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Thread: Government announces 2 measures to cool property market

  1. #31
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    In less than 2 years, garmen interfered with "free market" for 3 times? And everytime new rules "implemented with effect"?

    Which clever investors will dare to come in?

    If they don't stop interfering I am convinced market will crash. Where got property market without speculators one?

  2. #32
    mr funny is offline Any complaints please PM me
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    Default More gentle therapy to cool the property fever

    http://www.businesstimes.com.sg/sub/...95940,00.html?

    Published February 20, 2010

    More gentle therapy to cool the property fever

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

    By KALPANA RASHIWALA


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  3. #33
    xebay11 is offline New Launch Project Specialist
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    Quote Originally Posted by jlrx
    You should tell her "Look at the land, not the houses".

    It's good that you start training her from young.
    Yes true, BTW my daughter is interested in property and she actually came back from school one day and told me she and her best friend wanted to combine resources to buy a QAP house LOL! so I brought her sight seeing. I hope to in grain as much property talk into her and groom her as a real estate agent when she grows up.

  4. #34
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    Quote Originally Posted by xebay11
    Yes true, BTW my daughter is interested in property and she actually came back from school one day and told me she and her best friend wanted to combine resources to buy a QAP house LOL! so I brought her sight seeing. I hope to in grain as much property talk into her and groom her as a real estate agent when she grows up.
    What is a QAP house???

  5. #35
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    I think he meant it as PAP... since some politician was mentioned earlier.

    But he could also mean it as .. Quiet and Private?

    Money talks.

  6. #36
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    QAP=Queen Astrid Park

    Quote Originally Posted by Condorich
    I think he meant it as PAP... since some politician was mentioned earlier.

    But he could also mean it as .. Quiet and Private?

    Money talks.

  7. #37
    mr funny is offline Any complaints please PM me
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    Default New rules to curb property speculation

    http://www.straitstimes.com/PrimeNew...ry_492585.html

    Feb 20, 2010

    New rules to curb property speculation

    Pay stamp duty if you 'flip' property; bank loans capped at 80%

    By Joyce Teo, Property Correspondent


    TOUGHER rules on bank loans and measures to rein in speculators take effect today, as the Government steps up moves to cool the sizzling property market.

    First, anyone who sells a property within a year of buying it will have to pay stamp duty of around 3 per cent. That means from today, if you buy a home and sell it at $500,000 within 12 months, you will have to fork out $9,600 in stamp duty. This is on top of the stamp duty you had to pay on the purchase.

    Second, lending institutions will now be allowed to lend only up to 80 per cent of the purchase price, not 90 per cent. Buyers will have to come up with at least 20 per cent themselves.

    Housing Board loans are not affected by this change in what is called the loan-to-value (LTV) limit.

    The sellers' stamp duty will hit short-term speculators, observers said, while the change in the bank loan limit is likely to weed out marginalised buyers.

    The measures will affect only a limited number of buyers but experts feel they could have a psychological effect on the market. There is also concern that tougher steps are in the pipeline.

    In its surprise announcement yesterday evening, the Government made clear why it was acting: 'There is a risk that the market could overheat in the next few months, fuelled by low global interest rates and positive sentiments associated with the economic recovery.'

    The joint statement from the National Development and Finance ministries and the Monetary Authority of Singapore said: 'Any excessive exuberance will make the property market vulnerable to the continuing risks in the global economy.'

    If the market were to correct, property buyers and speculators could face capital losses, it added.

    The Government also pointed to the sharp spike in sales of new private homes last month and rising prices.

    It said that prices rose sharply in the second half of last year and at a faster rate than in previous rebounds. Mortgage lending is also up, hence its 'calibrated measures now to... pre-empt a property bubble from forming'.

    It added that it 'prefers to take small steps early, rather than be forced to impose more drastic measures after a bubble has formed'.

    The Government, which introduced market-cooling measures last September, also said that there is adequate supply and it will inject more sites on to its land sales list this year if needed.

    Cushman & Wakefield Singapore managing director Donald Han said: 'If the Government can come out with something so fast and without warning, it means they can do something faster and more painful if prices continue to rise rapidly. Investors won't like it.'

    Credo Real Estate managing director Karamjit Singh said the measures introduced last September and these new moves 'seem to be focused on preventing problems that aren't here just yet'.

    But he added: 'The question that may unnerve developers and investors is, what's next?'

    The Real Estate Developers' Association of Singapore did not think the sellers' stamp duty would have an adverse impact on property market activity.

    The reduced mortgage cap was also unlikely to have a significant impact on genuine buyers and investors, it said.

    Under 10 per cent of home loans cover more than 80 per cent of the property's valuation, but there are signs that more buyers are getting loans close to the maximum allowed.

    OCBC chief executive David Conner told The Straits Times: 'The banks have been pretty disciplined... because we've to put that much more capital against a 90 per cent loan than for an 80 per cent loan, the pricing has been significantly higher... and customers have declined to take that 90 per cent loan.'

    PropNex chief executive Mohamed Ismail did not think the new measures would kill the market, but expected a knee-jerk reaction. 'It may dampen speculators' buying interest... in the next few months,' he said.

    [email protected]

    Additional reporting by Gabriel Chen


    What the changes mean

    THE new rules mean a homebuyer will now have to fork out more of his own money to buy a property, and will reap a smaller profit if he sells it within a year.

    Take, for example, a buyer who pays $1million for a home today and sells it in less than a year for $1.1million.

    BEFORE THE NEW MEASURES

    The buyer could take out a loan of 90per cent of the price - so he could purchase the property with as little as $100,000 as a downpayment.

    By selling, he would have made a fast $100,000, less the stamp duty he paid when he bought the property - $24,600 under the stamp duty formula.

    That means he would pocket a profit of $75,400.

    His return on capital: 75,400/100,000 = 75.4%

    AFTER THE NEW MEASURES

    The buyer can take out a loan for only 80per cent of the price which means a downpayment of $200,000.

    He would have made $100,000 minus his original buyers' stamp duty ($24,600), and now minus an additional sellers' stamp duty, of $27,600.

    This means a greatly reduced profit of $47,800.

    His return on capital: 47,800/200,000 = 23.9%

  8. #38
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    http://www.straitstimes.com/News/Hom...ry_492888.html

    Feb 21, 2010

    New property rules: 'No effect on genuine buyers'

    Govt considered other factors besides prices in acting to prevent bubble, says Grace Fu

    By Jamie Ee Wen Wei


    Buyers with the financial means to hold a property will not be affected by the two new measures that came into effect yesterday, Senior Minister of State for National Development Grace Fu said.

    She emphasised that the Government had acted to prevent a speculative bubble from forming.

    In closely monitoring the property situation, it did not just look at prices, she said yesterday.

    It also took into account a comprehensive range of indicators, including the volume of sub-sales and the 'churn' - also known as 'flipping' - in the market.

    Ms Fu's comments - made at the sidelines of a community event - came a day after the new measures were announced.

    From yesterday, any property sold within a year of its purchase will attract stamp duty of around 3 per cent. This is on top of the stamp duty the prospective seller had earlier paid on the purchase.

    Home buyers will also have to fork out more of their own money to buy property. Lending institutions will now be allowed to lend only up to 80 per cent of the value of the property, instead of 90 per cent.

    Ms Fu said rising property prices were not the only reason that the Government decided to step in.

    'We don't really comment on property prices. But we look at a whole host of indicators...So it's not just about pricing,' she said.

    Asked why the new rules had come hard on the heels of last September's market-cooling measures, Ms Fu said the Government had been monitoring the market very closely and felt 'it was the right thing to do for the moment'.

    'We would like to, in a way, make sure that there's no bubble formation and can do it before the bubble is being formed. We think it's a suitable time,' she said.

    Emphasising that the aim was to deter speculative behaviour, she said: 'We want our investors to be on a more solid ground when they invest in property.

    'It should not deter genuine buyers who have the financial resources to hold a property. So, to an extent, we think it'll help maintain a healthy state of the market.'

    Last September, the Government removed the interest absorption scheme and interest-only housing loans - both of which removed or reduced regular instalment payments for uncompleted properties. It had also announced the resumption of confirmed-list land sales in the first half of this year.

    Asked if any financing restrictions on Housing Board loans were in the pipeline, Ms Fu said there were already stringent credit checks to curb speculation in public housing.

    'Plus the fact that HDB buyers who come to us for first-time loans, they are likely to live in the house that they buy,' she said.

    She added that the new rules were not meant to curb the rising cash-over-valuation (COV) sums.

    'COV happens when someone is prepared to pay a price above the valuation, so as long as a person has the means, then he will be willing to pay for the flat if he thinks it's worth it.'

    Meanwhile, home buyers yesterday continued to throng showflats across the island despite the new measures that had kicked in.

    Those whom The Sunday Times spoke to said the new rules will not affect them.

    Sales manager William Shie, who is in his 40s, welcomed the new rules.

    Mr Shie, who was at the 408-unit The Shore Residences showflat in Katong, said: 'It won't affect people like me who need a house. I actually welcome the new ruling. The lower the maximum possible loan, the better, because it chases away speculators.'

    [email protected]

    Additional reporting by Sumita Sreedharan, Debby Kwong and Ng Hui Ying

  9. #39
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    http://www.straitstimes.com/News/Hom...ry_492862.html

    Feb 21, 2010

    New home prices to stabilise

    Thanks to new cooling measures, private home prices are expected to remain firm; genuine buyers not likely to be affected, say experts

    By Irene Tham


    Rising too much and too fast? Not any more, it seems.

    The prices of new private homes are expected to stabilise - and remain firm - this year, said analysts.

    This is thanks to new measures which kicked in yesterday to cool the property market.

    The two rules: Lending institutions can lend only up to 80 per cent of the value of the property, not 90 per cent; and a new stamp duty of around 3 per cent for those who sell the property within a year of buying it.

    These moves could dampen sentiment temporarily as buyers pause and take stock, said Credo Real Estate managing director Karamjit Singh.

    Ms Tay Huey Ying, director of research and advisory at real estate consultancy Colliers International, expects the measures to curb the buying frenzy.

    Prices will stabilise instead of soaring like they did in the third quarter of last year, she added.

    Then, private home prices spiked 15.8 per cent (from the second quarter) and 7.4 per cent in the fourth quarter (from the previous one), according to the Urban Redevelopment Authority.

    Mr Singh expects the new measures to affect only a small proportion of buyers - those with a 'short-term view of their investments'.

    'On the whole, demand for private homes, especially at the low end, is still expected to remain strong. Hence, prices may continue to firm up this year,' he added.

    Similarly, Ms Tay said prices are likely to 'stand firm'.

    The new financing rules are not expected to hurt genuine buyers, said analysts, because banks were conservative and not prone to doling out loans of 90 per cent anyway.

    But some Housing Board upgraders may feel the pinch.

    Dennis Wee Group's associate director Elvin Tan said two out of 10 clients were getting loans close to the maximum allowed before - 90 per cent.

    'Now that they have to fork out at least 20 per cent of the price of a private property, they will suddenly feel strapped for cash,' he said.

    Commenting on the new stamp duty for sellers, analysts said fly-by-night speculators will be weeded out.

    They said these speculators - who tend to 'flip' a property less than a year after buying it for quick profits - make up 10 per cent to 20 per cent of all new private home buyers today.

    The latest move by the Government came swiftly after last month's sharp rebound in new private home sales.

    Developers sold 1,476 units, triple the 481 sold in December last year.

    'Although speculative activity has not reached a level deemed excessive, there is a likelihood that its volume may rise in tandem with improved confidence and economic conditions,' Ms Tay said.

    With the new measures in place, she expects private home prices to rise moderately by 10 per cent to 12 per cent this year.


    What buyers say

    The Sunday Times visited 10 showflats, including The Shore Residences in Katong, Altez in Tanjong Pagar and Meadows@Peirce in Upper Thomson, yesterday.

    Mr Nick Chong, 43
    Chief operating officer

    'The stamp duty will have a larger impact on speculators, but if the market has a good growth rate, they'll do well regardless of the new rules. The rules will probably affect the middle-income speculators, those who have to borrow money to speculate, and not the richer ones.'

    Mr William Shie, early 40s
    Sales manager

    'It won't affect people who need a house. I actually welcome the new ruling; the lower the maximum possible loan, the better, because it chases away speculators.'

    Ms Doris Teo, 59
    Teacher

    'I don't want to borrow too much from the bank, and I definitely wouldn't get a loan of as much as 80 per cent. The news just came out so I'm still unsure of how it would affect me. But it's possible that I might have to find a flat in a cheaper location.'

    Ms Elaine Lek, 31
    HR executive

    'If I see a place and have a good feeling about it, even with the new bank limit, I'll still figure out a way to buy the unit.'

    Mr Sean Toh, 38
    IT professional

    'I think the new measures will affect only those who are looking for condos as an investment; it won't affect home buyers like me. I will be selling my condo in Yishun and we will use the money from that to buy a new one.'

  10. #40
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    http://www.straitstimes.com/News/Hom...ry_492863.html

    Feb 21, 2010

    Private property resale market may still rise


    Prices of private property in the resale market could still head north despite the Government's measures to curb speculation, said industry players.

    The reason: People who held back hoping that prices would fall in the recession last year, but are now keen to enter, given the rebound in the market.

    Ngee Ann Polytechnic real estate lecturer Nicholas Mak said that based on caveats for last month, the resale market is showing strong volume.

    Statistics from the Urban Redevelopment Authority showed there were 3,353 resale transactions in the fourth quarter last year, compared to 5,798 in the third quarter and 4,164 in the second.

    Mr Mak added: 'With the economy picking up and greater job stability, people are buying as their sentiment has turned positive and there are expectations the market could pick up.'

    Said ERA agent David Lim: 'A lot of people reckon we are still probably at the foot of the mountain, and that they should go in now.'

    His average monthly transactions for private resale properties have gone up, from three or four last October to five or six in December and January.

    Buyers now face tighter rules to curb speculation.

    Lending institutions will now be allowed to lend only up to 80 per cent of the value of the property, not 90 per cent.

    Anyone who sells a property within a year of buying it must now foot stamp duty of around 3 per cent.

    Still, those with deep pockets can still speculate but they may be less active, said ERA agent Eugene Ow.

    Mr Lim forsees another peak this year in terms of prices. He said: 'A large part of the investors with real money can still go in despite these measures.'

    Even if they need loans, they might not need the full 90 per cent in the first place anyway, he added.

    Commenting on the new measures, Knight Frank property consultant Peter Ow said mid- to long-term buyers with a horizon of more than two to three years would not be discouraged.

    Also, the high-end and landed property segments should not be badly hit as people usually buy these for occupation, not speculation.

    Mr Peter Ow added: 'The upgrader market will be the one affected; these are the people moving up from HDB flats to condominiums. They're the ones who borrow to the maximum of 90 per cent.'

    Mr Steven Tan, executive director of property firm OrangeTee, said most banks have already been discouraging clients from taking up 90 per cent loans.

    He said: 'After the financial crisis, most banks tightened credit policies and put a much higher interest rate on those borrowing 90 per cent.

    'So buyers are prepared to borrow less.'

    Another reason for prices possibly going up? The fear that more curbs will kick in.

    Mr Mak noted the Government has yet to apply all the meaures at its disposal to cool the market.

    'They could put in capital gains tax, or extend stamp duty from one year to maybe two years,' he said.

    Leonard Lim & Shuli Shudderuddin

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