'Property still affordable': Redas

05:55 AM Sep 23, 2010
by Julie Quek

SINGAPORE - Property prices have remained at affordable levels for first-time home buyers despite the run up in the housing market here. The Government's recent announcement of cooling measures also had little impact on affordability.

In a statement, the Real Estate Developers' Association of Singapore (Redas) said this may help boost prospects in the local property market.

Currently, first-time buyers for private properties use about 36 per cent of their monthly take-home pay to service their housing loans every month. Redas said this is a healthy rate given that it is lower than the norm of 40 per cent.

Analysts agreed that a below-40-per-cent affordability ratio means housing prices are still affordable.

During the peak of the 1997 property boom, the affordability ratio went up to as high as 50 per cent.

This meant that almost half of a home owner's salary went into mortgage financing, making it difficult for Singaporeans to buy property.

"The level that we have right now of 30 to 40 per cent is pretty much in line with the market. So there's no sense of panic in today's market. Property is still fairly affordable," said Mr Donald Han, managing director, property consultancy Cushman and Wakefield.

Analysts believe the improved affordability may continue to prop up sentiment in the property market and boost sales and prices in the longer term.

They also predict that the local property sector will finish off strongly this year, with a total sale of 14,000 homes by December.

"I think 14,000 is definitely within the market's reach, because there's still a lot of liquidity in the market," said Chesterton Suntec International head of research and consultancy Colin Tan

Source: http://www.todayonline.com