Developers coy about impact of cooling measures
Published September 23, 2010
By UMA SHANKARI
(SINGAPORE) Developers celebrating the Mid-Autumn Festival yesterday were generally coy when asked about the impact thus far of the government's recent measures to cool the property market.
Some, however, were more comfortable talking about their confidence in the long-term prospects of the market.
Real Estate Developers' Association of Singapore (Redas) president Simon Cheong said that though the latest round of measures announced about three weeks ago to cool the property market may affect affordability due to a higher upfront cash component, they are unlikely to affect genuine home buyers.
Research done by Redas shows that the current affordability ratio for a first-time private home buyer 'remains at a healthy 36 per cent, below the 40 per cent norm'. This refers to the proportion of a monthly household income of about $9,500 used to make mortgage payments for the purchase of a private apartment of about 1,200 square foot bought at about $1,000 per square foot on 80 per cent loan to valuation.
A 30-year loan period and interest rate of one per cent above the three-month Singapore Interbank Offered Rate were assumed, Redas CEO Steven Choo explained later.
Mr Cheong declared: 'Redas is confident that the Singapore property market will continue to create value for home owners and investors in the long term (and the measures are) in line with the government's longer-term objectives to maintain a stable and sustainable property market.
'As president of Redas, I continue to be upbeat on the property market in the long term. Singapore's fundamentals remain strong.'
He cited Singapore's hosting of the recent Youth Olympic Games and the Formula One Grand Prix this week and pointed out that with the two integrated resorts near full operation, Singapore can expect more MICE (meetings, incentives, conventions and exhibitions) business and visitor arrivals.
'Upcoming projects and events will also further position Singapore as wealth management hub and a global city,' he added.
On Aug 30, the government said that it would now disallow concurrent ownership of HDB flats and private residential properties within the specified minimum occupation period.
Other measures were aimed at potential buyers of second or subsequent homes. Those with one or more existing mortgages can now borrow up to only 70 per cent of a property's value when buying a new home, down from 80 per cent previously. They must also pay at least 10 per cent in cash, up from 5 per cent.
Developers yesterday acknowledged that the measures have injected uncertainty in the market.
'But it's not a great degree of uncertainty; we are still moving (units),' said CapitaLand Group president and CEO Liew Mun Leong. 'If there is real demand, people need a home, interest rates are low, liquidity is there and the affordability is there, they will buy. Somebody said that policy cannot overrule demographics and economics. I subscribe to that too.'
But the measures will dampen private home prices slightly, he said, declining to predict the quantum of price fall. He also expects that the high-end residential market would not be hit by the government measures as buyer demand there is fuelled by the low interest rate environment and excess liquidity in the market - factors that the government cannot control.
Ho Bee Investments chairman and CEO Chua Thian Poh also reiterated the popular view. 'The HDB resale and upgrader markets will definitely be affected by the measures. But for the mid and high-end, developers are still selling, though sales are slower.'
Frasers Centrepoint CEO Lim Ee Seng, who also acknowledged that homebuyers are still holding back due to uncertainty, is more sanguine about the executive condo (EC) segment. What makes ECs attractive is that there is still a price gap of about 20 per cent between private mass-market homes and EC units within the same vicinity, he said.
Frasers Centrepoint is on course to launch Esparina Residences, a 573-unit EC development in Sengkang, next month. Agents expect the units to be priced around $700 psf.
Meanwhile, the Housing & Development Board postponed a special lecture that had been scheduled for yesterday morning by National Development Minister Mah Bow Tan as part of HDB's 50th anniversary celebrations. When asked about the reason for the postponement, the Ministry of National Development said: 'Given the extensive discussions in the media and Parliament following the housing measures announced on Aug 30, 2010, HDB decided to postpone the lecture to allow it to take stock of the feedback and impact of the recent measures.'
Source: http://www.businesstimes.com.sg
Redas remains upbeat about market
Monday, October 18, 2010
Posted by IM at 7:24 AM
Labels: HDB, hdb singapore, private property, Property News, Redas, residential property