This week’s preview of MCL condo could indicate if demand has been dented

ALL eyes in the property market are on MCL Land’s preview this week of its Yishun condo to see if demand has been dented by last Friday’s anti-speculation measures.

One and two-bedroom units – which have typically been popular among some speculators at property launches over the past year – make up nearly 40 per cent of the total 608 units in the project, The Estuary.

The Hongkong Land subsidiary will preview about 200 units in the 99-year leasehold condo at an average price of about $750 per sq ft (psf), said MCL chief executive Koh Teck Chuan.

Property industry watchers will be focusing on the demand for smaller units – especially the 85 one-bedders which range from 590-603 sq ft. Smallish apartments have often been targets for speculators over the past year as the lump sum outlay is relatively more affordable. And for developers, smallish units can achieve the highest psf price.

MCL is pricing its one-bedders at $835 psf on average, translating to a lump sum investment of about $500,000.

Meanwhile, property giant Far East Organization said last Friday night’s government announcement of measures to cool the market had affected the number of show-flat visitors at the weekend.

The group’s chief operating officer, property sales, Chia Boon Kuah, said: ‘We have seen some impact on visitors. The weekend launch of Altez (in Tanjong Pagar) received about 600 groups of visitors. So far we have sold a total of 140 out of 155 units released.

‘Across our other show flats, we noticed a slowdown in visitorship, though the number of units sold remain comparable over a typical weekend.

‘The majority of Far East’s buyers are owner-occupiers or investors with a mid to long-term investment horizon. We will continue to meet demand from this segment and expect to proceed with our planned launches this year, while keeping a close watch on market reactions.’

As for Yishun, where MCL is gearing up to preview The Estuary, Mr Koh said: ‘We believe our buyers will comprise mostly owner-occupiers and will not be affected by the government’s measures. There hasn’t been any private condo launch in Yishun for many years.’

The development, in blocks of 15-17 storeys, is near Khatib Station and overlooks Lower Seletar Reservoir.

Last Friday night, the government announced the introduction of a seller’s stamp duty for those buying residential properties from Feb 20 and selling them within a year, in a bid to curb short-term speculation. The new seller’s stamp duty is in addition to the buyer’s stamp duty.

As well, the loan-to-value limit for all housing loans provided by financial institutions will be reduced from 90 per cent to 80 per cent to foster greater financial prudence.

Some property consultants say the second measure could have an impact on some buyers of entry-level private condos.

‘That can be quite a challenge for some HDB upgraders as effectively it could mean having to come up with 20 per cent cash downpayment, since their CPF savings would be tied up in their existing flats,’ said Knight Frank managing director (residential services) Peter Ow.

‘And schemes like interest absorption and deferred payment – which helped such buyers tide over the construction of their new homes – are no longer available.’

The Estuary’s two-bedroom units range from 904 to 926 sq ft and have an average price of $780 psf. Its three-bedders (1,184 to 1,302 sq ft) cost $722 psf on average, while the four-bedders (1,453-1,528 sq ft) have an average price of $689 psf.

Savills Singapore’s analysis of URA Realis caveats information as of yesterday showed 191 caveats for sub-sales – sometimes seen as a proxy for speculative activity – of non-landed private homes were lodged last month and 10 for February. The highest monthly figure last year was in June, when 597 sub-sale caveats were lodged. During the 2007 bull run, the highest monthly figure was in July, with 867 caveats.

Source : Business Times – 23 Feb 2010

More progressive system will benefit more owners, won’t hit high-end demand

MOST market watchers have welcomed Finance Minister Tharman Shanmugaratnam’s move towards a progressive property tax regime for owner-occupied residential properties as a fairer system.

Currently, owner-occupied residential properties are taxed at a flat rate of 4 per cent of annual value (AV) or the estimated annual rent of a property, excluding the rent for furniture, fittings and service charge.

But for property tax payable on such properties from January 2011, there will be three tiers of tax rates. The first $6,000 of AV will be exempted from property tax. The next $59,000 AV will be taxed at 4 per cent and the balance of AV above $65,000 will be taxed at 6 per cent.

‘The new system … will benefit most Singaporeans … all HDB flat owners and the large majority of private property owners will pay lower taxes compared to the current system,’ Mr Tharman said.

‘…our property tax rates, even for the high-end, will remain lower than in most international cities. That is as it should be, so that we remain a vibrant and attractive place for businesses and individuals,’ he added.

All owner-occupied homes will enjoy tax savings of $240 as a result of the exemption of the first $6,000 of AV, according to Mr Tharman.

‘Owners of high-end properties with AVs of more than $77,000 will see a small increase in tax payable, as their effective tax rates will be higher than the current 4 per cent. They comprise the top 3 per cent of private owner-occupied residential properties, or the top 0.4 per cent of all owner-occupied homes in Singapore.

‘Homes with AVs of about $80,000 will face only a small increase in tax, of slightly less than $100 per year. A property with an AV of $150,000, which typically is a large property in the central districts and is within the top 0.5 per cent level of private owner-occupied homes, will face an increase in property tax of about $1,500 per year,’ he added.

The move will cost the government about $230 million a year initially.

Knight Frank managing director (residential services) Peter Ow welcomed the change, describing it as ‘taxing the rich to give the poor. It’s a fairer system’.

He does not expect the higher property tax rate payable for higher AV properties to dent demand for residential properties bought for owner occupation. ‘The 2 per cent will not hurt the pockets of owners in this bracket. A property with $65,000 AV would probably be worth around $2.5 million to $3 million.’

Leonard Ong, executive director, KPMG Tax Services, said: ‘We think it is a good way for Government to help owner occupiers of residential properties in Singapore. The bulk of them will be in the lower band of property tax; only a minority, those who own higher-value properties, will be in the upper tax band. This benefits more people than the current structure, which is a flat rate system.’

The property tax for non-owner-occupied residential properties as well as other properties will remain at a flat rate of 10 per cent of AV.

Inland Revenue Authority of Singapore determines the AV of a property by analysing rents of similar properties.

Currently, in addition to the 4 per cent concessionary tax rate, owner-occupied residential properties with AVs below $10,000 can enjoy the ongoing 1994 property tax rebates ranging from $25 to $150, depending on the AVs of the properties. The rebates, introduced together with the Goods and Services Tax, are aimed at supporting the lower- and middle-income groups. ‘It has significantly reduced property tax payable by HDB flat owners. However, as HDB homes gradually appreciate in value over the long term, flat owners will see an increasing property tax bill over time,’ Mr Tharman said.

The government provided special additional rebates last month to mitigate increases in tax payable as a result of higher rentals and hence AVs of HDB flats over the past two years.

However, the need for a longer-term solution that provides a fair and balanced system for all property owners led Mr Tharman to announce the progressive property tax schedule for owner-occupied residential property.

Market watchers also noted that there were no property tax rebates for commercial and industrial properties in the latest Budget statement.

Earlier in his Budget speech when he covered the fiscal position for FY2009, Mr Tharman also revealed that a strong recovery in the volume of transactions in the property market boosted stamp duty collections which ended up $1.3 billion higher than initially estimated.

Source : Business Times – 23 Feb 2010

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.

Source : Sunday Times – 21 Feb 2010

I REFER to the report, ‘Uproar over new rental flats going up’ (Feb 9).

People who raise this issue should be reminded that they too live in public housing.

Do not pigeonhole people in the lower-income groups as loud and aggressive and complain that living near these residents will lower the value of your property.

Even owners of multimillion- dollar property have no say in developments coming up in their neighbourhood.

Christine Ng (Madam)

Source : Straits Times – 22 Feb 2010

Please take good care of your home and don’t sell it prematurely to make a quick buck.

It is an important investment for the future. It can help see Singaporeans through their old age. And it can be passed on to one’s children or grandchildren.

That’s the message from Prime Minister Lee Hsien Loong to the 1,300 residents attending the gala annual Teck Ghee Chinese New Year dinner in Ang Mo Kio yesterday.

‘I have seen so many residents come to see me at my meet-the-people sessions, who have sold their houses, who have used the proceeds to pay debts or to do something else, and now their money has run out and they are in trouble and they want help.’

He said that the government has been closely watching the property market and has announced recent moves to prevent a speculative bubble from forming so that more drastic measures will not be needed later.

‘The prices have risen very sharply over the last six months,’ Mr Lee noted. ‘It has not yet reached a dangerous level. But the trend has been so fast and the mood has been so exuberant that we were worried that people will get carried away and they will go beyond what is wise and we will have a bubble.’

The government cannot control property prices to the tee. ‘But what we can do is to make sure that for all Singaporeans, homes remain affordable,’ he said.

The Prime Minister is also worried that not enough Singaporeans are starting families and that they are not reproducing enough. He noted that Singapore’s Total Fertility Rate fell to a record low of 1.23 last year, and the rate among the Chinese is even lower at 1.09.

He urged Singaporeans to have babies this year, notwithstanding the Chinese superstition that babies born in the Year of the Tiger will take on the fearsome attributes of the Chinese Zodiac animal. ‘Tigers are good animals, and Tiger babies are good babies,’ he quipped.

‘So have a Tiger baby and have a new member to your family and a new member to the Singapore family.’

Source : Business Times – 22 Feb 2010

The government will take more measures to curb speculative activity in the property market if it has to, Minister for National Development Mah Bow Tan said yesterday.

Measures targeted at the HDB (Housing & Development Board) market could also be on the way. These could be announced during the Budget Debate and Committee of Supply sessions following today’s Budget announcement, Mr Mah added.

‘Going forward, we will monitor the market closely and if there is a need to, we will take further measures,’ Mr Mah said. ‘I think that there are a few other measures that can be taken.’

Mr Mah, who was speaking to reporters at a community event last night, added that it is better not to speculate on what those measures might be and instead ’see what happens’ first.

The government on Friday announced two new property policies to curb speculation and encourage financial prudence.

A seller’s stamp duty will be levied on those who buy a residential property and sell it within a year. Currently, stamp duty is levied only for the purchase of a property and not its sale.

Also, the loan-to-value limit on housing loans will be lowered from 90 per cent to 80 per cent.

The two measures, which come on top of previous policies announced in September last year to cool the market, are not expected to hit prices and the volume of private property sales, market watchers said.

Mr Mah said that the government is taking very measured moves – which are designed to have a minimal impact on genuine homebuyers – as it tries to pre-empt a property bubble from forming.

Measures are being implemented in steps this time around, unlike in 1996 when many measures were introduced at one go.

‘We have to weigh very carefully what are the measures we want to take, such that we don’t cause the market to collapse, but at the same time, we let a little bit of air out of the bubble,’ Mr Mah said.

And as for the HDB market, ‘we are looking at something’, he added.

Mr Mah said in late January that HDB is checking to see if buyers are using government-subsidised flats to speculate in the property market – even as resale flat prices hit a new high in the fourth quarter of 2009.

Source : Business Times – 22 Feb 2010

PRIME Minister Lee Hsien Loong yesterday urged Singaporeans to treasure their homes and not use them as an easy means to make a quick buck or settle a debt.

He disclosed that MPs have been approached by many residents who have sold their homes for cash to pay off loans or make purchases.

‘They have a problem finding another home or getting a loan to buy another home…it is not easy to solve the problem,’ he said, in a speech underlining the importance of treating a residential property as a long-term investment.

‘Property is for people to buy to live in, not for speculating,’ he said.

His remarks, in Mandarin and English, at a Chinese New Year dinner last night came two days after the Government made a surprise announcement to cool property speculation.

Mr Lee stressed that the Government cannot control property prices.

‘We can try to influence it, but whether it goes up or goes down depends on sentiment, depends on what happens in the region and the world…

‘But we can apply measures to try to guide it in a broad way, so that if it is getting carried away, we can pull it back a bit,’ he added.

The measures announced last Friday include the introduction of stamp duty on those who sell their residential property within a year of buying it. The duty is around 3 per cent of the price.

Also, buyers can borrow only up to 80 per cent, not 90 per cent, of their property’s value from a financial institution.

Mr Lee said these measures were a pre-emptive move. Prices have risen sharply in the last six months, he noted.

‘While it has not yet reached a dangerous level… the trend has been so fast, and the mood so exuberant, that we are worried it will get carried away beyond what is wise,’ he told about 1,300 Ang Mo Kio GRC residents attending the dinner at his Teck Ghee constituency.

‘It is better to pre-empt a bubble than wait for it to get serious and have to take more drastic measures,’ he said, assuring Singaporeans that his government’s priority is to ensure homes remain affordable.

At the other extreme, falling home prices is undesirable for the many Singaporeans who own their homes, he added.

A home, an appreciating asset in Singapore, is a nest-egg, said Mr Lee.

‘Please take good care of it. It’s for you to live in, it’s for you as an investment, it’s for you for your old age.

‘Don’t think of selling prematurely to make a quick buck,’ he advised.

Alternatively, home-owners can pass their flats on to their children, he said and added: ‘This means you need to have children to pass your home to.’

Mr Lee then reiterated his worry that not enough Singaporeans are starting families. Total fertility rate last year hit a new low of 1.23. For the Chinese community here, it was even lower at 1.09.

But falling birth rate is an issue faced by East Asian countries, he noted, and it is partly a result of changing values.

In China, young people, to avoid nagging from their parents, have resorted to ‘renting’ a boyfriend or girlfriend to take home during this new year period, Mr Lee observed.

‘It’s amusing, but it’s also sad,’ he said. ‘I’m relieved there’s no such reports in Singapore. I hope it doesn’t happen.’ Still, a little social pressure is useful but more importantly, parents and relatives need to encourage them and show them support.

Unmarried residents interviewed said they first needed to save enough and have a stable career before settling down and starting a family.

Said Mr Jason Quak, 28, an operations manager: ‘Now you need money for everything, especially for a wedding.’

He and his 25-year-old girlfriend want to buy a flat in Ang Mo Kio, near his parents, but he is not confident he can find one within his budget of around $300,000.

Teacher D. George, 32, welcomed the latest anti-speculation measures but argued that these will not have a major impact on rising HDB prices.

Source : Straits Times – 22 Feb 2010

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

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

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

He added that he would be making ’some announcements’ during the Committee of Supply debates in Parliament on his ministry’s Budget next month.

Mr Mah had said late last month that HDB was embarking on a review of its rules to stamp out possible speculation, and that the findings would be out in a few months’ time.

The review is being conducted as HDB prices have been rising, with some buyers said to be renting HDB flats illegally or selling them after a one-year period to make a fast profit.

Yesterday, Mr Mah noted that there was a ‘high risk’ of a property bubble forming in the private homes market.

Last September, the Government announced several measures which led to the sales volume slipping.

But there have since been renewed signs that the market is heating up.

Sales volume has risen sharply, with developers selling 1,476 units last month – three times higher than in December.

And prices rebounded in the second half of last year.

Mr Mah said: ‘If you look at the environment, interest rates are low, there’s a lot of exuberance in the market as a result of positive sentiments.

‘If you see a lot of speculation, especially at a time when what we are seeing is a confluence of factors (such as) low interest rates, positive sentiment, volumes actually picking up – those are the danger signals. We have to make a decision.

‘The question is, do we act now, take small steps, or wait until the bubble has formed, by which time we may have to take more drastic steps. So we decided to act now. It depends on how the market reacts. If there is a need to, we will take further measures.’

He said there were a few other possible measures the Government could take but declined to elaborate.

‘It’s a choice between not doing anything and letting the exuberance take over and then having to act when everything is too late.’

Taking smaller steps means that the number of people affected, especially genuine buyers, will be ‘very little’, he added.

Mr Mah said that given the current market situation, the introduction of a seller’s stamp duty will make speculators ‘think twice’ about flipping properties.

‘We are not against prices rising. If the economy is doing well and there is genuine demand, prices rise. It’s part of the market workings.

‘What we want to see is a very stable, sustainable market, that prices don’t run up faster than what the economy can accommodate.’

Source : Straits Times – 22 Feb 2010

PRIME property prices may still be a far cry from the record levels reached during the 2007 property boom, but one Orchard Road project recently achieved a new record price.

The Straits Times understands that a 2,885 sq ft apartment at Ardmore Park was sold last week for $10.64 million, or $3,688 per sq ft (psf) – a record for the project.

The previous record for the 330-unit freehold project was $10.1 million, or $3,501 psf for a unit, achieved in October 2007, according to caveats lodged.

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

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

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

Mr Joseph Tan, executive director of residential services at CB Richard Ellis, said that this year will be a year dominated by high-end properties.

‘Mass market homes, which drove the property boom last year, have reached their previous peak in terms of price, whereas the luxury market is still 20 per cent below its peak,’ he said. He also noted that foreign buyers, who left in droves in the wake of the 2008 financial crisis, have been returning to the Singapore property market.

Based on caveats lodged, the number of foreign buyers rose from 1,498 in 2008 to 2,840 last year, he said.

Compared to rival cities such as Hong Kong, Singapore prime properties are still cheaper and represent good investment value, Mr Tan added.

According to a recent DTZ research report, foreigners accounted for 12 per cent of total purchases of private homes in the fourth quarter last year, up from 10 per cent in the previous quarter.

In the second half of last year, there was an increase in buyers from Britain, Korea and Australia, said the report.

High-end property prices have been inching up in tandem with the global economic recovery.

Late last year, six units at SC Global’s luxury development, Seven Palms in Sentosa Cove, were sold at record prices of $11 million each, or $3,100 to $3,400 psf.

However, luxury property prices are still nowhere near the dizzying heights achieved in 2007 when a 53rd storey 5,048 sq ft private apartment in The Orchard Residences was sold for a record $5,600 psf, or $28.27 million.

That was topped, in absolute terms, by a freehold apartment on the 19th storey of The Marq on Paterson Hill which sold for a whopping $31 million, but at a lower psf price of $5,100.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said that even though activity in high-end properties will pick up this year, prices this year are not likely to return to their 2007 peak.

‘This year is going to be a bit turbulent for the property market, especially after the recent government measures to cool the property market. Buyers should generally be quite cautious,’ he said.

The Government announced last Friday that it will introduce a sellers’ stamp duty for those who resell a property within a year. It also reduced the maximum home loan amount a bank can lend a buyer from 90 per cent to 80 per cent of the property value.

The new measures aim to pre-empt a property bubble from forming and to ensure a stable and sustainable property market.

‘Mass market homes, which drove the property boom last year, have reached their previous peak in terms of price, whereas the luxury market is still 20 per cent below its peak.’ - Mr Joseph Tan, executive director of residential services at CB Richard Ellis

Source : Straits Times – 22 Feb 2010