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Thread: Time to relook property cooling measures

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    Default Time to relook property cooling measures

    Time to relook property cooling measures, say analysts
    By Joanne Chan | Posted: 04 October 2011 1951 hrs

    SINGAPORE: A shortage of resale flats in the market is causing prices to shoot up and it may be time to relook some of the property-cooling measures, say property watchers.

    Resale flat prices, which were already at an all-time high, rose 3.8 per cent in the third quarter this year - higher than the 3.1 per cent pace recorded in the second quarter.

    Since property-cooling measures were introduced last year to take the heat off the exuberant market, the number of HDB resale flat transactions has dropped significantly - by 30 per cent compared to a year ago, said property firms.

    Market watchers said there has been a slowdown in the supply of resale flats, as home owners are put off by the rule that requires them to sell off their flat first before they are granted a higher bank loan of 80 per cent.

    Eugene Lim, key executive officer at ERA Realty, said: "Most sellers prefer to buy first, then sell. For people who do not qualify for HDB loan and they have to take a bank loan, they only would be able to get a maximum 60 per cent loan. And therefore there is a requirement for 40 per cent equity."

    HDB resale flats have also been generating good rental yield. Industry players said they have seen a spike in rental transactions and it is unlikely that home owners will give up their HDB flats, thus adding to the supply crunch.

    Tan Kok Keong, head of research and consultancy at OrangeTee, said: "Some segments of the public housing can be rented out. Every unit that's kept from the market means that one new household does not have the choice to buy that public housing."

    Mr Tan also pointed out that the Minimum Occupation Period (MOP) before flats can be rented out used to be one to three years. For home owners who bought a flat in 2008 or 2009, before the MOP was raised to five years, they would have been able to rent out their flats and use the yield to pay for a second mortgage on a private home.

    The government has increased the supply of new flats to draw first-time home owners away from the resale market. But there is a limit to how much demand can be diverted - first-timers account for a quarter of resale transactions. And not all are willing to wait two-and-a-half years for a new flat to be built.

    With such market conditions, sellers are commanding higher cash premiums - adding to the overall transaction price. Industry players said the median cash-over-valuation (COV) in the third quarter is about S$35,000 to S$37,000, similar to the previous quarter.

    To ease the supply crunch, there was a suggestion to relax the bank loan criteria for HDB upgraders.

    ERA Realty's Mr Lim said: "I think when the 60 per cent rule was implemented, the objective was to instil prudence in the buyers. But if you look at the practical point of view, if I'm selling my flat to buy another flat, eventually I will still end up with one property and one mortgage."

    If the shortage situation is not resolved, market watchers expect resale flat prices to inch up by another three to four per cent in the last quarter of this year. This would bring the overall price increase to more than 10 per cent in just one year - which makes owning a flat an increasing financial burden.

    -CNA/ac
    http://www.channelnewsasia.com/stories/singaporebusinessnews/view/1157213/1/.html

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    Quote Originally Posted by maisonjai
    Time to relook property cooling measures, say analysts
    By Joanne Chan | Posted: 04 October 2011 1951 hrs

    SINGAPORE: A shortage of resale flats in the market is causing prices to shoot up and it may be time to relook some of the property-cooling measures, say property watchers.

    Resale flat prices, which were already at an all-time high, rose 3.8 per cent in the third quarter this year - higher than the 3.1 per cent pace recorded in the second quarter.

    Since property-cooling measures were introduced last year to take the heat off the exuberant market, the number of HDB resale flat transactions has dropped significantly - by 30 per cent compared to a year ago, said property firms.

    Market watchers said there has been a slowdown in the supply of resale flats, as home owners are put off by the rule that requires them to sell off their flat first before they are granted a higher bank loan of 80 per cent.

    Eugene Lim, key executive officer at ERA Realty, said: "Most sellers prefer to buy first, then sell. For people who do not qualify for HDB loan and they have to take a bank loan, they only would be able to get a maximum 60 per cent loan. And therefore there is a requirement for 40 per cent equity."

    HDB resale flats have also been generating good rental yield. Industry players said they have seen a spike in rental transactions and it is unlikely that home owners will give up their HDB flats, thus adding to the supply crunch.

    Tan Kok Keong, head of research and consultancy at OrangeTee, said: "Some segments of the public housing can be rented out. Every unit that's kept from the market means that one new household does not have the choice to buy that public housing."

    Mr Tan also pointed out that the Minimum Occupation Period (MOP) before flats can be rented out used to be one to three years. For home owners who bought a flat in 2008 or 2009, before the MOP was raised to five years, they would have been able to rent out their flats and use the yield to pay for a second mortgage on a private home.

    The government has increased the supply of new flats to draw first-time home owners away from the resale market. But there is a limit to how much demand can be diverted - first-timers account for a quarter of resale transactions. And not all are willing to wait two-and-a-half years for a new flat to be built.

    With such market conditions, sellers are commanding higher cash premiums - adding to the overall transaction price. Industry players said the median cash-over-valuation (COV) in the third quarter is about S$35,000 to S$37,000, similar to the previous quarter.

    To ease the supply crunch, there was a suggestion to relax the bank loan criteria for HDB upgraders.

    ERA Realty's Mr Lim said: "I think when the 60 per cent rule was implemented, the objective was to instil prudence in the buyers. But if you look at the practical point of view, if I'm selling my flat to buy another flat, eventually I will still end up with one property and one mortgage."

    If the shortage situation is not resolved, market watchers expect resale flat prices to inch up by another three to four per cent in the last quarter of this year. This would bring the overall price increase to more than 10 per cent in just one year - which makes owning a flat an increasing financial burden.

    -CNA/ac
    http://www.channelnewsasia.com/stori...157213/1/.html
    Pte property prices will probably stay at the plateau next year because of growing re-sale HDB prices.

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    Quote Originally Posted by maisonjai
    Time to relook property cooling measures, say analysts
    By Joanne Chan | Posted: 04 October 2011 1951 hrs

    SINGAPORE: A shortage of resale flats in the market is causing prices to shoot up and it may be time to relook some of the property-cooling measures, say property watchers.

    Resale flat prices, which were already at an all-time high, rose 3.8 per cent in the third quarter this year - higher than the 3.1 per cent pace recorded in the second quarter.

    Since property-cooling measures were introduced last year to take the heat off the exuberant market, the number of HDB resale flat transactions has dropped significantly - by 30 per cent compared to a year ago, said property firms.

    Market watchers said there has been a slowdown in the supply of resale flats, as home owners are put off by the rule that requires them to sell off their flat first before they are granted a higher bank loan of 80 per cent.

    Eugene Lim, key executive officer at ERA Realty, said: "Most sellers prefer to buy first, then sell. For people who do not qualify for HDB loan and they have to take a bank loan, they only would be able to get a maximum 60 per cent loan. And therefore there is a requirement for 40 per cent equity."
    cooling measure is precisely for such home owners who are taking big risk ~

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    CM to cool pte ppty but hdb resale flats hot wor.
    Isn't that rule that doesn't permit pte owners to buy resale hdb created this? Everyone here says die die hold on to hdb cash cow, got money also cannot buy back -> supply crunch.
    Before GE, ppl complained pte owners fry resale hdb causing it to hit the roof. Headache

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    for hdb to hdb upgrade, i think they should allow 80% loan, and when they sell their existing hdb, there should be a charge for hdb or the bank to deduct the remaining 20% of the downpayment portion.

    the MOP and ownership criteria is sufficient to keep the speculators out.

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    2012 will be super exciting when the world economy goes south and the private housing market hits some turbulant waters and the hdb resale market becomes more appealing to upgraders. CM must be reviewed... change according to the requirements of the times.

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    Property cheong upwards almost 200% and now drop just 10% want a review of cooling measures already meh?

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    Quote Originally Posted by Geylang OKT
    Property cheong upwards almost 200% and now drop just 10% want a review of cooling measures already meh?
    200%? Did I miss something or you talking about from 97? Property prices probably climbed at most 30% or 40% from 09 low. Furthermore, if talking about latest CM introduced 9 months back, property prices probably climbed only 10% to 20%. Also, 10% drop from a high price does not equal to 10% rise from a low price, i.e. 10% drop from $1.2mil = $1.08mil while a 10% rise from $1.08mil = $1.188mil < $1.2mil.
    Last edited by ysyap; 05-10-11 at 07:58.

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    He should be referring to Geylang, which is quite true.

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    Quote Originally Posted by hyenergix
    He should be referring to Geylang, which is quite true.
    Geylang older apts rose from 5xx to 7xxpsf since 07

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    The better projects probably doubled at best from 05 to now.

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    Quote Originally Posted by kane
    The better projects probably doubled at best from 05 to now.
    Not so sure about all projects, but the value for my loft unit at Icon almost tripled from 2006.

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    Quote Originally Posted by bullman
    Not so sure about all projects, but the value for my loft unit at Icon almost tripled from 2006.
    You've outperformed the market.

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    i would hope govt come out another set of cooling measures #5...
    resale condo still gone up by about 10-15% since Jan 2011 CM #4...

    me bought condo for own staying, not profit making... not selling any sooner..
    if private condo market gets too hot, then there will be overbuild, oversupply and bubble, and later on for no good reason/boh-tai-boh-ji it crashes my condo's price even for genuine own staying like me....

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    Nothing.
    CMs won't be anymore added and won't be taken away yet.
    How to add more ...with prices moderating and crisis in Europe/US slow.
    How to take away when we slap their faces by having price increase ever since CM1 - CM4? Sure cannot lose face - so must have a 'managed' drop in prices first.

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    Quote Originally Posted by gn108
    Nothing.
    CMs won't be anymore added and won't be taken away yet.
    How to add more ...with prices moderating and crisis in Europe/US slow.
    How to take away when we slap their faces by having price increase ever since CM1 - CM4? Sure cannot lose face - so must have a 'managed' drop in prices first.
    KBW already said their implemented measures are having positive effects in the housing market so why must take away now. The call to review the CMs are only noises which the govt may not act on anytime in the near future unless the housing market takes a drastic turn for the worse.

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    There is no need to relook into the cooling measures.

    The only reason why HDB resale price if still going up is because the price gap between private property and HDB have widen too much over the past few years.

    So to balance this, it is either HDB price go up, or Pvt come down.
    I think the government is smart enough to know that pvt will have to fall in order to bring housing price under control.

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    Quote Originally Posted by Jadey
    There is no need to relook into the cooling measures.

    The only reason why HDB resale price if still going up is because the price gap between private property and HDB have widen too much over the past few years.

    So to balance this, it is either HDB price go up, or Pvt come down.
    I think the government is smart enough to know that pvt will have to fall in order to bring housing price under control.
    Difficult for HDB resale prices to go down in short term unlesss some drastic measures are taken, like 90% capital gains tax on sale of HDB by PRs, sharp decline in foreign influx, or changes in subletting rules etc.

    LT wise, Khaw's supply side measures coupled with a drop in foreign influx will eventually have an effect, maybe just in time for 2016.

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    Quote Originally Posted by yaozong7
    Difficult for HDB resale prices to go down in short term unlesss some drastic measures are taken, like 90% capital gains tax on sale of HDB by PRs, sharp decline in foreign influx, or changes in subletting rules etc.

    LT wise, Khaw's supply side measures coupled with a drop in foreign influx will eventually have an effect, maybe just in time for 2016.

    we are unlikely to see any further measures to cool the property sector, especially in the HDB because by doing so they will be depriving citizens and residents a place to live.

    believe the main reason why people are rushing into HDB resale is because private property are out of reach for most and investors and upgraders are expecting pvt property prices to come down.

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    Quote Originally Posted by Jadey
    There is no need to relook into the cooling measures.

    The only reason why HDB resale price if still going up is because the price gap between private property and HDB have widen too much over the past few years.

    So to balance this, it is either HDB price go up, or Pvt come down.
    I think the government is smart enough to know that pvt will have to fall in order to bring housing price under control.
    I think you need to look at the % increase of HDB price vs private.

    Looking at the price difference in absolute amount between HDB and private may be misleading.

    I believe the % increase for HDB might not necessarily be lower than private

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    Quote Originally Posted by Jonathan0503
    I think you need to look at the % increase of HDB price vs private.

    Looking at the price difference in absolute amount between HDB and private may be misleading.

    I believe the % increase for HDB might not necessarily be lower than private
    when times are bad, people will always look at the cost of having a roof above the head. For pvt property, 1 3 bedder the size of 4 room flat will easily cost $1m, if you can get it for 500k in the resale hdb market, your cost of having shelter will be 50% cheaper.

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    but there are some singaporeans who die die must stay in a condo.

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    Quote Originally Posted by kane
    but there are some singaporeans who die die must stay in a condo.
    Maybe 2 Groups of these condo diehards? In bad times,

    1. CCR, shift to RCR or OCR
    Perhaps CCR owner sell and shift to RCR...

    2. Stay in same area, just downgrade to smaller unit or older unit of lower psf

    -e.g. CCR dweller downgrade from 4 bedder to 2+1 bedder or shift to older condo in same district

    Wonder majority belong to which group...

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    as long as we can agree that those buying hdb flats are for own stays, then it cant be wrong that hdb buyers are anticipating correction in pvt property

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    Quote Originally Posted by Jadey
    as long as we can agree that those buying hdb flats are for own stays, then it cant be wrong that hdb buyers are anticipating correction in pvt property
    agree. as long as they don't end up bidding up the prices of hdb, otherwise their plans may backfire.

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    Quote Originally Posted by kane
    agree. as long as they don't end up bidding up the prices of hdb, otherwise their plans may backfire.
    my view is that price of resale hdb will continue till a point where it make more sense to buy private than hdb.

    Looking at the price gap of HDB and OCR private, I think there is still some room to move for hdb unless pvt property price take a drastic correction.

    information that I got from some key player in the industry is that, price correction in pvt property is no longer about weather is will happen, but how soon and how much.

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    Quote Originally Posted by Jadey
    my view is that price of resale hdb will continue till a point where it make more sense to buy private than hdb.

    Looking at the price gap of HDB and OCR private, I think there is still some room to move for hdb unless pvt property price take a drastic correction.

    information that I got from some key player in the industry is that, price correction in pvt property is no longer about weather is will happen, but how soon and how much.
    2012 start (some suggest 2011 end start). 2013 bottom. Which month? I don't know. LOL. Just a wild speculation!

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    Quote Originally Posted by ysyap
    2012 start (some suggest 2011 end start). 2013 bottom. Which month? I don't know. LOL. Just a wild speculation!
    correction already started, only question is how far this will continue before we hit bottom.

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    if really want to increase resale hdb supply and bring down resale hdb price, immediately stop allowing hdb to be rented out! this will make hdb to become a lousy asset and dual/multiple unit holder will release them. secondly this has the added benefit to really bring in better grade foreign talents which wat singaporeans wanted. if a ft can only afford hdb rental...wat more can i say.... but of course it will cause a labour supply crunch problem..

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    Quote Originally Posted by Allthepies
    if really want to increase resale hdb supply and bring down resale hdb price, immediately stop allowing hdb to be rented out! this will make hdb to become a lousy asset and dual/multiple unit holder will release them. secondly this has the added benefit to really bring in better grade foreign talents which wat singaporeans wanted. if a ft can only afford hdb rental...wat more can i say.... but of course it will cause a labour supply crunch problem..
    This is a good way of making e blue collar foreign workers rent our condos. Then w good rental e price if condos will increase. Brilliant idea to increase inflation also. More pp will buy condo as a hedge n for passive income.

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