Showing posts with label news - property. Show all posts
Showing posts with label news - property. Show all posts
Saturday, 19 December 2015
Properties put up for auction at 6-year high
MORE distressed properties were put up for auction this year, but barely a fraction were sold.
The number of auction properties rose to a six-year high of 796 in 2015, going by Colliers data which includes relistings, but the number that got sold was dismal at just 33.
This represents a success rate of just 4.1 per cent, down from an average of 6.2 per cent over the last five years.
Thursday, 20 August 2015
Down-grading as part of retirement planning can be a wild card!!!
With more
residential projects set for completion in the coming quarters, property
developers will need more time to clear their inventory of unsold units
in previously launched developments, reported Singapore Business Review citing a Savills report.
It highlighted that the situation is even more serious for projects located away from the central region, since the GLS programme is generally focused on the OCR and RCR.
The time to clear the stock of
present and future unsold units will be more than 12 years. Therefore,
even if island-wide take-up rates double, it will take well over five
years to sell down the inventory, the report stated.
Friday, 12 December 2014
Mortgagee sales surged sevenfold as lenders strive to recoup losses
Singapore Business Review
Blame it on higher bankruptcies.
Mortgagees turned to property auction in a bid to recoup losses in a weak market. According to data released today by Colliers, the Singapore property auction market through 2014 saw a total of 529 properties being put up for sale. One-third of this figure, or 159 homes, were put up by mortgagees.
Not only is this 5 times the 32 properties put up by mortgagees in 2013, it is also the highest number in 5 years since 2010. Meanwhile, the proportion of properties put up by owners in 2014 remains high at close to 69.9%.
“The higher number of mortgagee listings this year was on the back of the stricter regulatory and financing environment, in which borrowers in default are finding it challenging to sell their properties on their own, as buyers generally remain cautious.” said Annie Chan, Director of Auction & Sales at Colliers International.
In addition to buyers having to fork out a higher cash outlay with measures such as Additional Buyers’ Stamp Duty and Total Debt Servicing Ratio in place, there are also concerns of a mounting supply of residential units and an impending increase in interest rates.
Ms Chan continues, “However, there is little cause for anxiety, as the 159 properties put up by mortgagees this year are still fewer than the mortgagee listings during the 2008 global financial crisis, the 1998 Asian financial crisis, as well as the last market downturn in 2004.”
Blame it on higher bankruptcies.
Mortgagees turned to property auction in a bid to recoup losses in a weak market. According to data released today by Colliers, the Singapore property auction market through 2014 saw a total of 529 properties being put up for sale. One-third of this figure, or 159 homes, were put up by mortgagees.
Not only is this 5 times the 32 properties put up by mortgagees in 2013, it is also the highest number in 5 years since 2010. Meanwhile, the proportion of properties put up by owners in 2014 remains high at close to 69.9%.
“The higher number of mortgagee listings this year was on the back of the stricter regulatory and financing environment, in which borrowers in default are finding it challenging to sell their properties on their own, as buyers generally remain cautious.” said Annie Chan, Director of Auction & Sales at Colliers International.
In addition to buyers having to fork out a higher cash outlay with measures such as Additional Buyers’ Stamp Duty and Total Debt Servicing Ratio in place, there are also concerns of a mounting supply of residential units and an impending increase in interest rates.
The high number of bankruptcies could have also contributed to the
increase in the number of properties put up for mortgagee sale.”
Ms Chan continues, “However, there is little cause for anxiety, as the 159 properties put up by mortgagees this year are still fewer than the mortgagee listings during the 2008 global financial crisis, the 1998 Asian financial crisis, as well as the last market downturn in 2004.”
Saturday, 22 November 2014
More homes sold through public auctions
SINGAPORE: Of all the private homes being sold through public auctions, about 70 per cent were put on sale by their owners, according to Colliers International which holds one such auction every month.
The remaining are put on auction by banks. Seventy-four per cent of all auctioned properties this year were condominiums while the rest were landed properties.
Colliers said more homes were being auctioned off due to rising interest rates and defaults in mortgage payments.
"This is because of the tighter financing and regulatory environment, which makes it difficult for borrowers on default to dispose their property on their own in the open market.
Consequently if they are in default, the bank will repossess the property for auction sale," said Grace Ng, Deputy Managing Director of Colliers International.
According to numbers from the Credit Bureau (Singapore), 25 homeowners were unable to pay their mortgages in the first nine months of this year. This was compared to 10 in the same period time last year.
The number of those who delayed their payments for more than 30 days also rose by about 12 per cent, to almost 9,000.
- CNA/by
Friday, 29 August 2014
Lights off on Singapore's billionaire row at Sentosa Cove as luxury house prices plunge
There's an eerie silence at night in Sentosa Cove, the man-made island resort billed as Singapore's answer to Monte Carlo and the only place in the country where foreigners can buy landed property - PHOTO: REUTERS
[SINGAPORE] There's an eerie silence at night in Sentosa Cove,
the man-made island resort billed as Singapore's answer to Monte Carlo
and the only place in the country where foreigners can buy landed
property.
Dozens of houses - complete with their own private yacht berths and multiple swimming pools - sit empty while few lights are on in the apartment blocks overlooking the marina, a few kilometres away from Sentosa's giant casino.
Prices in the gated community, where Australian mining tycoons Gina Rinehart and Nathan Tinkler bought properties, fell around 20 per cent in the past year as lending restrictions and taxes on foreign buyers burst a bubble in the South-east Asian financial hub's luxury real estate market.
Investors could see the value of their assets fall even further with developers and investors still struggling to sell even after the recent price falls.
Dozens of houses - complete with their own private yacht berths and multiple swimming pools - sit empty while few lights are on in the apartment blocks overlooking the marina, a few kilometres away from Sentosa's giant casino.
Prices in the gated community, where Australian mining tycoons Gina Rinehart and Nathan Tinkler bought properties, fell around 20 per cent in the past year as lending restrictions and taxes on foreign buyers burst a bubble in the South-east Asian financial hub's luxury real estate market.
Investors could see the value of their assets fall even further with developers and investors still struggling to sell even after the recent price falls.
Tuesday, 8 July 2014
Singaporeans went on massive property buying spree abroad in 2013: MAS
But many buyers are unaware of risks.
More Singaporeans are foraying into overseas property markets, but many of these buyers are unaware of the risks associated with their purchases. In a statement released yesterday, the Monetary Authority of Singapore issued warnings against overseas property purchases.
According to the MAS, the value of overseas purchases made through real estate agents in Singapore has grown to S$2.0 billion in 2013 from S$1.4 billion in 2012.
“MAS is concerned that some individuals may be overextending themselves through such investments, or may not recognise the risks involved. With global interest rates at very low levels, it is quite understandable that Singaporeans should want better returns than what bank deposits offer. But most local savers already own a property in Singapore, and have to be concerned about how much concentration they can afford to have in properties, especially when taking risks in overseas property markets,” the MAS cautioned.
Here’s more from the statement:
More Singaporeans are foraying into overseas property markets, but many of these buyers are unaware of the risks associated with their purchases. In a statement released yesterday, the Monetary Authority of Singapore issued warnings against overseas property purchases.
According to the MAS, the value of overseas purchases made through real estate agents in Singapore has grown to S$2.0 billion in 2013 from S$1.4 billion in 2012.
“MAS is concerned that some individuals may be overextending themselves through such investments, or may not recognise the risks involved. With global interest rates at very low levels, it is quite understandable that Singaporeans should want better returns than what bank deposits offer. But most local savers already own a property in Singapore, and have to be concerned about how much concentration they can afford to have in properties, especially when taking risks in overseas property markets,” the MAS cautioned.
Here’s more from the statement:
MAS has therefore issued warnings about overseas property purchases:
First, the risk of price fluctuations may be more difficult to assess or manage in overseas markets, which investors are likely to be less familiar with.
Second, there are foreign exchange and interest rate risks.
Third, the legal and regulatory framework governing property purchases and financing agreements in other countries may not provide the level of protection that investors are used to in Singapore.
The Council for Estate Agencies (CEA) has also been highlighting these risks. CEA issued an online guide in March 2014 on what investors in overseas properties should look out for. (These include finding out about rules or restrictions on foreign property purchases and ownership, the taxes payable, and the dispute resolution avenues available in the foreign market.)
To encourage financial prudence on the part of both borrowers and financial institutions (FIs), MAS’ Total Debt Servicing Ratio (TDSR) framework covers all loans taken from FIs in Singapore to finance property purchases, whether in Singapore or overseas.
When a borrower seeks a property loan, the FI is required to include in the TDSR all existing debt service obligations, including those relating to any foreign property purchases.
Saturday, 28 June 2014
Tuesday, 24 June 2014
Mortgagee sales touch quarterly high in Q2
[SINGAPORE] The number of properties up for auction by
mortgagees (or lenders) as well as their share of the number of
properties going under the hammer has hit a quarterly high in Q2.
Auctioneers say this reflects the difficulty that financially stretched borrowers face in securing buyers for their properties since the implementation of the total debt servicing ratio (TDSR) framework a year ago. Because of this, financial institutions have had to repossess more properties and put them up for auction.
The trend is expected to gain momentum as the rising supply of non-landed private homes will make it harder for mortgagors (or borrowers) to find buyers and thus dispose of their properties themselves - resulting in more properties ending up as mortgagee sales.
Furthermore, the reduced inflow of expats into Singapore is shrinking the pool of potential tenants, hitting rental incomes and hurting owners' ability to service their loans.
Figures from Colliers International show that this quarter, 42 mortgagee sale properties have been put up for auction - almost double the 22 in Q1 this year. In Q2 2013, the figure was just six properties.
The latest figure is the highest since Q3 2009, when 63 mortgagee sale properties landed on the auction block. The first-half tally of 64 was double the 32 for the whole of last year - and also a big jump from 24 in 2012 and 39 in 2011.
In H1 this year, the number of properties put up for auction by owners was 192, down from 226 in the same year-ago period.
As a result, while the owner sales' share of properties put up for auction has dropped from 93.4 per cent in full-year 2013 to 75 per cent in H1 2014, the mortgagee sales' share has risen from 6.6 per cent to 25 per cent. On a quarterly basis, the mortagee sale share has doubled from 16.7 per cent in Q1 this year to 33.9 per cent in Q2 - the highest level since the 35.5 per cent share in Q1 2008 during the global crisis.
Colliers' analysis took into account information as at June 19 from auction lists for the major houses for the month of June. While DTZ conducted its auction last Thursday, Colliers, Knight Frank and JLL will conduct theirs this week.
JLL's analysis shows that for January-May this year, 13 properties (both owner and mortgagee sales) were sold for a total of nearly $26.2 million at auction. Of this, the mortgagee sales accounted for nine properties which fetched $12.8 million.
For the whole of last year, 21 properties amounting to $99.6 million were sold at auction, of which 10 properties totalling $12.6 million involved mortgagee sales.
Typically, financial institutions provide some leeway to borrowers who are experiencing difficulty servicing their mortgages by giving them the first crack at finding a buyer as owner sales tend to fetch a higher price compared with a mortgagee sale which is often seen as distressed. However, the implementation of TDSR has made it difficult for potential buyers to obtain credit.
"More buyers have also chosen to stay on the sidelines with a view that prices will start to ease," noted JLL's head of auction and sales, Mok Sze Sze.
As a result, said Colliers' deputy managing director Grace Ng, banks have little choice but to respossess such properties - resulting in the increase in mortgagee sale properties surfacing at auctions.
She added that due to exuberance at private housing launches in the past few years, many buyers bought uncompleted properties "off plan" with the non-savvy ending up with units that have undesirable orientation or layout. Such owners now face difficulty finding buyers and tenants.
While the majority of mortgagee properties ending up on the auction block are residential, there are also signs of an increase in strata industrial units, notes Ms Mok.
Going by Colliers' analysis, nearly 63 per cent of the mortgagee sale properties that have been put up for auction in the first six months are residential properties, followed by a 17.2 per cent share each for industrial and retail properties.
Colliers' auction tomorrow will feature a mortgagee sale property at Turquoise condo in Sentosa Cove. The 2,777-sq-ft four-plus-one bedroom unit previously surfaced at an auction on April 30. It was withdrawn without bids at the opening price of $5 million.
Another mortgagee property to be featured at the same auction is a third-floor unit at the freehold Stevens Court. The 2,863-sq-ft unit has five bedrooms. JLL's auction on Thursday will feature mortgagee sale units at VisionCrest Residence, Residences@Killiney, The Floravale in Westwood Avenue and a shop unit at 116 Yio Chu Kang Road. At Knight Frank's auction today, a mortagee sale of a two-bedder at Dover Parkview is expected to go under the hammer.
Sharon Lee, head of auctions at the firm, advises those having problems servicing loans to be realistic. Given the buyer's market today, one has to be aware that potential buyers would be anticipating price corrections - instead of sticking to the last transacted price in the project some time ago, she said.
Auctioneers say this reflects the difficulty that financially stretched borrowers face in securing buyers for their properties since the implementation of the total debt servicing ratio (TDSR) framework a year ago. Because of this, financial institutions have had to repossess more properties and put them up for auction.
The trend is expected to gain momentum as the rising supply of non-landed private homes will make it harder for mortgagors (or borrowers) to find buyers and thus dispose of their properties themselves - resulting in more properties ending up as mortgagee sales.
Furthermore, the reduced inflow of expats into Singapore is shrinking the pool of potential tenants, hitting rental incomes and hurting owners' ability to service their loans.
Figures from Colliers International show that this quarter, 42 mortgagee sale properties have been put up for auction - almost double the 22 in Q1 this year. In Q2 2013, the figure was just six properties.
The latest figure is the highest since Q3 2009, when 63 mortgagee sale properties landed on the auction block. The first-half tally of 64 was double the 32 for the whole of last year - and also a big jump from 24 in 2012 and 39 in 2011.
In H1 this year, the number of properties put up for auction by owners was 192, down from 226 in the same year-ago period.
As a result, while the owner sales' share of properties put up for auction has dropped from 93.4 per cent in full-year 2013 to 75 per cent in H1 2014, the mortgagee sales' share has risen from 6.6 per cent to 25 per cent. On a quarterly basis, the mortagee sale share has doubled from 16.7 per cent in Q1 this year to 33.9 per cent in Q2 - the highest level since the 35.5 per cent share in Q1 2008 during the global crisis.
Colliers' analysis took into account information as at June 19 from auction lists for the major houses for the month of June. While DTZ conducted its auction last Thursday, Colliers, Knight Frank and JLL will conduct theirs this week.
JLL's analysis shows that for January-May this year, 13 properties (both owner and mortgagee sales) were sold for a total of nearly $26.2 million at auction. Of this, the mortgagee sales accounted for nine properties which fetched $12.8 million.
For the whole of last year, 21 properties amounting to $99.6 million were sold at auction, of which 10 properties totalling $12.6 million involved mortgagee sales.
Typically, financial institutions provide some leeway to borrowers who are experiencing difficulty servicing their mortgages by giving them the first crack at finding a buyer as owner sales tend to fetch a higher price compared with a mortgagee sale which is often seen as distressed. However, the implementation of TDSR has made it difficult for potential buyers to obtain credit.
"More buyers have also chosen to stay on the sidelines with a view that prices will start to ease," noted JLL's head of auction and sales, Mok Sze Sze.
As a result, said Colliers' deputy managing director Grace Ng, banks have little choice but to respossess such properties - resulting in the increase in mortgagee sale properties surfacing at auctions.
She added that due to exuberance at private housing launches in the past few years, many buyers bought uncompleted properties "off plan" with the non-savvy ending up with units that have undesirable orientation or layout. Such owners now face difficulty finding buyers and tenants.
While the majority of mortgagee properties ending up on the auction block are residential, there are also signs of an increase in strata industrial units, notes Ms Mok.
Going by Colliers' analysis, nearly 63 per cent of the mortgagee sale properties that have been put up for auction in the first six months are residential properties, followed by a 17.2 per cent share each for industrial and retail properties.
Colliers' auction tomorrow will feature a mortgagee sale property at Turquoise condo in Sentosa Cove. The 2,777-sq-ft four-plus-one bedroom unit previously surfaced at an auction on April 30. It was withdrawn without bids at the opening price of $5 million.
Another mortgagee property to be featured at the same auction is a third-floor unit at the freehold Stevens Court. The 2,863-sq-ft unit has five bedrooms. JLL's auction on Thursday will feature mortgagee sale units at VisionCrest Residence, Residences@Killiney, The Floravale in Westwood Avenue and a shop unit at 116 Yio Chu Kang Road. At Knight Frank's auction today, a mortagee sale of a two-bedder at Dover Parkview is expected to go under the hammer.
Sharon Lee, head of auctions at the firm, advises those having problems servicing loans to be realistic. Given the buyer's market today, one has to be aware that potential buyers would be anticipating price corrections - instead of sticking to the last transacted price in the project some time ago, she said.
Saturday, 26 April 2014
Number of HDB resale flats sold falls to all-time low in Q1
SINGAPORE: The number of Housing and Development Board
(HDB) resale flats sold fell to an all-time low in the first quarter of
this year, with 3,781 units transacted.
This is the lowest figure recorded since HDB started releasing quarterly resale transaction volume data in 1997.
Both public and private units have also registered price declines in the first quarter, with the private market seeing its largest price drop since 2009.
The HDB Resale Price Index registered a 1.6 per cent decline in the first quarter, marking the third consecutive quarter that a price decrease has been recorded.
Transaction volumes also reached an all-time low, representing a 5 per cent drop compared to the previous quarter where 4,001 resale flats were transacted.
On the other hand, subletting transactions rose by 17 per cent in the first quarter, compared to the fourth quarter of last year.
There were 7,268 subletting cases in the fourth quarter of 2013, compared to 8,485 cases in the first quarter of 2014.
The total number of HDB flats approved for subletting also rose by 2.1 per cent, from 45,674 units in the fourth quarter of 2013, to 46,637 units in the first quarter of 2014.
Mr Chris Koh, director of Chris International, said: "Ever since the ruling was changed for owners to rent out their flats instead of selling them, many have chosen to rent them out. They are staying in their private condominiums and instead have rented out their flats. Unlike in the old days when they had to sell away their flat or stay in their flat and rent out their condo.
"So with that change of rule, many are tempted now to hold on to their flats because the rental that they get from their flats is not too bad. Some of them are renting out their flats as high as S$2,800 to S$3,000 a month. That's a lot of money for an HDB owner. They have realised today that now a flat becomes a form of investment, that holding (on to) their flat helps them enjoy rental, so they have got this rental yield."
Some property analysts expect prices to continue to decline for at least another quarter before stabilising, as more buyers are expected to be drawn back to the HDB resale market.
Just last month, HDB had revised its resale procedure to shift the attention of buyers and sellers away from the Cash-Over-Valuation component when negotiating a deal for an HDB resale flat.
In line with that, HDB has decided that from this quarter onwards, it will also not publish COV data by town or flat type.
As for the private market, with cooling measures taking effect, prices of private residential properties fell by 1.3 per cent in the first quarter of this year -- the largest drop since the second quarter of 2009, when prices fell by 4.7 per cent.
According to data from the Urban Redevelopment Authority, this is also the second consecutive quarter of decline following a 0.9 per cent drop in the previous quarter.
Properties in the city centre (Core Central Region) saw a price drop of 1.1 per cent, following a 2.1 per cent decrease in the previous quarter.
Prices in suburban areas (Outside Central Region) fell by 0.1 per cent after a 1.0 per cent decrease in the last three months of 2013.
But it was prices in the city's fringes (Rest of Central Region) which saw the biggest drop this time round, with a decline of 3.3 per cent, reversing a 0.4 per cent increase in the previous quarter.
Rentals also slowed, falling 0.7 per cent in the first quarter. This is greater than the 0.5 per cent decline in the fourth quarter of 2013.
Developers also launched and sold fewer uncompleted private residential units, excluding executive condominiums, compared to the last three months of 2013.
There were fewer than 2,000 units launched in Q1, compared to more than 2,600 in Q4.
A total of 1,744 private residential units, excluding ECs, were sold in Q1 of this year, compared to 2,568 units sold in the fourth quarter of 2013.
Mr Alan Cheong, senior director of Research & Consultancy at Savills Singapore, said: "Low transactions doesn't necessarily mean the market is in dire straits. You have to pair that up with the launches and it's about 87 per cent. No doubt it's lower than the 97 per cent seen in the first quarter of 2013, but still it's a healthy number.
"For the second quarter we will see a flurry of launches, in the RCR region in particular, so we will see transaction volumes going up because in Singapore there's this phenomenon that demand chases supply, whether it's in the office sector, retail sector or residential sector."
A total of 14,985 units, including executive condominiums, are expected to be completed in the last three quarters of this year, bringing the total to 19,505 units this year.
Another 24,592 units are also set to be completed next year. In comparison, about 14,400 units were completed in 2013.
This is the lowest figure recorded since HDB started releasing quarterly resale transaction volume data in 1997.
Both public and private units have also registered price declines in the first quarter, with the private market seeing its largest price drop since 2009.
The HDB Resale Price Index registered a 1.6 per cent decline in the first quarter, marking the third consecutive quarter that a price decrease has been recorded.
Transaction volumes also reached an all-time low, representing a 5 per cent drop compared to the previous quarter where 4,001 resale flats were transacted.
On the other hand, subletting transactions rose by 17 per cent in the first quarter, compared to the fourth quarter of last year.
There were 7,268 subletting cases in the fourth quarter of 2013, compared to 8,485 cases in the first quarter of 2014.
The total number of HDB flats approved for subletting also rose by 2.1 per cent, from 45,674 units in the fourth quarter of 2013, to 46,637 units in the first quarter of 2014.
Mr Chris Koh, director of Chris International, said: "Ever since the ruling was changed for owners to rent out their flats instead of selling them, many have chosen to rent them out. They are staying in their private condominiums and instead have rented out their flats. Unlike in the old days when they had to sell away their flat or stay in their flat and rent out their condo.
"So with that change of rule, many are tempted now to hold on to their flats because the rental that they get from their flats is not too bad. Some of them are renting out their flats as high as S$2,800 to S$3,000 a month. That's a lot of money for an HDB owner. They have realised today that now a flat becomes a form of investment, that holding (on to) their flat helps them enjoy rental, so they have got this rental yield."
Some property analysts expect prices to continue to decline for at least another quarter before stabilising, as more buyers are expected to be drawn back to the HDB resale market.
Just last month, HDB had revised its resale procedure to shift the attention of buyers and sellers away from the Cash-Over-Valuation component when negotiating a deal for an HDB resale flat.
In line with that, HDB has decided that from this quarter onwards, it will also not publish COV data by town or flat type.
As for the private market, with cooling measures taking effect, prices of private residential properties fell by 1.3 per cent in the first quarter of this year -- the largest drop since the second quarter of 2009, when prices fell by 4.7 per cent.
According to data from the Urban Redevelopment Authority, this is also the second consecutive quarter of decline following a 0.9 per cent drop in the previous quarter.
Properties in the city centre (Core Central Region) saw a price drop of 1.1 per cent, following a 2.1 per cent decrease in the previous quarter.
Prices in suburban areas (Outside Central Region) fell by 0.1 per cent after a 1.0 per cent decrease in the last three months of 2013.
But it was prices in the city's fringes (Rest of Central Region) which saw the biggest drop this time round, with a decline of 3.3 per cent, reversing a 0.4 per cent increase in the previous quarter.
Rentals also slowed, falling 0.7 per cent in the first quarter. This is greater than the 0.5 per cent decline in the fourth quarter of 2013.
Developers also launched and sold fewer uncompleted private residential units, excluding executive condominiums, compared to the last three months of 2013.
There were fewer than 2,000 units launched in Q1, compared to more than 2,600 in Q4.
A total of 1,744 private residential units, excluding ECs, were sold in Q1 of this year, compared to 2,568 units sold in the fourth quarter of 2013.
Mr Alan Cheong, senior director of Research & Consultancy at Savills Singapore, said: "Low transactions doesn't necessarily mean the market is in dire straits. You have to pair that up with the launches and it's about 87 per cent. No doubt it's lower than the 97 per cent seen in the first quarter of 2013, but still it's a healthy number.
"For the second quarter we will see a flurry of launches, in the RCR region in particular, so we will see transaction volumes going up because in Singapore there's this phenomenon that demand chases supply, whether it's in the office sector, retail sector or residential sector."
A total of 14,985 units, including executive condominiums, are expected to be completed in the last three quarters of this year, bringing the total to 19,505 units this year.
Another 24,592 units are also set to be completed next year. In comparison, about 14,400 units were completed in 2013.
- CNA/nd/de
Thursday, 6 February 2014
COVs fall to S$3,000 in Jan 2014, figure last seen during 2009 financial crisis
SINGAPORE: Cash-over-valuation (COV) premiums for
Housing and Development Board (HDB) flats fell to S$3,000 last month --
matching the previous low in June 2009 during the global financial
crisis.
A flash report by the Singapore Real Estate Exchange (SRX) showed on Thursday that the median COV in January fell by S$2,000 from December 2013.
Eight out of 28 HDB towns saw zero or negative median COV. Sengkang and Punggol led the drop with negative overall COVs, while Bishan, Geylang, Jurong West, Sembawang, Woodlands and Yishun recorded zero overall median COV.
The report also showed that almost three in 10 HDB deals closed below valuation.
Transaction records showed that 28.5 per cent of HDB resale deals were closed below valuation last month, an increase from the 20.4 per cent that closed below valuation in December 2013.
Overall, HDB resale prices gained a marginal 0.3 per cent in January, thwarting the general decline in monthly prices since April 2013.
According to flash estimates, 893 HDB flats were sold in January's resale market, a slight drop from 910 units in December 2013.
On a year-on-year basis, January's resale volume posted a 34.6 per cent drop from 1,365 flats sold over the same month of last year.
Rental volume dropped 18.7 per cent year-on-year.
An estimated 1,319 HDB flats were rented last month, 6.8 per cent less than December 2013's 1,415 rental transactions. On a year-on-year basis,
January's rental volume posted a 18.7 per cent drop from 1,623 flats leased over the same month of last year.
HDB median rents stayed constant at S$2,300 in January, after two consecutive monthly drops in November and December.
A flash report by the Singapore Real Estate Exchange (SRX) showed on Thursday that the median COV in January fell by S$2,000 from December 2013.
Eight out of 28 HDB towns saw zero or negative median COV. Sengkang and Punggol led the drop with negative overall COVs, while Bishan, Geylang, Jurong West, Sembawang, Woodlands and Yishun recorded zero overall median COV.
The report also showed that almost three in 10 HDB deals closed below valuation.
Transaction records showed that 28.5 per cent of HDB resale deals were closed below valuation last month, an increase from the 20.4 per cent that closed below valuation in December 2013.
Overall, HDB resale prices gained a marginal 0.3 per cent in January, thwarting the general decline in monthly prices since April 2013.
According to flash estimates, 893 HDB flats were sold in January's resale market, a slight drop from 910 units in December 2013.
On a year-on-year basis, January's resale volume posted a 34.6 per cent drop from 1,365 flats sold over the same month of last year.
Rental volume dropped 18.7 per cent year-on-year.
An estimated 1,319 HDB flats were rented last month, 6.8 per cent less than December 2013's 1,415 rental transactions. On a year-on-year basis,
January's rental volume posted a 18.7 per cent drop from 1,623 flats leased over the same month of last year.
HDB median rents stayed constant at S$2,300 in January, after two consecutive monthly drops in November and December.
- CNA/ac
Friday, 28 June 2013
The Monetary Authority of Singapore (MAS) has introduced additional new measures to cool the property market.
SINGAPORE: The Monetary Authority of Singapore (MAS) has introduced additional new measures to cool the property market.
The central bank said in a statement on Friday that the new rules, which will take effect on Saturday, will ensure that a property buyer's monthly payments do not exceed 60 per cent of his income.
"The TDSR (total debt servicing ratio) will apply to loans for the purchase of all types of property, loans secured on property, and the re-financing of all such loans," it said.
MAS said the rules will help strengthen credit underwriting practices of financial institutions and encourage financial prudence among borrowers.
MAS will also refine rules related to the application of the existing Loan-to Value (LTV) limits on housing loans.
The bank said these refinements seek to ensure the effectiveness of the loan limits that were put in place to cool investment demand in the housing market.
In particular, they aim to prevent home buyers from circumventing the tighter loan limits on second and subsequent housing loans.
When working out loans to be granted to home buyers, banks will have to consider the monthly repayment for the property loan that the borrower is applying for, plus all his other outstanding debt obligations.
Banks will also have to apply a specified medium-term interest rate or the prevailing market interest rate, whichever is higher, to the property loan that the borrower is applying for.
The financial institutions will also have to discount at least 30 per cent of the borrower's variable income, such as bonuses, and rental income.
MAS said its inspection of banks showed uneven practices with respect to the application of debt servicing ratios and highlighted areas for improvement in credit underwriting practices
The central bank said in a statement on Friday that the new rules, which will take effect on Saturday, will ensure that a property buyer's monthly payments do not exceed 60 per cent of his income.
"The TDSR (total debt servicing ratio) will apply to loans for the purchase of all types of property, loans secured on property, and the re-financing of all such loans," it said.
MAS said the rules will help strengthen credit underwriting practices of financial institutions and encourage financial prudence among borrowers.
MAS will also refine rules related to the application of the existing Loan-to Value (LTV) limits on housing loans.
The bank said these refinements seek to ensure the effectiveness of the loan limits that were put in place to cool investment demand in the housing market.
In particular, they aim to prevent home buyers from circumventing the tighter loan limits on second and subsequent housing loans.
When working out loans to be granted to home buyers, banks will have to consider the monthly repayment for the property loan that the borrower is applying for, plus all his other outstanding debt obligations.
Banks will also have to apply a specified medium-term interest rate or the prevailing market interest rate, whichever is higher, to the property loan that the borrower is applying for.
The financial institutions will also have to discount at least 30 per cent of the borrower's variable income, such as bonuses, and rental income.
MAS said its inspection of banks showed uneven practices with respect to the application of debt servicing ratios and highlighted areas for improvement in credit underwriting practices
- CNA/al
Saturday, 2 March 2013
Property prices not yet at an acceptable level: Tharman
"We're still in a wrong part of the cycle," he told Bloomberg Television in an interview on Thursday.
Mr Tharman said the process of property prices becoming appropriate would "happen through a combination of income improvement, as well as prices certainly not going up further".
"Some correction in prices will not be out of order," he added.
"We're still in a wrong part of the cycle," he told Bloomberg Television in an interview on Thursday.
Mr Tharman said the process of property prices becoming appropriate would "happen through a combination of income improvement, as well as prices certainly not going up further".
"Some correction in prices will not be out of order," he added
PROPERTY
prices in Singapore still have "some ways to go" before they reach an
acceptable level, according to Finance Minister Tharman Shanmugaratnam.
"We're still in a wrong part of the cycle," he told Bloomberg Television in an interview on Thursday.
Mr Tharman said the process of property prices becoming appropriate would "happen through a combination of income improvement, as well as prices certainly not going up further".
"Some correction in prices will not be out of order," he added.
- See more at: http://www.straitstimes.com/breaking-news/money/story/property-prices-not-yet-acceptable-level-tharman-20130301#sthash.uqWZLevg.dpuf
"We're still in a wrong part of the cycle," he told Bloomberg Television in an interview on Thursday.
Mr Tharman said the process of property prices becoming appropriate would "happen through a combination of income improvement, as well as prices certainly not going up further".
"Some correction in prices will not be out of order," he added.
- See more at: http://www.straitstimes.com/breaking-news/money/story/property-prices-not-yet-acceptable-level-tharman-20130301#sthash.uqWZLevg.dpuf
SINGAPORE — There are still “some ways to go” before property prices are at an acceptable level, Deputy Prime Minister Tharman Shanmugaratnam said in an interview with Bloomberg Television on Thursday.
“We’re still in a wrong part of the cycle,” he said, adding that bringing prices to an acceptable level will happen “through a combination of income improvement, as well as prices certainly not going up further, but some correction in prices will not be out of order”.
Mr Tharman’s comments come after the Government introduced a further round of property cooling measures in January to take more heat off the market, which has seen prices keep climbing upward.
The impact of the measures has yet to be seen, with market watchers cautioning that it might not be until this month or April before it is clear how prices and demand have been affected.Meanwhile, property analysts were divided on whether the Government might be inclined to introduce more cooling measures if prices continue to rise.
Noting that Mr Tharman said in his Budget speech that no effort will be spared to resolve the housing issue, Mr Steve Melhuish, Co-Founder and Group Chief Executive Officer of PropertyGuru, said: “The Government certainly won’t hesitate to intervene if the property market faces threats of a bubble similar to that of Hong Kong and China and there is a chance we could see more curbs if the market does not see an appreciable price correction.”
However, Mr Alan Cheong, head of research at Savills Singapore, said it is unlikely that the Government will add any further cooling measures in the foreseeable future, although Mr Tharman’s comments in the interview may act as a partial brake on the market as they indicate the Government is keeping a close eye on the situation.
Mr Colin Tan, Head of Research and Consultancy at Chesterton Suntec International, added that it appears that Mr Tharman’s chief concern is to make homes more affordable to Singaporeans.
“He is quite happy for this to happen via a rise in general incomes levels or a correction in property prices,” he said.
“I take this to mean that the cooling measures — both in the past and probably in the future — are not crafted simply to force a price correction but more to tame market sentiment.”
In the interview, Mr Tharman also said that the Government has to limit property price gains because of the social impact when people cannot afford to buy homes.
CW8888's insert:
Read? Another Debate On Property Or Stocks Investing - Part 3
Those multi-baggers properties were the time when policemen in short-pant. Now, mata wears long-pant. It is long over!
Read more? Uncle8888's view: Stocks vs Property Investing
okay, continue with Today ...
He added that “we can prevent a real bubble from being formed which then eventually crashes, and that’s our objective”.
Friday, 11 January 2013
More property cooling measures announced
SINGAPORE: The
Singapore government on Friday announced a comprehensive package of
measures to cool the residential property market.
The measures, which will take effect on January 12, include higher buyer's stamp duty, tighter loan-to-value limits, higher minimum cash downpayment for second and subsequent housing loans, as well as an introduction of seller's stamp duty for industrial properties.
The measures are calibrated to be tighter on property ownership for investment, as well as on foreign buyers, the Ministry of National Development said.
To discourage over-borrowing, financing conditions for housing have also been tightened.
In addition, structural measures have been implemented to strengthen the policy intent of public housing and executive condominiums.
The ministry said the additional buyer's stamp duty (ABSD) will be increased between 5 and 7 percentage points across the board.
The ABSD will now be extended to permanent residents buying their first residential property and on Singaporeans buying their second residential property.
Potential buyers who already have at least one existing loan will also have to pay more cash upfront for their purchases and face tighter loan-to-value limits.
To further moderate the demand for HDB flats, the government has introduced several new measures.
It will tighten eligibility for loans to buy HDB flats.
Permanent residents who own a HDB flat will also not be allowed to sublet their entire flat.
Permanent residents who own a HDB flat must sell their flat within six months of purchasing a private residential property in Singapore.
There are also new measures to ensure that executive condominiums (EC) remain affordable for middle-income Singaporean families.
The maximum strata floor area of new EC units will be capped at 160 square metres.
Sales of new dual-key EC units will be restricted to multi-generational families only.
Developers of future EC sale sites from the Government Land Sales programme will only be allowed to launch units for sale 15 months from the date of award of the sites or after the physical completion of foundation works, whichever is earlier.
Private enclosed spaces and private roof terraces will be treated as gross floor area (GFA). The GFA of such spaces in non-landed residential developments, including ECs, will be counted as part of the "bonus" GFA of a residential development and subject to payment of charges.
For the first time, the government has also introduced a seller's stamp duty (SSD) on industrial property to discourage short-term speculative activity which could distort prices and raise costs for businesses.
It will apply to industrial properties and land bought and sold within three years of purchase.
A rate of 15 percent will be imposed on industrial properties sold within the first year of purchase. This will go down to 10 percent for those sold in the second year of purchase, and to 5 percent for those sold in the third year of purchase.
Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam said in a statement: "The reality we face is that interest rates are extraordinarily low, globally and in Singapore, and continue to add fuel to our property market.
"We have to take this further round of measures now, to check recent market trends and avoid a more serious correction in prices further down the road."
- CNA/al
The measures, which will take effect on January 12, include higher buyer's stamp duty, tighter loan-to-value limits, higher minimum cash downpayment for second and subsequent housing loans, as well as an introduction of seller's stamp duty for industrial properties.
The measures are calibrated to be tighter on property ownership for investment, as well as on foreign buyers, the Ministry of National Development said.
To discourage over-borrowing, financing conditions for housing have also been tightened.
In addition, structural measures have been implemented to strengthen the policy intent of public housing and executive condominiums.
The ministry said the additional buyer's stamp duty (ABSD) will be increased between 5 and 7 percentage points across the board.
The ABSD will now be extended to permanent residents buying their first residential property and on Singaporeans buying their second residential property.
Potential buyers who already have at least one existing loan will also have to pay more cash upfront for their purchases and face tighter loan-to-value limits.
To further moderate the demand for HDB flats, the government has introduced several new measures.
It will tighten eligibility for loans to buy HDB flats.
Permanent residents who own a HDB flat will also not be allowed to sublet their entire flat.
Permanent residents who own a HDB flat must sell their flat within six months of purchasing a private residential property in Singapore.
There are also new measures to ensure that executive condominiums (EC) remain affordable for middle-income Singaporean families.
The maximum strata floor area of new EC units will be capped at 160 square metres.
Sales of new dual-key EC units will be restricted to multi-generational families only.
Developers of future EC sale sites from the Government Land Sales programme will only be allowed to launch units for sale 15 months from the date of award of the sites or after the physical completion of foundation works, whichever is earlier.
Private enclosed spaces and private roof terraces will be treated as gross floor area (GFA). The GFA of such spaces in non-landed residential developments, including ECs, will be counted as part of the "bonus" GFA of a residential development and subject to payment of charges.
For the first time, the government has also introduced a seller's stamp duty (SSD) on industrial property to discourage short-term speculative activity which could distort prices and raise costs for businesses.
It will apply to industrial properties and land bought and sold within three years of purchase.
A rate of 15 percent will be imposed on industrial properties sold within the first year of purchase. This will go down to 10 percent for those sold in the second year of purchase, and to 5 percent for those sold in the third year of purchase.
Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam said in a statement: "The reality we face is that interest rates are extraordinarily low, globally and in Singapore, and continue to add fuel to our property market.
"We have to take this further round of measures now, to check recent market trends and avoid a more serious correction in prices further down the road."
- CNA/al
Saturday, 10 November 2012
Rental yield falls for non-landed private property
SINGAPORE: The
rental yield for non-landed private property went down by 0.2 percentage
points in the last 10 months, compared to the same period last year.
According to statistics from the Singapore Real Estate Exchange (SRX), this brings the rental yield to 4.03 per cent.
This is even though average rental rose by two per cent in the first 10 months, to reach about S$3.80 per square foot.
In October alone, the average monthly rental was about S$3.89 per square foot.
Analysts said this is due to rental being unable to catch up with rising property prices.
With more private properties expected to be completed next year and the government's tightening of foreign manpower, analysts said rental yield will continue to fall.
This as the economy slows and demand for private property decreases.
The rental yield for October alone was 3.87 per cent and analysts expect it to dip to 3.5 per cent in June next year.
- CNA/ck
According to statistics from the Singapore Real Estate Exchange (SRX), this brings the rental yield to 4.03 per cent.
This is even though average rental rose by two per cent in the first 10 months, to reach about S$3.80 per square foot.
In October alone, the average monthly rental was about S$3.89 per square foot.
Analysts said this is due to rental being unable to catch up with rising property prices.
With more private properties expected to be completed next year and the government's tightening of foreign manpower, analysts said rental yield will continue to fall.
This as the economy slows and demand for private property decreases.
The rental yield for October alone was 3.87 per cent and analysts expect it to dip to 3.5 per cent in June next year.
- CNA/ck
Monday, 17 September 2012
Over 1,000 DBSS flats still unsold since scheme's suspension
More than 1,000 Design, Build and Sell Scheme (DBSS) flats have been sitting unsold since the scheme was suspended last year.
Experts say demand for these pricier homes has likely been dampened by the bumper fresh supply of build-to-order (BTO) flats since both have a monthly income ceiling of $10,000.
Six DBSS launches have been rolled out since the 806-unit Adora Green in Yishun - now fully sold out - entered the market in February last year. Some DBSS projects have similarly enjoyed healthy sales.
EL Development's 888-unit Trivelis in Clementi is 90 per cent sold, while CEL Development's 488-unit Belvia in Bedok has found buyers for 400 units.
Take-up at Design and Build projects
Centrale 8 (Tampines)
Total units: 708
Unsold: About 250
Price:$389,000 to $778,000
Parkland Residences (Upper Serangoon)
Total units: 680
Unsold: 195
Price: $359,000 to $706,000
Lake Vista@Yuan Ching (Jurong)
Total units: 682
Unsold: 206
Price: $360,500 to $680,400
Trivelis (Clementi)
Total units: 888
Unsold: 90
Price: $375,000 to $770,000
Belvia (Bedok) Total units: 488
Unsold: 88
Price: $387,000 to $727,000
Pasir Ris One (Pasir Ris)
Total units: 447
Unsold: About 340
Price: $390,000 to $770,000
Note: Prices at launch
SOURCES: DEVELOPERS, AGENTS
Experts say demand for these pricier homes has likely been dampened by the bumper fresh supply of build-to-order (BTO) flats since both have a monthly income ceiling of $10,000.
Six DBSS launches have been rolled out since the 806-unit Adora Green in Yishun - now fully sold out - entered the market in February last year. Some DBSS projects have similarly enjoyed healthy sales.
EL Development's 888-unit Trivelis in Clementi is 90 per cent sold, while CEL Development's 488-unit Belvia in Bedok has found buyers for 400 units.
Take-up at Design and Build projects
Centrale 8 (Tampines)
Total units: 708
Unsold: About 250
Price:$389,000 to $778,000
Parkland Residences (Upper Serangoon)
Total units: 680
Unsold: 195
Price: $359,000 to $706,000
Lake Vista@Yuan Ching (Jurong)
Total units: 682
Unsold: 206
Price: $360,500 to $680,400
Trivelis (Clementi)
Total units: 888
Unsold: 90
Price: $375,000 to $770,000
Belvia (Bedok) Total units: 488
Unsold: 88
Price: $387,000 to $727,000
Pasir Ris One (Pasir Ris)
Total units: 447
Unsold: About 340
Price: $390,000 to $770,000
Note: Prices at launch
SOURCES: DEVELOPERS, AGENTS
Saturday, 1 September 2012
More condominium units returned in first half of this year
SINGAPORE: More buyers are returning their condominium units.
Figures from a Singapore property research firm show the number has doubled in the first half of this year, compared to the same period last year.
Between January and July this year, over 720 units have been returned.
The figure was 488 during the same period last year.
Buyers who return units forfeit 1.25 per cent of the property value.
Analysts cite two main reasons for the spike.
Lim Yong Hock, senior vice-president, PropNex, said: "In the past six months, some property prices have exceeded S$1,800 per square foot. Some buyers who purchase on impulse may later regret and pull out. Another reason could be (that) some buyers are unable to secure a bank loan."
- CNA/cc
Figures from a Singapore property research firm show the number has doubled in the first half of this year, compared to the same period last year.
Between January and July this year, over 720 units have been returned.
The figure was 488 during the same period last year.
Buyers who return units forfeit 1.25 per cent of the property value.
Analysts cite two main reasons for the spike.
Lim Yong Hock, senior vice-president, PropNex, said: "In the past six months, some property prices have exceeded S$1,800 per square foot. Some buyers who purchase on impulse may later regret and pull out. Another reason could be (that) some buyers are unable to secure a bank loan."
- CNA/cc
Thursday, 9 June 2011
Sharp fall in property prices "possible"
SINGAPORE: Minister for National Development Khaw Boon Wan has sounded an alert on a possible sharp fall in property prices.
Writing on his blog, Mr Khaw said things can suddenly go very wrong.
He pointed out a strong supply of housing units is coming up.
About 35,000 private homes have already been sold.
Another 45,000 units are also waiting to be built and sold.
Mr Khaw warned a weak global economy could turn away foreign buyers who make up about 16 per cent of all buyers of private properties.
Rental demand can also fall quickly since many Singaporeans also buy properties to lease to foreigners.
He said the impact of external shocks can be serious if the drop in demand happens when there's a substantial increase in supply.
He also said cost of borrowing and repayment must go up and households must factor this in.
Mr Khaw advised investors to bear these in mind before signing up for new houses.
-CNA/wk
Writing on his blog, Mr Khaw said things can suddenly go very wrong.
He pointed out a strong supply of housing units is coming up.
About 35,000 private homes have already been sold.
Another 45,000 units are also waiting to be built and sold.
Mr Khaw warned a weak global economy could turn away foreign buyers who make up about 16 per cent of all buyers of private properties.
Rental demand can also fall quickly since many Singaporeans also buy properties to lease to foreigners.
He said the impact of external shocks can be serious if the drop in demand happens when there's a substantial increase in supply.
He also said cost of borrowing and repayment must go up and households must factor this in.
Mr Khaw advised investors to bear these in mind before signing up for new houses.
-CNA/wk
Sunday, 24 October 2010
More Singaporeans consider buying overseas properties
SINGAPORE: The strong Sing dollar and rising property prices in Singapore have prompted Singaporeans to consider investing in properties overseas.
More than 6,000 visitors turned up at an exhibition on overseas properties on Saturday, the first day of the two-day event.
More than 150 properties worldwide are being put up for sale at the exhibition at Marina Bay Sands.
Among the properties is The Elements@Ampang in Kuala Lumpur. At about S$400 per square feet, the freehold property saw half of the block's units being taken up when the sale was launched in July.
Land & General Berhad's sales & marketing manager, Lim Kok Yee, said: "With a HDB flat [costing] about S$600,000, you can easily get about four units of this [The Elements@Ampang].....[On] the returns for capital gain, we are looking easily at about 15-20% in terms of three years to come."
The weaker euro has also made properties in Europe more appealing.
Ocean Villas Group's director, Rebecca Smith, said: "Singaporeans, unfortunately, can't get 100% finance loan most of the time, but 70% of finance in these properties is possible."
Still, buying properties in Spain now is about 50 percent cheaper than several years ago as property prices there have reached rock bottom, said property developers.
But property agents advise investors to consider other substantial charges including property taxes, interest rates and even property management fees.
- CNA/ir
More than 6,000 visitors turned up at an exhibition on overseas properties on Saturday, the first day of the two-day event.
More than 150 properties worldwide are being put up for sale at the exhibition at Marina Bay Sands.
Among the properties is The Elements@Ampang in Kuala Lumpur. At about S$400 per square feet, the freehold property saw half of the block's units being taken up when the sale was launched in July.
Land & General Berhad's sales & marketing manager, Lim Kok Yee, said: "With a HDB flat [costing] about S$600,000, you can easily get about four units of this [The Elements@Ampang].....[On] the returns for capital gain, we are looking easily at about 15-20% in terms of three years to come."
The weaker euro has also made properties in Europe more appealing.
Ocean Villas Group's director, Rebecca Smith, said: "Singaporeans, unfortunately, can't get 100% finance loan most of the time, but 70% of finance in these properties is possible."
Still, buying properties in Spain now is about 50 percent cheaper than several years ago as property prices there have reached rock bottom, said property developers.
But property agents advise investors to consider other substantial charges including property taxes, interest rates and even property management fees.
- CNA/ir
Thursday, 14 October 2010
Seoul Homeowners Watch Prices Sink Even as Economy Soars
By
Yoon Jae Kwang sidestepped the global financial crisis by selling all of his mutual funds after 100 percent returns to buy an apartment outside Seoul in 2007. Three years later, the housing market has slumped and Yoon faces a loss on his investment.
The 112-square-meter (1,200-square-foot) home, which jumped as much as 16 percent from the purchase price of 320 million won ($280,000) in just a year, has dropped 22 percent in value from the peak. Yoon can’t find buyers for the apartment in Yongin, 49 kilometers (30 miles) south of the capital, to pay off the 80 million won he borrowed to help pay for it.
“I am stuck; you know the price will drop more for at least another couple of years, and yet you can’t do anything about it,” said Yoon, 34, who works at a software development company in southern Seoul. “What happens when the time comes for me to pay off my debt?”
Yoon’s difficulties reflect his government’s success in cooling the market, while property prices soar in Hong Kong, China and Singapore. In Korea, government efforts to forestall a property bubble and rein in record household debt have damped prices and sent consumer sentiment to a 14-month low in September.
Apartment prices in the Seoul metropolitan area have fallen 2.7 percent so far this year, the first decline in six years, according to data from Kookmin Bank, South Korea’s biggest lender. The number of unsold new apartments in Seoul has increased 16 percent, while existing apartment sales slumped 59 percent below their average of the past four years, according to the Ministry of Land, Transport and Maritime Affairs.
Hong Kong, Singapore
Home prices are up about 15 percent in Hong Kong in 2010 and jumped 38 percent in the 12 months to the end of June in Singapore. China’s property prices rose 9.3 percent in August from a year earlier, even as officials crack down on speculators and multiple home purchases.
In South Korea, the declines come even as the economy bounces back from the global financial crisis with forecast growth of 5.9 percent this year. The Bank of Korea raised its forecast in July from 5.2 percent predicted in April.
The central bank will closely monitor inflation, Governor Kim Choong Soo told reporters today after keeping the benchmark rate at 2.25 percent, which he said some board members opposed.
“People are saying the stock market is booming and companies are enjoying record earnings,” said Jeong Ai Nam, a local realtor in southern Seoul. “The housing market, it’s a totally different story. Demand has dried up.”
Debt-to-Income
Apartment prices in Seoul had increased 3.2 percent between January and September last year, according to Kookmin Bank, as a $52 billion stimulus package and record-low interest rates spurred demand. Bank lending to households expanded in June last year by the most in more than two years on demand for mortgages.
To stem the surging household borrowing, the Financial Supervisory Service in July 2009 said buyers of homes worth more than 600 million won could borrow only as much as 50 percent of the property’s value, down from 60 percent previously. Then in September, the government tightened debt-to-income rules, allowing banks to extend no more than 50 percent of a borrower’s annual income to purchase homes in Seoul and 60 percent in Incheon and Geyonggi provinces near the capital.
Apartment prices and sales then started their slump, prompting the government of President Lee Myung Bak to ease some of its curbs this year. On Aug. 29, Lee’s administration announced a seven-month exemption to the 50 percent debt-to- income rule in Seoul, while leaving it in force in three southern parts of the capital -- Gangnam, Seocho and Songpa -- that it deemed “speculative zones.”
Speculative Zones
The 60 percent limit imposed outside the capital has also been suspended until the end of March, and a nationwide waiver on taxes for home sales was extended until the end of 2012.
The changes have yet to spur property transactions because buyers are concerned prices may fall further, said Cho Min Yi, head of research at SpeedBank, a housing consulting company in Seoul.
“It’s all about sentiment,” said Cho. “You can’t expect the property market to recover soon while people stand pat.”
The government may not be able to take further action to boost the market as it remains concerned about overheating prices and household debt levels, Cho said.
South Korea’s household debt jumped 20 percent to a record of 754.9 trillion won at the end of June, from the end of 2007, according to the Bank of Korea. Home loans increased to 349 trillion won, up from 293 trillion won in 2007.
This makes South Korean consumers’ debt as a percentage of their income higher than that of the U.S. and Japan, according to Moody’s Investors Service.
‘Nightmare’
“The high indebtedness and vulnerability of households to a rise in interest rates are further increasing the downward pressure on housing prices,” Moody’s said Sept. 7.
Banker Lee Gi Do bought an apartment in southeastern Seoul for 450 million won last year and within a week his agent offered him 7 percent more to sell the property. A year later, the apartment’s value has dropped almost 10 percent below the purchase price and Lee can’t find a buyer.
“My dream’s become a nightmare,” said the 33-year-old. “Far from making money, I may struggle to pay my monthly interest bill if the central bank raises rates more.”
The stagnant property market also has forced South Korean builders to restructure debts after the construction industry shrank 0.9 percent over the three months through June, the third drop in four quarters, according to the Bank of Korea. The decline contrasts with 1.4 percent growth in South Korea’s gross domestic product in the period.
Bad Loans
Combined second-quarter profit at local lenders including Kookmin Bank dropped 34 percent from a year earlier after they set aside extra loan-loss reserves to help construction and shipbuilding companies restructure debts, the Financial Supervisory Service said on Aug. 3.
Moody’s expects a surge in credit losses from the construction industry, which will weigh on Korean bank earnings, the credit rating company said.
The household loan delinquency ratio for South Korean banks rose to 0.78 percent in August from 0.48 percent at the end of last year and soured mortgage loans almost doubled to 0.64 percent from 0.33 percent.
The average cost of leasing an apartment is on the rise in the Seoul metropolitan area as potential buyers are favoring renting for now amid concerns of further declines in home prices. Rents in the nation have jumped 4.4 percent so far this year, the biggest gain for the first three quarters since 2002, according to Kookmin Bank.
Household Income
“It’s a typical bottleneck as people are delaying buying a home and rushing into the leasing market,” said SpeedBank’s Cho.
Still, software developer Yoon says he will hold onto his Yongin apartment for now.
“You always hear about how real estate is where the big players invest their money in Korea; that you never go wrong with property,” Yoon said. “That may have been true for my parents’ generation, but not mine.”
-- With assistance from Saeromi Shin in Seoul. Editors: Brett Miller, Andreea Papuc
Yoon Jae Kwang sidestepped the global financial crisis by selling all of his mutual funds after 100 percent returns to buy an apartment outside Seoul in 2007. Three years later, the housing market has slumped and Yoon faces a loss on his investment.
The 112-square-meter (1,200-square-foot) home, which jumped as much as 16 percent from the purchase price of 320 million won ($280,000) in just a year, has dropped 22 percent in value from the peak. Yoon can’t find buyers for the apartment in Yongin, 49 kilometers (30 miles) south of the capital, to pay off the 80 million won he borrowed to help pay for it.
“I am stuck; you know the price will drop more for at least another couple of years, and yet you can’t do anything about it,” said Yoon, 34, who works at a software development company in southern Seoul. “What happens when the time comes for me to pay off my debt?”
Yoon’s difficulties reflect his government’s success in cooling the market, while property prices soar in Hong Kong, China and Singapore. In Korea, government efforts to forestall a property bubble and rein in record household debt have damped prices and sent consumer sentiment to a 14-month low in September.
Apartment prices in the Seoul metropolitan area have fallen 2.7 percent so far this year, the first decline in six years, according to data from Kookmin Bank, South Korea’s biggest lender. The number of unsold new apartments in Seoul has increased 16 percent, while existing apartment sales slumped 59 percent below their average of the past four years, according to the Ministry of Land, Transport and Maritime Affairs.
Hong Kong, Singapore
Home prices are up about 15 percent in Hong Kong in 2010 and jumped 38 percent in the 12 months to the end of June in Singapore. China’s property prices rose 9.3 percent in August from a year earlier, even as officials crack down on speculators and multiple home purchases.
In South Korea, the declines come even as the economy bounces back from the global financial crisis with forecast growth of 5.9 percent this year. The Bank of Korea raised its forecast in July from 5.2 percent predicted in April.
The central bank will closely monitor inflation, Governor Kim Choong Soo told reporters today after keeping the benchmark rate at 2.25 percent, which he said some board members opposed.
“People are saying the stock market is booming and companies are enjoying record earnings,” said Jeong Ai Nam, a local realtor in southern Seoul. “The housing market, it’s a totally different story. Demand has dried up.”
Debt-to-Income
Apartment prices in Seoul had increased 3.2 percent between January and September last year, according to Kookmin Bank, as a $52 billion stimulus package and record-low interest rates spurred demand. Bank lending to households expanded in June last year by the most in more than two years on demand for mortgages.
To stem the surging household borrowing, the Financial Supervisory Service in July 2009 said buyers of homes worth more than 600 million won could borrow only as much as 50 percent of the property’s value, down from 60 percent previously. Then in September, the government tightened debt-to-income rules, allowing banks to extend no more than 50 percent of a borrower’s annual income to purchase homes in Seoul and 60 percent in Incheon and Geyonggi provinces near the capital.
Apartment prices and sales then started their slump, prompting the government of President Lee Myung Bak to ease some of its curbs this year. On Aug. 29, Lee’s administration announced a seven-month exemption to the 50 percent debt-to- income rule in Seoul, while leaving it in force in three southern parts of the capital -- Gangnam, Seocho and Songpa -- that it deemed “speculative zones.”
Speculative Zones
The 60 percent limit imposed outside the capital has also been suspended until the end of March, and a nationwide waiver on taxes for home sales was extended until the end of 2012.
The changes have yet to spur property transactions because buyers are concerned prices may fall further, said Cho Min Yi, head of research at SpeedBank, a housing consulting company in Seoul.
“It’s all about sentiment,” said Cho. “You can’t expect the property market to recover soon while people stand pat.”
The government may not be able to take further action to boost the market as it remains concerned about overheating prices and household debt levels, Cho said.
South Korea’s household debt jumped 20 percent to a record of 754.9 trillion won at the end of June, from the end of 2007, according to the Bank of Korea. Home loans increased to 349 trillion won, up from 293 trillion won in 2007.
This makes South Korean consumers’ debt as a percentage of their income higher than that of the U.S. and Japan, according to Moody’s Investors Service.
‘Nightmare’
“The high indebtedness and vulnerability of households to a rise in interest rates are further increasing the downward pressure on housing prices,” Moody’s said Sept. 7.
Banker Lee Gi Do bought an apartment in southeastern Seoul for 450 million won last year and within a week his agent offered him 7 percent more to sell the property. A year later, the apartment’s value has dropped almost 10 percent below the purchase price and Lee can’t find a buyer.
“My dream’s become a nightmare,” said the 33-year-old. “Far from making money, I may struggle to pay my monthly interest bill if the central bank raises rates more.”
The stagnant property market also has forced South Korean builders to restructure debts after the construction industry shrank 0.9 percent over the three months through June, the third drop in four quarters, according to the Bank of Korea. The decline contrasts with 1.4 percent growth in South Korea’s gross domestic product in the period.
Bad Loans
Combined second-quarter profit at local lenders including Kookmin Bank dropped 34 percent from a year earlier after they set aside extra loan-loss reserves to help construction and shipbuilding companies restructure debts, the Financial Supervisory Service said on Aug. 3.
Moody’s expects a surge in credit losses from the construction industry, which will weigh on Korean bank earnings, the credit rating company said.
The household loan delinquency ratio for South Korean banks rose to 0.78 percent in August from 0.48 percent at the end of last year and soured mortgage loans almost doubled to 0.64 percent from 0.33 percent.
The average cost of leasing an apartment is on the rise in the Seoul metropolitan area as potential buyers are favoring renting for now amid concerns of further declines in home prices. Rents in the nation have jumped 4.4 percent so far this year, the biggest gain for the first three quarters since 2002, according to Kookmin Bank.
Household Income
“It’s a typical bottleneck as people are delaying buying a home and rushing into the leasing market,” said SpeedBank’s Cho.
Still, software developer Yoon says he will hold onto his Yongin apartment for now.
“You always hear about how real estate is where the big players invest their money in Korea; that you never go wrong with property,” Yoon said. “That may have been true for my parents’ generation, but not mine.”
-- With assistance from Saeromi Shin in Seoul. Editors: Brett Miller, Andreea Papuc
Monday, 30 August 2010
New measures to cool property market
SINGAPORE: The government said Monday that it will increase the holding period for imposition of Seller's Stamp Duty (SSD).
The SSD will be raised from the current one year to three years.
Another measure will impact those who have more than one outstanding housing loan.
Property buyers who already have one or more outstanding housing loans at the time of the new housing purchase will have to pay more money upfront.
The government will increase the minimum cash payment from five per cent to 10 per cent of the valuation limit.
Those with more than one outstanding housing loan will also see a decrease in the Loan-to-Value (LTV) limit for housing loans granted by financial institutions regulated by MAS.
The LTV will be lowered from the current 80 per cent to 70 per cent.
The measures will take immediate effect on August 30.
The government said the objective of the measures is "to ensure a stable and sustainable property market where prices move in line with economic fundamentals".
It noted that the property market is currently very buoyant, with prices increasing by 11 per cent in the first half of this year.
It added that while Singapore has enjoyed strong economic growth in the first half, growth is expected to moderate in the second half of the year.
Should economic growth falter and the market correct, the government said property buyers could face capital losses.
It has thus decided to introduce additional measures now to temper sentiments and encourage greater financial prudence among property purchasers.
-CNA/wk
The SSD will be raised from the current one year to three years.
Another measure will impact those who have more than one outstanding housing loan.
Property buyers who already have one or more outstanding housing loans at the time of the new housing purchase will have to pay more money upfront.
The government will increase the minimum cash payment from five per cent to 10 per cent of the valuation limit.
Those with more than one outstanding housing loan will also see a decrease in the Loan-to-Value (LTV) limit for housing loans granted by financial institutions regulated by MAS.
The LTV will be lowered from the current 80 per cent to 70 per cent.
The measures will take immediate effect on August 30.
The government said the objective of the measures is "to ensure a stable and sustainable property market where prices move in line with economic fundamentals".
It noted that the property market is currently very buoyant, with prices increasing by 11 per cent in the first half of this year.
It added that while Singapore has enjoyed strong economic growth in the first half, growth is expected to moderate in the second half of the year.
Should economic growth falter and the market correct, the government said property buyers could face capital losses.
It has thus decided to introduce additional measures now to temper sentiments and encourage greater financial prudence among property purchasers.
-CNA/wk
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