Five reasons why you should buy a property now

With house prices on the rise, despite the new cooling measures, is now really the right time to buy a property? Award-winning property agent Kelvin Fong thinks so. Here are his five reasons why buying a property today could be the best decision you ever make.

1. Low interest rates
People with money to invest can use the current low interest rates – which are as low as 0.88% at present – to leverage a passive income from their purchased property. In fact, the returns from a property can be more than what a bank’s fixed deposit account can offer.

For example, a unit at Southbank costing about $1.2million could generate a rental income of about $4800 per month, while the mortgage is about $3000. The buyer would enjoy a passive income of $1800 per month, as compared to depositing it in the bank to get 0.4% of around $1000 per year.

2. Property is an appreciating asset (eventually)
Barring any dramatic economic upheavals, property prices will likely stabilise or slowly, but progressively, increase from now till 2011. Most sellers will not want to sell at a lower price today, and will not suffer when paying a relatively high mortgage due to low borrowing costs. The 30% down payment rule will actually act as an incentive because purchasers, having come up with this capital, will not want to sell.

Provided you do not sell your property during the downturn – as you will almost inevitably lose money on it – the value should increase. The key is that the buyer must have holding power when the market deteriorates and should not buy until they have the holding power to weather any market conditions. Prices will eventually rise again – as witnessed in 2008, when prices were down but did eventually rise to and, in some cases surpass, the 2007 peak.

3. Assets beat playing the market
Many people will choose to purchase an asset like property because the market liquidity – essentially the asset’s cash value – is still strong and, due to the last financial crisis in 2008, people felt safer putting the money in asset rather than financial instruments. The asset will always be there, and even when market conditions are not as good, as long as you do not sell it, you will not lose money.

4. Market conditions don’t matter
Buyers who are looking at property as a long-term investment will be less concerned about the market’s movement up or down.. Property will – nearly always – appreciate in the long term in Singapore due to the scarcity of land and available real estate. While having a diverse portfolio is preferred, as a long-term investment, property is generally going to make more money than other comparable instruments. Investing in bonds, for example, is a safe investment instrument, but capital appreciation is weak.

Property is not the ideal market for speculators though – not only has the government introduced measures to discourage property speculation – but you will be much more at risk of market fluctuations.

5. Property keeps on giving
Buying public housing in today’s market is not cheap, with HDB’s executive condominiums going at around $600 – 700psf, close to mass market private property prices. A HUDC unit has already reached the $1 million mark, and the trend looks set to continue. Parents may see buying an asset, not only as a hedge against inflation, but also as an eventual inheritance to their children. If house prices continue to rise – and with the cost of construction materials inevitably going to rise too – there is the fear that the younger generation could be priced out.

Source: iProperty.com Singapore

October 15th, 2010

Proposed changes to Residential Property Act not expected to weigh down on prices

SINGAPORE: Proposed changes to foreign ownership of landed residential property in Singapore and a seven-day cooling period for HDB resale flats are not expected to weigh down on property prices, according to analysts.

Over 80% of Singapore's population resides in flats. Hence, proposed amendments to the Residential Property Act will have little impact on the overall market, said experts.

The Act regulates foreign ownership of restricted properties, namely landed homes, strata-landed housing and vacant residential land.

The proposed changes to foreign ownership of landed homes were outlined in the Residential Property (Amendment) Bill, introduced in Parliament on Monday.

Commenting on the changes, Nicholas Mak, executive director of property consultancy firm SLP International, said: "This is not a cooling measure; this is to bring some of the rules in line with modern practices and keep them more current and effective...There are about 70,000 landed properties (in Singapore), only 3% or about 2,000 are owned by foreigners. Most of these have plans to stay and live in Singapore for a long period of time, so the rules that affect them are not really that great."

Separately, HDB has announced a 7-day cooling period for flat buyers and sellers before completing transactions.

Mohamed Ismail, CEO of PropNex, said: "I don't think this measure will in any way further bring down prices, simply because I see this as another step of prudence measures.

"On the other hand it could be open to abuse because the sellers have cooling off period. During the 7 days he may choose not to sell and during the 7 days there may be another buyer that comes along to up the price by $500 or $1,000, and the first buyer may lose out."

However, analysts added that cooling measures implemented by the government at the end of August will still have a greater impact on the overall property market. And some experts said that as a result, prices in mass market properties could see a decline of 8% in the next six months.

The government introduced the recent set of property measures to pre-empt a speculative bubble from forming, to encourage greater financial prudence and to reinforce the objective of long-term owner occupation for public housing.

Speaking in Parliament on Monday, National Development Minister Mah Bow Tan said: "By taking these calibrated steps one at a time, we are able to let the air out of the bubble.... gradually, rather than to prick the bubble and then have it burst, because when the property bubble bursts, a lot of people will be hurt, not to mention the economy as a whole."

Some experts note that the volume of property transactions in private and public sector has gone down by 30% since the measures were implemented.

Source: Channel News Asia by Rachel Kelly

Posted: 18 October 2010 

ANOTHER 2,300 DBSS FLATS IN PIPELINE

SINGAPORE - Flat buyers can look forward to more public flats under the Design, Build and Sell Scheme (DBSS).

The Housing and Development Board (HDB) awarded a tender yesterday for a site that could yield about 700 DBSS flats in Yishun to Guthrie (DBP) and SK Land for $148,888,888.

The site, with a land area of 27,473 sq m, is at the junction of Yishun Avenue 11 and Yishun Central.

The HDB will tender another three new DBSS sites later this year that could yield 1,590 flats in Tampines, Bedok Reservoir and Upper Serangoon.

The first site in Tampines Avenue 5 and Tampines Central 8 will be launched for sale next month, while the other two at Bedok Reservoir Crescent and Upper Serangoon Road will be rolled out in the second half of this year.

This flat supply will supplement the Build-To-Order system, which is the main supply of new HDB flats.

DBSS flats are developed and sold by private developers. They have a 99-year lease and are sold under similar HDB eligibility conditions.

Ninety-five per cent of the flat supply for public applicants will be set aside for first-timers.

- Source: TODAY, 25 May 2010

GETTING TOUGH ON ILLEGAL SUB-LETS

SINGAPORE - Since the beginning of the year, the Housing and Development Board (HDB) has started taking action to repossess three flats - their owners had rented out their entire units without fulfilling a minimum occupation period and gaining prior approval from the HDB.

On Wednesday, another flat - a maisonette - was found to have been illegally housing 20 people when HDB officers paid a "surprise" routine inspection visit to it. Seventeen of the tenants were maids. The owner of the maisonette had gone beyond the limit of nine sub-tenants and could lose his flat.

From January 2008 to December last year, HDB took enforcement action against 56 flat owners - from all flat types - who sub-letted their units without approval.

Some flat owners lock up one bedroom, and sub-let the rest of the flat without staying in the unit. The penalties for these cases ranged from fines of $1,000 to $21,000 to the repossession of the flats.

HDB also set up a hotline last month to receive tip-offs. It has received more than 60 calls in three weeks, and is investigating the cases. Mr Teo Chye Hwa, head of HDB's Bukit Batok Branch Office said that once a call is received, the board will first check if the owner is allowed to sub-let the whole flat.

"Once that is verified, we will conduct further investigation to gather more evidence of illegal sub-letting of the flats," he said.

HDB will continue to step up routine checks to weed out unauthorised sub-letting.

- TODAY, 9 April 2010

Singapore jumps two spots in office costs ranking

Singapore has climbed two notches on the latest bi-annual list of the most expensive office locations in the world.


However, according to a report released by Colliers International, the country’s competitiveness in office occupancy costs continued to improve, as the gap between rental rates in Singapore and in other major financial centres in the world had widened.

Colliers’ global office real estate review for the second-half of 2009 showed that among 154 cities worldwide being tracked, Singapore ranked 24th as the most expensive office location from June to December 2009, up by two notches from 26th place during the first half of 2009.

Hong Kong remained on the top spot, followed by London’s West End and Tokyo.

Although the country’s ranking rose, the gap between office rents in Singapore and those in rival cities grew bigger. Colliers said that this is because Singapore lags behind in the office market recovery, both regionally and worldwide. Many cities around the world posted gains or saw milder declines in office rents during the second half of last year.

“This phenomenon is to Singapore's advantage,” said Tay Huey Ying, Colliers’ director of research and advisory. “The resultant growth in the gap in office occupancy costs against other key financial centres improves our competitiveness and makes Singapore the choice location for business set-ups.”

She also noted that the gap in office rents between Singapore and Hong Kong had widened, from 45 percent at end-December 2008 to 60 percent in H1 2009 and 67 percent in H2 2009.

While office rents in Singapore continued to fall, the rate of decline has slowed significantly, from 42.3 percent in the first half of 2009 to 6.5 percent in the second half of 2009.

Colliers expects the local market in Singapore to ride with the economic recovery this year, and create a momentum seen in Q4 2009, when demand for office space had expanded by 301,000 sq ft.

In addition, rents for grade A office space in the central business district bottomed out in the first quarter of the year, growing by 0.5 percent quarter-on-quarter to the end of Q1 at $6.38 psf per month, said Colliers.

“The flight to quality, as well as expansion by businesses, can be expected to continue in 2010,” said Ms. Tay. “Barring any unforeseen external shocks, the Singapore office market is expected to see a modest recovery with up to a 5 percent increase in rents in 2010.”

 

- PropertyGuru.com.sg, 6 Apr 2010

S'PORE RANKED NINTH MOST EXPENSIVE CITY

SINGAPORE - Singapore is ninth most expensive city in the world for logistics space. The Republic has overtaken cities such as Seoul, Sao Paolo and Honolulu in flatted or prime warehouse rents, according to the latest Global Industrial Report released by Colliers International.

These are industrial space of 20,000 square foot or more. In terms of rent for landed warehouses or 100,000 square foot or more, Singapore's ranking worldwide remains constant at No 12 across the 139 cities as of the second half of 2009.

Tokyo ranked top in both categories while London and Oslo were in the top five. A decline in rental rates in larger cities like Seoul, Sao Paolo and Honolulu has pushed Singapore's ranking higher.

Still, Singapore remains quite competitive as a logistics hub despite the jump in ranking, said Mr Suan Teck Kin, a United Overseas Bank economist. "I don't think Singapore's warehouse rent is still a key issue yet," he said.

Rental rates in Singapore have only slightly increased from US$1.03 ($1.44) to US$1.07 per sq ft per month, he said. While in Hong Kong, the rent has jumped from US$1.28 to US$1.51 per sq ft per month.

"To maintain its competitive edge, Singapore should ensure that it will provide value-added services for multinational companies to consider locating their operations here," said Mr David Cohen, director of Asian Economic Forecasting at Action Economics.

- TODAY, 31 March 2010

WHERE HAVE THE UPGRADERS GONE?

SINGAPORE - A year ago, they made up two-thirds of buyers here snapping up private homes.

But in the first three months of this year, public housing upgraders were notably out of the brisk action that saw an estimated 4,000 private residential units snapped up - more than double the 1,860 units sold in the preceding quarter, despite property market curbs introduced last month.

Steeply rising prices and the burden of servicing hefty mortgage loans are among the reasons that have held back HDB dwellers from chasing their private-housing aspirations, according to analysts.

HDB upgraders made up just 33.7 per cent of the private home buyers in the first quarter, a sharp drop from the 63.7 per cent in the same quarter a year ago, according to a report by CB Richard Ellis.

Mr G Rajan, a PropNex agent, told MediaCorp that the price gap between a public flat and a private condominium was so wide that buyers think twice about switching.

As bank loans now are allowed to cover only 80 per cent of the sale price, down from 90 per cent, this means home buyers will need to fork out more cash as well.

Another factor for the weaker participation of HDB upgraders: Most launches in the first three months were for up-market properties in prime districts, compared to the largely mass market projects that dominated launches in the first quarter of last year.

Indeed, this quarter's private home sales are supported by an influx of foreign buyers, who make up 23.5 per cent of new home buyers, said the CBRE report.

As for prices, they are expected to be close to peak numbers, when the Urban Redevelopment Authority releases its residential property price index this week, said Mr Desmond Sim, associate director of research and consultancy at Jones Lang LaSalle.

Could more market-cooling initiatives be on the cards? Some think so.

Ms Chua Chor Hoon, head of DTZ South-east Asia Research, said: "If the buying fever and price increase continue unabated or intensify, more government measures are likely to be introduced."

Mr Colin Tan, head of research and consultancy at Chesterton Suntec International, said: "I don't see why prices should come down on their own without any government intervention as there is more money to spend than apartments to sell."

Liquidity, coupled with growing market confidence, continues to fuel demand as investors dive into the market hoping to gain from price increases, said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

Some expect the market to soften and HDB upgraders to return in the third quarter.

CBRE thinks demand for new homes in the next quarter will reach 3,000 and developers will snap up offerings under the Government Land Sales programme to replenish landbanks. As such, home prices are likely to rise gradually.

DTZ Research expects prices to increase "moderately" by per cent this year, noting that landed home prices this quarter have surpassed 2008 peak levels.

But at the same time, leasehold homes outside the prime districts have seen least price growth since they have passed the peak, and there is "more resistance" to higher prices in the mass market.

Meanwhile, the resale private home market has not enjoyed the same level of activity. In fact, there has been a notable decrease, said Mr Vinod Nair, chief executive officer of SmartLoans.

"There is a 10- to 15-per-cent price gap between what sellers want to sell at, and buyers to buy at," said Mr Nair.

- TODAY, 31 March 2010

PRIVATE PROPERTY PRICES RESIST COOLING MEASURES

SINGAPORE - The red-hot private homes market continued to resist cooling measures introduced by the Government, registering another quarter of price growth, as some have forecasted.

Flash estimates yesterday by the Urban Redevelopment Authority (URA) show the price index of private residential property for the first three months rose to 174.2 points - 5.1 per cent higher than in the fourth quarter last year.

But the pace of growth was slower than the 7.4 per cent surge in October to December. And the index is still 2 per cent below the peak levels of mid-2008, and 4 per cent off the historical height of the 1996 property boom.

Industry observers said that had it not been for the recent anti-speculative measures introduced in February, the price hike could have been higher.

"If the demand for private homes continue for the rest of this year unabated, the record average private home prices set during the property boom in 1996 could be exceeded before the end of this year," said Mr Nicholas Mak, real estate lecturer at Ngee Ann Polytechnic. He expects prices to increase by between 12 and 22 per cent for the whole of this year.

Mr Donald Han thinks that record peak could be hit in three to six months. "We are expecting 1Q2010 (sales) volume to be between 3,800 and 4,100 units", and home prices would grow moderately by 3 to 5 per cent on-quarter, said the Cushman and Wakefield managing director for Singapore.

The URA data showed prices of non-landed private homes in the prime Core Central Region rose by 4.5 per cent; the Rest of Central Region 7.2 per cent; and Outside Central Region 3.9 per cent.

The estimate figures will be updated by URA in four weeks' time. Millet Enriquez

- TODAY,  2 April 2010

A SIGN OF BUYER RESISTANCE?

SINGAPORE - Prices of HDB resale flats have been climbing for three quarters, the last two at more than 3 per cent each. Now, the rate of growth has slowed to 2.7 per cent in the first three months of this year.

And the median cash over valuation (COV) amount - after doubling in the fourth quarter - has risen by just $1,000 to $25,000, while resale volume headed south for two consecutive quarters.

Could this, coming after recent property cooling measures by the Government, be a sign that resale prices are encountering buyer resistance?

It is the first possible indication that resale prices may not rise by as much as they did last year, property experts told MediaCorp, but it is still a wait-and-see situation.

"It's the right signal; it shows prices are growing at a slower pace," said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

The number of Built-to-Order (BTO) flats to be launched by HDB this year is also expected to take some steam off the resale market, said Mr Eugene Lim, associate director of ERA Asia Pacific.

But, he added, demand still outstrips supply: "The demand for resale flats comes predominantly from upgraders, downgraders and permanent residents because of their immediate housing needs."

The HDB announced it will launch this month 1,200 BTO flats in Punggol and, from May to September, another 7,400 BTO flats in areas such as Sengkang, Jurong West, Yishun, Bukit Panjang and Woodlands.

But some, like sales manager Sri Aran, cannot wait three years for a new flat. He plans to upgrade from his three-room flat to a five-roomer, as his 16-year-old son now shares a room with his grandfather, but is concerned about rising resale prices.

While it makes more sense for first-time households to buy direct from the HDB as there is no COV, these buyers could "return to the resale market with a vengeance" since the rejection rate of BTOs is about 50 per cent, said Chesterton Suntec International's head of research and consultancy Colin Tan.

However, the estimated number of resale transactions for the first quarter fell by 5 per cent, after a 23-per-cent drop in the fourth quarter. Mr Mak attributed this to slower sales during the Chinese New Year holiday and the gradual effects of the cooling measures.

Mr Lim agreed: "We need to watch Q2 and Q3, which tend to experience a lot more market activity."

Property consultants expect resale prices to rise between 5 and 10 per cent this year. The Resale Price Index has risen by 3.5 per cent annually, on average, since 2000. Last year's hike was 8.2 per cent.

 

- TODAY, 2 April 2010

MARINA HOUSE TO MORPH INTO LUXURY APARTMENT BLOCK

SINGAPORE - A consortium led by mainboard-listed Roxy-Pacific Holdings has acquired Marina House (picture) at 70 Shenton Way for $148 million and plans to turn it into a luxury residential apartment.

Owned by Hong Leong Group, the building sits on a land area of 1,833.5 square metres and consists of a four-storey podium and 17-storey office tower. It has a gross floor area of 199,691 square feet and has an unexpired lease of 60 years. The site has also obtained permission from the Urban Redevelopment Authority to be developed into a 42-storey luxury residential apartment block with commercial space on the first floor.

Roxy-Pacific is confident the prime site will be much sought-after, with its location near Marina Bay, Tanjong Pagar MRT, the two Integrated Resorts and the future Tanjong Pagar Waterfront City.

"A reference property nearby that was launched recently was 76 Shenton Way which was sold within a day, with the highest selling price achieved at $2,600 per square feet," said Teo Hong Lim, CEO of Roxy-Pacific.

Tay Huey Ying, director of research and advisory at Colliers International, shares the sentiment and said demand for inner-city residential developments remain high due to their good rental prospects. However, the 70 Shenton Way's 60-year lease may set prices back.

"A 99-year lease is more attractive than a 60-year lease. The ability for the developers to top it up to 99 years is critical." she said, adding that such a development will require the approval of various permits including the lease top up. Coupled with tear-down and construction time, the development will typically take three years to complete.

Meanwhile, the other consortium partners are Macly Capital, Pinnacle Assets, Fission Holdings and investor Chee Hsian Sing, with each party holding a 20-per-cent stake in the property. Roxy-Pacific said the acquisition is financed through internal cash resources and is not expected to impact net earnings per share and net tangible assets per share for this financial year.

- TODAY, 6 April 2010

HOME LOANS MARKET COMPETITION HOTS UP

SINGAPORE - The home loans market is hotting up in Singapore with big lenders aggressively lowering rates to fend off competition from each other and the smaller finance houses.

Finance companies had the lowest interest rates at the start of the year, but three months on, banks have also started dropping prices.

Competition is stiff among major local banks and financiers, but DBS Bank, OCBC Bank and United Overseas Bank (UOB) have been going on the offensive with not just lower prices but additional services as well.

SIAS Research lead analyst Moh Tse Yang said: "Some developers whom we have met have been approached by several banks to go hand-in-hand with them during their launches, to be able to set up booths there, offering special rates. So we're looking at the banks aggressively chasing the home loans."

At the end of last year, Hong Leong Finance was offering some of the lowest rates, with first year interest rate for its public housing loan at 1.3 per cent. But within three months, the banks responded.

As at the end of last month, DBS' variable public housing home loan rate for the first year stood at 1.3 per cent, while OCBC's rates came in at 1.26 per cent.

Hong Leong's current rates have also come down, standing at 1.23 per cent. UOB declined to give their rates for the period.

But despite the rapid lowering of rates, observers expect banks and financiers to stop short of a price war.

Ms Christine Kuo, senior analyst (financial institutions group) at Moody's Singapore, said: "After all, the banks understand that a price war does nobody any good. So, although they will try to stay competitive, they won't be making sufficient margins if they continue to undercut."

Lenders are currently in the process of revising their home loan interest rates for this month, analysts said.

The expectation is that rates will be revised upwards, in light of strong continued demand from home buyers as well as on the back of outlook that interest rates may be on the uptrend going forward.

- TODAY, 7 April 2010

COMPULSORY INDEMNITY COVER FOR ESTATE AGENTS TO BOOST CONFIDENCE

SINGAPORE - If your real estate agent lies, gives you poor advice or fails to do due diligence, you will soon have a greater degree of assurance of recovering at least part of your losses.

From next month, agents accredited with the Singapore Accredited Estate Agencies (SAEA) must have valid professional indemnity (PI) insurance in order to renew their accreditation status. A minimum indemnity limit of $500,000 is recommended.

The move, besides helping companies to manage their risks, is also to boost public confidence.

"Consumers who approach PI-covered agencies feel safer, that this agency is not a fly-by-night company. And in the event I need legal recourse that would lead to financial compensation, I would be able to get it," said SAEA chief executive Tan Tee Khoon.

He noted how, in some cases, the plaintiff may find himself holding just a paper judgment when the other party cannot cough up the money.

Why the change now? Compulsory PI could be one aspect of a proposed regulatory framework for the industry that authorities are now looking at, said Dr Tan, and SAEA's new requirement for its members is in anticipation of just such a development.

One example of when PI comes in useful for the client: Some years ago, a buyer of a property was keen on converting it for a different business purpose.

His agent failed to find out that the property could not be used for other things, and ended up using his PI coverage to pay the penalty for forfeiting the purchase.

This instance was cited by Mr Michael Chew, chief executive of AVA Insurance Brokers, which was one insurer - the other being Royal & Sun Alliance Insurance - that SAEA worked with to offer PI options tailored especially for smaller real estate agencies.

Big estate agencies here already have indemnity cover, but hundreds of "boutique sized" firms lack such coverage due to their limited means, noted Dr Tan.

The proposed PI premiums AVA has worked out with SAEA, Mr Chew estimates, are about half the cost of coverage smaller estate agents are currently paying. More information will be given to SAEA's 400 accredited estate agencies.

In Singapore overall, Dr Tan reckons there are some 1,700 estate agencies, about 70 per cent of which have less than 50 staff - and of this group, four in 10 do not have PI coverage.

He believes making smaller agencies take up PI won't jack up costs for consumers, "as the industry is competitive".

Source: TODAY, 17 March 2010

MEASURES TO ENSURE A STABLE AND SUSTAINABLE PROPERTY MARKET

1 The Government announced today the following measures to ensure a stable and sustainable property market:

Introducing a Seller’s Stamp Duty (SSD) on all residential properties and residential lands that are bought after today and sold within 1 year from the date of purchase; and

Lowering the Loan-to-Value (LTV) limit to 80% for all housing loans provided by financial institutions regulated by the Monetary Authority of Singapore (MAS)

2 In September last year, the Government introduced a set of measures to temper the exuberance in the private residential market. The Government has continued to monitor the property market closely. While the September 2009 measures helped to cool the property market, there are recent signs that it is starting to heat up again.

3 Demand for private housing units has spiked sharply in January this year. The number of units sold by developers in January was triple that in December 2009 and was the highest monthly total since September 2009. Prices have also increased sharply in the second half of 2009, at a faster rate compared to previous rebounds from the troughs of property cycles, and the price increase has continued in January. Mortgage lending has also increased steadily by around 12% year-on-year through 2009.

4 While the current level of speculative activity in the market is still lower than what it was at the height of the property market boom, and overall price levels are below the previous peak, 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.

5 Any excessive exuberance will make the property market vulnerable to the continuing risks in the global economy. Should growth turn out weaker than expected, property buyers and speculators could face capital losses as the market corrects. Conversely, if the recovery stays on course, interest rates will eventually rise and drive up financing costs with severe implications for those who have overextended themselves.

6 Therefore, the Government has decided to introduce calibrated measures now to temper sentiments and pre-empt a property bubble from forming. We will tighten the supply of credit to the housing market to encourage greater financial prudence among property purchasers. The Govern­ment prefers to take small steps early, rather than be forced to impose more drastic measures after a bubble has formed.

7 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.

Seller’s Stamp Duty (SSD) on Residential Properties Sold within 1 Year

8 The SSD will be levied on sellers of residential properties and lands bought on or after 20 Feb 2010, and sold within one year from the date of purchase. Properties bought before 20 Feb 2010 will not be subject to the SSD.

9 The objective of this new tax measure is to discourage short-term speculative activity that could distort underlying prices. It is not targeted at the purchase of properties for owner-occupation or longer term investment.

10 The SSD will be applied at the standard ad valorem stamp duty rates for the conveyance, assignment or transfer of property.

11 The SSD will not be applicable to HDB flats as they are already subject to a minimum occupation period of at least one year.

12 IRAS will be releasing an e-tax guide on the circumstances under which SSD will apply and the procedures for paying SSD. The e-tax guide will be available at www.iras.gov.sg. Taxpayers with enquiries may call IRAS at 6351 3697 or 6351 3698. The telephone lines will be opened till 6.30 pm on 19 February 2010 and from 8.30am to 1.00 pm on 20 February 2010.

Lowering Loan-To-Value (LTV) Limit to 80% for Housing Loans

13 The LTV limit will be lowered from 90% to 80% for all housing loans provided by financial institutions regulated by the MAS. The 80% LTV limit will apply to all housing loans granted by financial institutions for private residential properties, Executive Condominiums, HUDC flats and HDB flats (including those under the Design, Build and Sell Scheme, or DBSS flats).

14 Loans granted by HDB for HDB flats (including DBSS flats) will still have an LTV cap of 90%. This is because HDB flats are already subject to other criteria to prevent speculation and encourage financial prudence e.g. minimum owner occupation period and restriction on ownership to one flat per household. HDB loans are offered to only eligible first-time flat buyers or second-timers who are upgrading. They are required to utilise all of their CPF Ordinary Account balance before HDB loans will be granted. This is in line with HDB's home ownership policy of helping eligible buyers, especially first-time buyers, purchase public housing in a financially prudent manner.

15 Financial institutions' lending standards have remained prudent. Currently, less than 10% of housing loans are granted at LTVs greater than 80%, although there are signs that more housing loans are originating at higher LTV bands. In line with the objective of ensuring a stable and sustainable property market, lowering the LTV limit sends a clear signal to the financial institutions to maintain credit standards, and encourages greater financial prudence among property purchasers.

Adequate Supply in the Pipeline

16 The Government will also continue to ensure that there is adequate supply of housing to meet demand. Sites that can yield 10,550 private housing units have already made available in the Confirmed and Reserve List of the Government Land Sales (GLS) Programme in the 1st Half of 2010. This is the highest supply quantum in the history of the GLS Programme.

17 In addition, the Government placed 8 residential sites, including 2 Executive Condominium sites, which can potentially yield about 2,900 units on the Confirmed List. This was close to the highest ever potential supply of about 3,000 units (in the 2nd Half 2007 GLS Programme) from the GLS Confirmed List, since the Reserve List / Confirmed List system started in 2001. If necessary, the Government would inject more supply in the 2nd half 2010 GLS Programme.

18 Apart from the supply from the GLS Programme, there were also 60,476 uncompleted units of private housing from projects in the pipeline as at 4Q2009. Of these, 34,234 units were available or could be made available for sale. These comprised units that had been launched for sale by developers, units that had pre-requisite conditions for sale and which could be launched for sale immediately, as well as units with planning approvals for which pre-requisite conditions for sale could be obtained quickly from the Government and made available for sale.

Notes:
1 For example, if a property is bought on 15th March 2010 and sold within 12 months, i.e. on or before 14th March 2011, SSD will apply.

2 The measures were the removal of the Interest Absorption Scheme and Interest-Only housing loans, resumption of the Confirmed List under the Government Land Sales Programme in 1st Half of 2010, and non-extension of property-related measures announced as part of Budget 2009 which expired in January 2010.

3 The SSD will apply to the transfer or disposal of interest (including sale and gifts) of residential lands and residential units (whether completed or uncompleted).

4 The date of purchase for computation of the holding period for SSD shall be the date when a buyer (i.e. Buyer A) exercises the option to purchase the property, or signs the sale and purchase agreement, whichever is earlier. The date of resale of the property shall be the date when the subsequent buyer (i.e. Buyer B) exercises the option to purchase the property from Buyer A, or signs the sale and purchase agreement, whichever is earlier.

5 1% for the first $180,000 of the consideration, 2% for the next $180,000, and 3% for the balance.

6 Executive Condominiums and HUDC flats that are purchased on the resale market are not subject to the minimum occupation period, and SSD will therefore apply to them.

7 The 80% LTV limit will apply to transactions where the date on which the option to purchase (OTP) was granted falls on or after 20 February 2010; or if there is no OTP, where the date of the sale and purchase agreement falls on or after 20 February 2010. For the avoidance of doubt, the date of purchase for the lowering of the LTV is the date the OTP is granted; while the date of purchase for the levying of the SSD is the date the OTP is exercised.

8 Refer to private residential developments with Housing Developer License and Building Plan Approval. Under the Housing Developer (Control and Licensing) Act, a sale licence must be obtained for a project with more than 4 units, if the developer intends to sell uncompleted residential units in the development. However, the sale of the residential units can only commence with the approval of the building plans of the development.

9 Refer to uncompleted private residential developments without pre-requisites for sale but with Written Permission or Planning Permission granted. The sale licences could be obtained within 5 working days and building plan approvals could be obtained within 7 working days from the date of application for cases where clearances from various technical agencies are obtained and relevant documents are in order during formal submissions.

Jointly Issued by:

Ministry of National Development, Ministry of Finance &

Monetary Authority of Singapore

Updated on 19 February, 2010

HOUSING AND DEVELOPMENT BOARD FACES 3 KEY CHALLENGES

SINGAPORE - Public housing in the 21st century must evolve to meet changing needs, according to National Development Minister Mah Bow Tan.

And the Housing and Development Board (HDB) will face three key challenges: Shifting demographics, ageing estates and a need for sustainable development.

On emerging population trends that will shape future housing policies, he said: "With globalisation and changing demographics, we also see an increasingly affluent population with a growing international outlook and rising expectations. Through immigration, the population is rising and becoming more diverse with different needs."

These changes will require not only greater integration efforts but may prompt other lifestyle changes and, thus, increased expectations of what public housing can provide.

Mr Mah was speaking yesterday at the opening of the International Housing Conference in Singapore.

Singapore's ageing society may require further innovations in housing policies or building design, he also said, highlighting the second challenge: The steadily ageing profile of HDB flats and towns. There will be an urgent need to upgrade, redevelop and rejuvenate older estates to keep them relevant and vibrant.

The third consideration was the need to minimise the impact of growth on the environment and to use resources efficiently. This will contribute to Singapore's overall quest to provide a green and healthy living environment, through careful long-term planning.

Mr Mah said that environmental, economic and social sustainability have been major and constant considerations in the design of HDB towns and flats. "Design guidelines are developed to take into account Singapore's tropical climate. The choice of materials, design and construction methods are also carefully considered, as they have major bearings on buildability, resource consumption and future maintenance requirements," he said.

In the past half century, the HDB has garnered significant international recognition, including the United Nations Public Service Award.

And while new challenges may shape housing policies differently in the future,Mr Mah said the core mission of HDB remained unchanged: Providing Singaporeans with affordable quality homes and building cohesive communities.

He urged the HDB to continue its pursuit of sustainable public housing for the next 50 years and beyond.

- Source: TODAY, 28 January 2010

A POLICY OF HARMONY?

SINGAPORE - Could a housing policy, similar to the one introduced to ensure a mix of ethnic groups in public estates, be adopted to integrate new Singaporeans?

"It's a very valuable instrument," acknowledged Minister Mentor Lee Kuan Yew (picture). He said this when responding to a question posed at a dialogue yesterday by Ambassador-At-Large Tommy Koh if more could be done to integrate those already here, just the way the Ethnic Integration Policy (EIP) has done for Singaporeans of different ethnic backgrounds since 1989.

Mr Lee said: "We're not allowing new Singaporeans whether from China, India, Malaysia or whatever to congregate in the same tower blocks which they're already beginning to do. They buy second-hand flats and they congregate. So, we have a record of how many new citizens are living where, and we keep their numbers dispersed. It's a very valuable instrument for communal harmony."

The EIP stipulates that Chinese, Malays, Indians and Eurasians each have a representative quota of homes in a housing block and in a neighbourhood. Once those limits are reached, no further sale of public flats to that ethnic group will be allowed.

Yesterday's comments were not the first time Mr Lee had made such remarks. In a dialogue with university students last October, Mr Lee said the Government "disperses" new citizens around Singapore so they will not form "little China" or other cliques.

But the Housing and Development Board clarified after yesterday's dialogue that a quota policy on permanent residents for resale flats was still being considered.

The idea of expanding the current policy on ethnic mix for HDB flats to include PRs was raised last year in Parliament by MP Lim Wee Kiak.

Then, National Development Minister Mah Bow Tan said his ministry kept a close watch on the distribution of PRs living in HDB estates and - where necessary - will consider measures to prevent the congregation of PRs and foreigners.

Public housing prices: An election issue?

Mr Mah was at the centre of another issue that came up during yesterday's dialogue at the International Housing Conference.

Citing a newspaper report, which said three Opposition parties were eyeing Mr Mah's Tampines Group Representation Constituency in the next General Election, Professor Koh asked if affordability of public housing would be an election issue. The parties had cited what they said were unhappiness over rising prices of HDB flats.

In reply, Mr Lee said public housing affordability will always be an issue. While buyers would always want better flats - and priced cheaper - the Government has to price flats "fair to the revenue it collects" and to the individual.

"Not only the present buyer, but the past buyer and the future buyer," said Mr Lee, who paused and then added: "If Mr Mah is unable to defend himself, he deserves to lose."

While this reply drew laughter from the audience - and from Mr Mah himself - Mr Lee had this message for the Opposition.

"No (political) party in the world has given its citizens ... an asset that is as valuable as what we have given every family here. And you say that policy is at fault? You must be daft," he said.

Prof Koh, the dialogue moderator, wondered if the problem was a "mis-match" between what buyers want and what they could afford.

To this, Mr Lee replied, "You will never solve the problem. I have a three-room flat at this price. I want a four-room flat at this price. And so on."

He continued, "Why do we put a five-year limit for any re-sale? Because the moment you buy a flat, you can sell it and make a profit. That is the acid test. We're giving you something more valuable than you're paying for. So we say you cannot sell it for five years. If you sell it, and you take the profits, you'll come in for the second bite of the cherry."

With affordability a concern, especially in a booming housing market, should the HDB develop more rental flats for the lower income, asked National University of Singapore professor Deng Yongheng.

Mr Lee disagreed, saying this "would lead to all kinds of problems".

"You say the advantage is low rentals, which means you are getting a dependency group - dependent on the Government for constant subsidies," said Mr Lee.

Instead, the Government's philosophy is to "give" citizens an asset, make flats affordable by providing grants and improve estate surroundings.

Another question, from Real Estate Developers' Association of Singapore chief executive Steven Choo, was whether HDB will be able to "catch up with the ever rising aspirations" in the future.

To this, Mr Lee said future public housing is tied to Singapore's competitiveness in the globalised world. Singapore needs a stable government, a strong currency, a stout defence and an improved workforce productivity.

"If you create those conditions, you thrive. If you can't, investments go elsewhere, technology goes elsewhere, you are bypassed," said Mr Lee.

- Source: TODAY, 28 January 2010

CALL FOR AGENT ACCREDITATION

SINGAPORE - The latest study on the professional standards of property agents have resulted in a strong call for their mandatory certification.

The study by Ngee Ann Polytechnic showed that while most respondents were satisfied with the services rendered by property agents, about a third - or 348 out of 1,041 - said they had experienced bad service.

The two most common complaints were the failure to negotiate a good price for their property, as well as wrong advice given by agents.

More than seven in ten said accreditation is necessary.

Most felt there should be a minimum requirement of two years of relevant working experience before agents are accredited by an independent professional organisation.

Currently, with accreditation being on a voluntary basis, the majority of the agents are not certified. In fact, out of the 33,000 or so agents here, only a quarter or about 8,000 are accredited.

Mr Nicholas Mak, a lecturer in real estate at Ngee Ann Polytechnic said professionalising the industry is more important at the time of a property boom because it is during such times that fair weather agents enter the industry.

"They just come in when the market is good, get a few deals earn several thousand dollars in commission and then after that disappear when the market is not doing so well," said Mr Mak. "In the meantime they are not properly trained, they may not follow certain codes of conduct and it may actually result in certain malpractices which in a way, it's just a small minority of these black sheep which gives the industry a bad name."

The Singapore Accredited Estate Agencies Limited said the good news is that 12,000 people have registered or are set to take the Common Exam for Sales Person. This, it said, will go some way in standardising the "level of competency" among housing agents here.

- Source: TODAY, 28 January 2010

HDB TASKED TO PREVENT LOOPHOLES

SINGAPORE - HDB flats are for owner-occupation and not speculation or rental investment, National Development Minister Mah Bow Tan said yesterday.

He has tasked the Housing and Development Board to review their regulations to ensure that no loopholes are being exploited.

Fresh concerns over the affordability of public housing were sparked when HDB's latest housing data revealed that resale flat prices continued to climb in the fourth quarter of last year.

In addition, the median cash premium that home owners have to pay upfront doubled to $24,000, prompting calls for the government to step in.

But Mr Mah, speaking on the sidelines of an HDB event, noted that the resale market should be allowed to operate as a free market, with prices set on a "willing buyer, willing seller" basis.

"Now, if you are a buyer, you feel anxious because you want prices to be low. But if you are a seller, you want prices to be high. So it's not possible for the Government to set the resale prices."

While promoting a free market, Mr Mah drew the line at speculation and stressed that public housing is for owner-occupation.

As such, Mr Mah said the HDB is relooking rules to ensure that prices are not being artificially inflated.

"If somebody is coming in the hopes of making money, through flipping or selling the flats later on, or to buy to rent without staying in there, I think that's not possible, that's not the idea of HDB flats."

He declined to say which rules are being studied.

Aside from reviewing regulations, Mr Mah said he had also asked the HDB to step up enforcement against those who break the rules.

"I don't know if it's extensive but anecdotally you do hear one or two cases. So we want to make sure that this is not happening," he added.

Recent reports suggested that some flat owners at the newly completed Pinnacle@Duxton, had rented out their entire units without a minimum occupation period.

This is considered illegal under HDB's housing rules.

Observers said many of the transactions are done under the table - making enforcement difficult even if the rules are tightened.

Mr Chris Koh of Dennis Wee Realty noted that new rules requiring home owners to report the details of their tenants are an incentive for them to be honest. But he believes that there is scope to increase the penalties further, and to penalise agents who facilitate illegal transactions.

- Source: TODAY, 29 January 2010

WOULD YOU PAY $100,000 COV?

SINGAPORE - You want to sell your flat and you are asking for $100,000 cash over valuation (COV).

A buyer is willing to pay you $95,000. Would you sell?

A couple asked that amount for their four-room Housing and Development Board (HDB) flat, and a potential buyer offered $5,000 less than the amount they wanted.

But the sellers said no.

"$100,000 is $100,000. Because we are not in urgent need to sell," said Michelle, who is in her 30's.

The owners - who declined to give their full names - run a food and beverage business.

The Bishan flat - which had recently been put up for sale - has been valued at $460,000 by an independent valuer appointed by HDB.

The flat owners are not alone in asking for increasingly higher COV figures. According to the HDB, four out of 13,000 four-room flats sold last year had premiums higher than $70,000.

Housing analysts say it is a sellers' market right now, with resale flats being a hot commodity.

The Bishan flat owners said they have received three offers so far - including the $95,000 bid - all of which they rejected. The others were between $50,000 to $60,000.

"In one way, it's to test the market," said Michelle. "If we sell, we sell. If we don't sell, we will just continue to stay."

HDB figures show that 79 per cent of home sales transacted in the third quarter of last year were above valuation. In the second quarter, it was 57 per cent.

The median COV is also on the rise - jumping from $3,000 in the second quarter to $12,000 in the quarter after that.

Housing agents say most flats now command at least $20,000 to $30,000 COV. Throw in a good location, close proximity to an MRT station and good renovation, and the price can go up to between $50,000 and $70,000.

Analysts caution against jumping into deals that require high cash premiums.

COV is a premium, and five years down the line, the renovation will deteriorate. And there's no guarantee that you can sell at the same COV (that you had paid) above the then value, said Mr Mohamed Ismail, the chief executive officer of PropNex.

"Buyers should exercise discretion as far as how high you want to pay," he said.

The HDB does not control resale flat prices as they are the result of negotiations between willing buyers and sellers.

Intervening in COV means forcing people to buy and sell at fixed prices, it said.

It has urged buyers to exercise caution and to do their homework to determine if a flat is truly worth its asking price. Buyers should offer a price within their means, said the HDB.

Source: TODAY, 19 January 2010

SINGAPOREANS WILL ALWAYS COME FIRST

SINGAPORE - One by one, residents who rose to pose questions on bread and butter issues to Law Minister K Shanmugam were given the same assurance: That Singaporeans will always come first.

Those worried about job security and housing issues asked Mr Shanmugam his views on what they perceived as difficult competition from foreigners at a two-hour dialogue session yesterday in Yew Tee.

Foreign workers come in handy because they "will come in as needed by the economy and when not needed by the economy, they will go back", Mr Shanmugam said.

"We have to start off with the perspective that we have to help Singaporeans first," he added. "Singaporeans must have jobs and be able to afford the basic things."

Another issue raised by residents at the dialogue session was the question of availability of housing for young couples, especially with reports of the Build-To-Order flats in Chua Chu Kang being over-subscribed.

Mr Shanmugam didn't think that Housing and Development Board was building behind the curve, adding that HDB had to be careful not to flood the market, even as it promises to build up to 12,000 BTO flats this year.

On a lighter note, one resident also asked to laughter if the government could consider waiving the $100 entry charge to the casinos at the integrated resorts on National Day.

"I hope Singaporeans don't get overly excited about the casinos. I don't think the Government can pay for it and say 'free entry'," Mr Shanmugam, who is also Second Minister for Home Affairs, replied. "We have put in various safeguards. So, let's see how those safeguards work."

- Source: TODAY, 18 January 2010

NEW SYSTEM TO SAFEGUARD PROPERTY DEALS

SINGAPORE - For property deals in future, both buyer and seller will have to give the go-ahead before any payment can go through. This new two-party signatory system forms the centrepiece of measures that the Law Ministry is seeking to roll out to tackle the longstanding problem of crooked lawyers absconding with clients' cash.

The last five years has seen a handful of rogue lawyers skipping town with almost $20 million - the most memorable being David Rasif, who disappeared with about $11 million in 2006.

MinLaw is seeking a second round of public feedback on the revised enhancements, which will see banks playing a central role in safeguarding money meant for property transactions that lawyers are entrusted with. Under the latest recommendations, lawyers cannot hold any conveyancing monies - option deposits, stamp duties, balance sales proceeds, for example - in their regular client account.

Other than holding up to $5,000 for last-minute disbursements - not unusual in property deals - in their client accounts, law firms have to open a separate type of bank account to hold remaining funds.

Anyone breaching this may be jailed up to three years or fined up to $50,000. The money may also be held in an escrow account between lawyers for both parties.

Either way, to deposit or release any funds from the account, lawyers for both buyers and sellers of properties need to sign off on prescribed forms.

Banks will validate the signatures against a Central Signature Repository - which will be set up in due course - before pay-out is made to approved parties, such as sellers, mortgage banks or others as indicated. Payment will only be through cashier's orders.

Banks will also show on their website a list of law firms that have conveyancing accounts with them, as well as the account numbers, to enable property buyers to make verifications.

So far, only DBS, UOB and OCBC have signed up for the scheme, but MinLaw expects foreign banks to be involved eventually. Although the stringent checks will cause some delays initially, lawyers say this is a worthy trade-off for buyers and sellers.

Rodyk & Davidson partner Norman Ho said: "If there's cooperation between the bank and the lawyers and among the lawyers working on the transactions, and with the understanding of the public, there should be no issue. Ultimately, the result to be achieved is to ensure that monies are safeguarded."

Law Minister and Second Minister for Home Affairs K Shanmugam said it is all a matter of balance: "In the end, you cannot completely eliminate fraud. You can only try and put in rules to make sure it makes it more difficult to commit fraud. And at the same time, 99 per cent of the transactions go through without problems or have gone through without problems. And in order to try and catch the small number of situations where that hasn't worked, you must make the rules unworkable." TEO XUANWEI

A pilot trial involving selected law firms and the three banks will be held from April to May. The trial is expected to process around 400 cases. For details on the proposed measures, visit www.minlaw.gov.sg. The public can fax feedback to 6332 8842 or email MLAW_Consultation@mlaw.gov.sg by Feb 12.

- Source: TODAY, 18 January 2010