 3% on Purchase and with another round of Stamp Duty imposed on Sale, total stamp duty incurred by "speculator" would be close to 6%, plus property agent commissioon of 1%, other miscellaneous fees eg. legal fees, it would mean that it will take close to 10% appreciation in price for speculator to "break-even".

This measure likely to dampen speculation in property, and might lead to a fall in property prices.

2. Max 80% Loan instead of 90% loan. In recent months, there are cash tight buyers who would need 90% loan in order to purchase properties. This measure will deter such people from buying properties, thereby dampening demand on properties.

These measures announced might mark a "turning point" in Property Market in Singapore, which has been going up and up non-stop since April 2009. If China property market bubble burst in year 2010, this would further exert downward pressures on Property prices in Asia, especially Hong Kong and Singapore.

Note: above are just the personal comments of Dennis Ng and not to be construed as investment advice of any sort.

Regards.

Dennis Ng, http://www.HousingLoanSG.com

People are still thronging the showflats.

Looks like the property market is really hot and crazy. The latest measures are probably not going to change market direction....

But it seems like S'pore government is really concerned about the property market, reading some of the comments by our Prime Minister, Mah Bow Tan etc, ....and year 2010 is likely to have General Elections....so the government might NOT hesitate to come up with more measures to cool down the property market if necessary.

If you're looking to buy a property to sell in 1 to 2 years' time, the Risks have definitely gone up in view of above.

wow, Mr Mah indeed warned that he might have 3rd step, 4th step up his sleeve...


New HDB measures to come
By Joyce Teo, Property Correspondent

NEWS of potential measures affecting the public housing market could come as soon as next month, hot on the heels of curbs announced last Friday aimed at cooling the private property market, Minister for National Development Mah Bow Tan said yesterday.

He was speaking to reporters yesterday evening at a Chinese New Year event at Tampines East Community Club.

When asked about possible measures for the Housing Board market, Mr Mah said: 'We are looking at something. I've asked HDB to look at some of the activity that is going on in the market.'

The home with the record-breaking price is on a high floor in a premium tower with an unblocked panoramic view, said property agent Daphne Tay of Sotheby's International Realty, who part-brokered the deal.

A foreign buyer from North Asia forked out the record sum. The sellers were an Indonesian couple who were the original owners, said Ms Tay, who has been in the industry for over 15 years. Both buyer and seller declined to be interviewed.

Property analysts said that the record deal was not unexpected, given that the luxury property segment is hotting up.

[Starfire]

Frankly I don't see how the price of new pvt properties can drop very much when the cost of materials (sand price), high land cost and the new levy on contraction company keep going up.

[Dennis Ng]

Frankly I don't see how the price of new pvt properties can drop very much when the cost of materials (sand price), high land cost and the new levy on contraction company keep going up.

well, if China property market crash, then prices can fall, even with rise of foreign workers' levy.

S'pore govt is very "brilliant" one, traffic jam, increase ERP, too many foreigners, increase Foreign Workers' Levy lor, so brilliant.

Such brilliant ideas which is why we have to pay ministers millions-dollar salary.