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22-08-13, 12:34
http://www.businesstimes.com.sg/archive/tuesday/premium/top-stories/housing-grants-move-right-direction-20130820
Published August 20, 2013
PM LEE'S NATIONAL DAY RALLY SPEECH
Housing grants a move in the right direction
But consultants vary in their assessment of the impact on the wider market
By Mindy Tan [email protected]
[SINGAPORE] While consultants concur that the grants outlined at Sunday's National Day Rally are a move in the right direction to promote home ownership, they vary in their assessment of the potential impact on the wider market.
Amid other policy announcements unveiled during the annual National Day Rally, Prime Minister Lee Hsien Loong said that the government was extending the Special CPF Housing Grant (SHG) to include middle-income households looking to purchase four-room flats.
In addition, a Step-Up Housing Grant was introduced to help families upgrade from two-room to three-room flats.
Ong Kah Seng, director at R'ST Research said that he does not expect the grants to have an impact on the resale market given that the tighter mortgage servicing ratios (MSR) have already effectively restricted overbuying.
"Buyers will opt for the appropriate flat size and location in accordance with their earning capacity and loan limits," said Mr Ong. "This is already effectively shown in the recent months of stabilised resale flat prices and lowered cash-over-valuation (COV).
DTZ's head of research, Lee Lay Keng, on the other hand, expects the grants to cool the resale market by diverting demand to the primary sales pool, specifically those looking for a four-room resale flat.
"This could lead to an easing of transaction volumes, prices and COVs in the HDB resale market," she said.
Looking specifically at the Step-Up Housing Grant, Alan Cheong, senior director, research and consultancy at Savills Singapore, noted that depending on what the grant is targeted at - BTO or resale flats - the market could react very differently.
"Intuitively, if the additional grants extend only to BTO flats, then it should be a negative on the resale market as it will siphon first-timer demand from the latter to the former. Resale demand will cool and this will have negative concatenating effects on the entire housing chain," said Mr Cheong.
"But if it also applies to first time buyers of resale flats, if the BTO building rate is not improved, then increasing the grant amounts to an increase in liquidity flowing into the resale market. This will have positive concatenating effects," he said.
Even as steps are taken to take care of the existing population, the foundations are being set to ensure there is sufficient space as the population grows.
Consultants were largely sanguine about the government's plans to move the Paya Lebar Airbase to Changi, a move which will not only free up 800 hectares of area, it will also remove height restrictions on a large area around Paya Lebar.
This provides master planners with yet another blank canvas on which they can plan a township, said Desmond Sim, CBRE Research associate director.
"It's not just the immediate vicinity of the area that will be refreshed, but at least a 10km radius because of existing height restrictions," said Mr Sim.
"This site basically gives the government an additional alternative option to intensify land usage to support the future population growth."
Under the current master plan, for instance, even though private homes in some parts of Geylang have a plot ratio of 2.8 with an allowable building height of 36 storeys, the buildings are only built up to eight stories because of the height restriction. As a result, buyers are unable to maximise the full potential of the buildings.
"Going forward, some of these developments should command higher prices given their en bloc potential once the height restrictions are removed. In the longer term, as Paya Lebar regional centre shapes up, prices in this location will see more upside as homes in the location will be more desirable with the removal of the airbase," said Steven Tan, managing director of OrangeTee.
The other benefit is that the area will further supplement the catchment population that is necessary to spur the growth of nearby regional centres such as Paya Lebar, Tampines, and the future North Coast Innovation Corridor areas, said Alice Tan, associate director and head of research at Knight Frank Singapore.
In the meantime however, transport connectivity plans for the area would have to be reviewed, and physical infrastructure needs to be implemented before these new developments are in place, to mitigate potential traffic congestion in the area, she said.
DTZ's Ms Lee added: "In the longer term beyond 2030 (as the relocation of the airbase and new plans for the area are only likely to happen in 2030 and beyond), these new developments are likely to provide an uplift to the capital and rental values in the area."
Published August 20, 2013
PM LEE'S NATIONAL DAY RALLY SPEECH
Housing grants a move in the right direction
But consultants vary in their assessment of the impact on the wider market
By Mindy Tan [email protected]
[SINGAPORE] While consultants concur that the grants outlined at Sunday's National Day Rally are a move in the right direction to promote home ownership, they vary in their assessment of the potential impact on the wider market.
Amid other policy announcements unveiled during the annual National Day Rally, Prime Minister Lee Hsien Loong said that the government was extending the Special CPF Housing Grant (SHG) to include middle-income households looking to purchase four-room flats.
In addition, a Step-Up Housing Grant was introduced to help families upgrade from two-room to three-room flats.
Ong Kah Seng, director at R'ST Research said that he does not expect the grants to have an impact on the resale market given that the tighter mortgage servicing ratios (MSR) have already effectively restricted overbuying.
"Buyers will opt for the appropriate flat size and location in accordance with their earning capacity and loan limits," said Mr Ong. "This is already effectively shown in the recent months of stabilised resale flat prices and lowered cash-over-valuation (COV).
DTZ's head of research, Lee Lay Keng, on the other hand, expects the grants to cool the resale market by diverting demand to the primary sales pool, specifically those looking for a four-room resale flat.
"This could lead to an easing of transaction volumes, prices and COVs in the HDB resale market," she said.
Looking specifically at the Step-Up Housing Grant, Alan Cheong, senior director, research and consultancy at Savills Singapore, noted that depending on what the grant is targeted at - BTO or resale flats - the market could react very differently.
"Intuitively, if the additional grants extend only to BTO flats, then it should be a negative on the resale market as it will siphon first-timer demand from the latter to the former. Resale demand will cool and this will have negative concatenating effects on the entire housing chain," said Mr Cheong.
"But if it also applies to first time buyers of resale flats, if the BTO building rate is not improved, then increasing the grant amounts to an increase in liquidity flowing into the resale market. This will have positive concatenating effects," he said.
Even as steps are taken to take care of the existing population, the foundations are being set to ensure there is sufficient space as the population grows.
Consultants were largely sanguine about the government's plans to move the Paya Lebar Airbase to Changi, a move which will not only free up 800 hectares of area, it will also remove height restrictions on a large area around Paya Lebar.
This provides master planners with yet another blank canvas on which they can plan a township, said Desmond Sim, CBRE Research associate director.
"It's not just the immediate vicinity of the area that will be refreshed, but at least a 10km radius because of existing height restrictions," said Mr Sim.
"This site basically gives the government an additional alternative option to intensify land usage to support the future population growth."
Under the current master plan, for instance, even though private homes in some parts of Geylang have a plot ratio of 2.8 with an allowable building height of 36 storeys, the buildings are only built up to eight stories because of the height restriction. As a result, buyers are unable to maximise the full potential of the buildings.
"Going forward, some of these developments should command higher prices given their en bloc potential once the height restrictions are removed. In the longer term, as Paya Lebar regional centre shapes up, prices in this location will see more upside as homes in the location will be more desirable with the removal of the airbase," said Steven Tan, managing director of OrangeTee.
The other benefit is that the area will further supplement the catchment population that is necessary to spur the growth of nearby regional centres such as Paya Lebar, Tampines, and the future North Coast Innovation Corridor areas, said Alice Tan, associate director and head of research at Knight Frank Singapore.
In the meantime however, transport connectivity plans for the area would have to be reviewed, and physical infrastructure needs to be implemented before these new developments are in place, to mitigate potential traffic congestion in the area, she said.
DTZ's Ms Lee added: "In the longer term beyond 2030 (as the relocation of the airbase and new plans for the area are only likely to happen in 2030 and beyond), these new developments are likely to provide an uplift to the capital and rental values in the area."