Published January 29, 2011

HDB resale prices up 2.5% in Q4 2010
Up to 22,000 new flats may be offered under the build-to-order system

By UMA SHANKARI

HDB resale prices rose by 2.5 per cent in the fourth quarter of 2010 - a tad higher than the 2.4 per cent climb estimated earlier this month - even as the number of deals and the cash-over-valuation (COV) amounts commanded by flats fell.

Data from the Housing & Development Board (HDB) released yesterday showed that the official resale price index climbed to yet another new high in Q4 2010. For the whole of 2010, HDB resale prices rose by 14.1 per cent.

Prices rose even as the median COV amount among all resale transactions fell by $7,000 (or 23 per cent) from $30,000 in Q3 2010 to $23,000 in Q4 2010.

But prices still rose as valuations of most types of HDB flats climbed in Q4, analysts said.

The number of resale transactions fell by about 21 per cent, from 8,205 in Q3 2010 to 6,454 in Q4 2010. The total number of resale transactions in 2010 fell to 32,257, a decline of 13 per cent over 2009's volume.

Analysts said that HDB flat valuations still increased in Q4 2010, in spite of a number of cooling measures introduced in August 2010, as there is usually a lag time of about six to eight weeks before price corrections would align with the actual sentiment in the market.

But resale prices could soon plateau, PropNex chief executive Mohamed Ismail said.

HDB's Q4 2010 data shows that median resale prices of 3-room, 4-room, 5-room and executive flats stood at $300,000, $385,000, $460,000 and $548,000 respectively, he said.

But PropNex's in-house data for deals done in January shows median resale prices of $298,000, $393,000, $466,000 and $538,000 respectively - a 1.8 per cent drop to 2.1 per cent increase from Q4 2010.

'It must also be highlighted that some of our data reflects transactions that took place before the additional cooling measures announced on Jan 13, 2011,' added Mr Mohd Ismail. 'Feedback from the ground has indicated that there is less movement among the current HDB dwellers due to the (new) 60 per cent loan-to-value (LTV) cap. Therefore, it is possible to see a further dip, though not drastic one, for median COVs and sales volume in Q1 2011.'

HDB plans to offer up to 22,000 new flats under the build-to-order (BTO) system if demand is sustained.

The BTO supply will also be supplemented by the upcoming supply of flats under the design, build & sell scheme (DBSS) and the executive condominium (EC) housing scheme. Four more EC developments in Punggol, Pasir Ris, Bukit Panjang and Tampines will be launched for sale in the coming months by private developers.


Source: www.businesstimes.com.sg

by Colin Tan

Updated 11:11 AM Jan 14, 2011

In a Sunday feature article entitled "History-making year ahead", eight events and issues were highlighted by the writer which are expected to loom large in 2011. Seventh on the list was how to cool the property market without crashing it.

Last year, private housing prices eclipsed the previous 1996 peak, while the cash-over-valuation (COV) levels for public flats reached historic highs even as the Government unveiled two sets of cooling measures and ramped up the supply of housing sites and the number of new public flats for sale. It was a tumultuous year to say the least.

While the events in the property market may not be as central as the General Election and Presidential Polls listed as first and second on the list, it has the potential to significantly affect the results of the two.

Fortunately, the impact of the most recent set of cooling measures appears to have yielded results for the time being at least.

Flash estimates released by the Urban Redevelopment Authority (URA) recently show that private housing prices edged up by only 2.7 per cent in Q4, down from 2.9 per cent in Q3, albeit taking the price index to a fresh high.

However, sales volumes have not dampened. Over 15,500 new private homes are estimated to have been sold last year - a new benchmark.

Over at the HDB market, prices of resale flats rose 2.4 per cent in Q4 2010 - a slower rate of growth than the 4 per cent increase in Q3 2010. But while the resale price index was pushed to yet another all-time record, transaction volumes fell.

The resale volume declined by about 21 per cent in Q4. The median COV amount is also estimated to have fallen by $7,000 or 23 per cent, from $30,000 in Q3 to $23,000 in Q4 2010. But prices of public housing resale flats are still going up.

With the region awash with liquidity and healthy economic growth, the upward trend of the property market is expected to continue in 2011.

The finalised set of market numbers will determine whether a new round of cooling measures is forthcoming.

However, even if prices remain stable, if sales of new homes continue to be very high, then the concern is that a lot of it may not be owner-occupier demand. This has strong ramifications for the rental market. If the cost of borrowings should suddenly shoot up, a crash cannot be ruled out even if our track record shows that we have always managed a soft landing.

To outsiders who are not familiar with our housing market, all of our current market indicators, including those on the economic front, are gelling together to produce what can be considered to be the perfect property bull run if there is such a thing.

It is a sign of the anxious times, when single-property owners have mixed feelings even as many are made millionaires on paper.

Personally, I am not so sure the effects of the latest set of cooling measures will last. Our housing market must be among the most open and attractive to investors all over the world.

Is it time for some measures regulating the amount of liquidity flowing into Singapore and into the local housing market? Can there be more focused cooling measures without affecting genuine buyers and sellers? Is it time to pool together all the data of all the various government bodies to get to the bottom of the "problem" if it has not already been done yet?

It is very difficult to suggest solutions if there are still big gaps on what we know about the market. If the gap persists should not there be greater efforts to plug them?

Much as I like speculators to learn from their mistakes, a crash benefits no one.

Personally, I am not in favour of changing the goal posts midway with respect to investors. It breeds uncertainty and affects investor confidence. As I see it, part of the problem is that the market does not appear to take the Government's warning - that it will not let the market overheat - seriously. Either that or it has short memories.

I prefer a more direct approach. Lay down all the cooling measures to be taken upfront. Have four sets, one for each quarter. Set the trigger points for each of them, say x per cent rise in the price index. If the price index surpasses this figure, the first set of cooling measures automatically kicks in and so on. The trigger points can be linked to fundamentals, say the percentage GDP growth for the previous quarter plus x per cent.

This should send a very clear message to investors. At the same time, the market has a choice; whether it wants to trigger the measures or not.



Colin Tan is head, research and Consultancy, at Chesterton Suntec International.

Source: www.todayonline.com

But rate of increase slowed, cooled by Government measures

by Joanne Chan
05:55 AM Jan 04, 2011

SINGAPORE - The red-hot resale market for Housing and Development Board flats saw prices go up by almost 14 per cent last year compared to 2009, according to HDB's flash estimates yesterday.

In comparison, prices went up by 8.2 per cent in 2009 compared to 2008.

But in a sign that the prices are cooling off, the rate of increase has slowed: Between October and December, the HDB Resale Price Index increased by 2.4 per cent, compared to 4 per cent in the third quarter.

The median Cash-Over-Valuation (COV) also fell $7,000 in the fourth quarter to $23,000, compared to the third quarter.

Over the same period, resale volume dipped by about 21 per cent to about 6,500 transactions.

Property analysts MediaCorp spoke to said the numbers point to a stabilising market, which had been cooled by measures introduced by the Government in August.

In particular, they noted that the new rule which disallowed private property owners to own a HDB flat at the same time has turned many away from the resale market.

Dennis Wee Group director Chris Koh noted that investors looking to profit from the resale market are thinking twice.

Said Mr Koh: "There has always been a group of people who buy and sell flats very regularly, every three to five years they change the address of their HDB flat. This group of people are also affected by the new measures ... They have to cough up 10 per cent cash, for example, instead of 5 per cent."

Analysts also attributed the decline in resale volume to the traditional year-end slowdown.

SLP International executive director of research and consultancy Nicholas Mak expects transaction volume to pick up in the first quarter of this year. Said Mr Mak: "There will be a slight increase but I don't think we will see a strong spike of above 10,000 units like what we've seen during the height of the HDB resale market boom."

Property firms attested to sellers asking for lower COVs.

Said Hersing Corporation senior group division director Mark Teo: "I believe the COV prices for the first quarter of this year are going to continue to go down further ... probably, by another $5,000 or $10,000."

Despite the falling COV, it will be a few more months before housing prices stabilise - as valuation is partly based on past transactions, Mr Teo noted.

The HDB reiterated that it has ramped up its new flat supply significantly to meet the demand from first-timer households. This year, it plans to offer up to 22,000 new Build-To-Order flats, subject to demand. Last year, the HDB offered 17,700 new flats under the BTO system and Sale of Balance Flats exercise.

Source: www.todayonline.com

by Joanne Chan
05:55 AM Dec 21, 2010

SINGAPORE - The rising property prices have shown few signs of slowing since Singapore's recovery from the global economic downturn.

This year, a strong economy, low unemployment rate and ample liquidity pushed private property prices past the previous peak in 1996.

In the public housing sector, prices in the resale market hit new highs.

The cash premium buyers pay upfront - also known as cash-over-valuation (COV) - climbed to $30,000.

Faced with the possibility of a property bubble, the Government introduced cooling measures in September last year and February this year. The slew of measures ranged from raising housing supply to clamping down on speculation by tightening existing rules.

However, demand continued unabated.

Mr Nicholas Mak, the executive director of Research and Consultancy at SLP International, said: "The market seemed to take it into its stride and continued to expand; sales were still climbing and so were prices."

So, another round of measures were implemented in August, including raising the effective period of the seller's stamp duty to three years.

The maximum bank loan amount was also reduced to 70 per cent.

Analysts noted that this approach of taking "small steps" to regulate the property market is unlike the previous property run, when a capital gains tax was introduced prior to the market crash in 1996.

In a recent interview with MediaCorp, National Development Minister Mah Bow Tan reiterated this cautious approach of incremental steps is to bring prices down to a sustainable level but not crash the market.

Said Mr Mah: "We are not taking a big bang approach but taking a very calibrated approach to this."

Noting that the measures introduced in August appear to have had more impact on the public housing market, Mr Mah added: "The big change was when we disallowed dual ownership of public and private property within this minimum occupation period, which is now five years. Previously it was three years."



'Sellers should be more realistic'

COV for resale flats has declined gradually, dropping to $22,000 last month.

Observers say COV levels may eventually drop to $10,000 to $20,000, as more housing becoming available.

The Government plans to release 22,000 new public flats next year, depending on the take-up rate. The HDB will also release land sites for another 4,000 flats under the Design, Build and Sell Scheme and 4,000 executive condominium units.

Dennis Wee Group Director Chris Koh said sellers need to be more realistic about their expectations in the current market.

Said Mr Koh: "This isn't like a year ago, when you could ask for COV as high as possible and people may just grab it. But I think buyers are now a lot more wiser. And those who were really in need and desperate would have bought."

The impact of the measures on the private property market remains to be seen.

September saw a frosty reception from buyers, with the number of private homes sold plummeting below the 1,000 unit level.

However, the market rebounded quickly. Last month, some 1,900 units were sold.

The Government has indicated it will introduce more measures if necessary to temper demand.

But for now, it appears no further action will be taken as it monitors the impact of its latest measures.

SLP International's Mak said the next round of measures, if any, would likely come in the middle of next year.

"One possibility is that they could further tighten the loan-to-value for investors, thus making it more expensive or more risky for investors who already own one or two properties and are buying their third or fourth one," said Mr Mak.

A broad measure, such as a capital gains tax which will affect all homebuyers, should only be a last resort, Mr Mak added.

Source: www.todayonline.com

National Development Minister says the market has not yet felt full impact of cooling measures
by Joanne Chan

Updated 12:32 PM Dec 07, 2010

SINGAPORE - While cash-over-valuation (COV) and the number of transactions in the Housing Board resale market are heading south, National Development Minister Mah Bow Tan believes it will be another one to two months before the full impact of the Government's cooling measures is felt.

In an exclusive interview with MediaCorp, Mr Mah revealed that the median COV last month was $22,000, down $3,000 from that for October. This marks the second month in a row the COV has fallen, a sign property cooling measures set in August are taking effect,

And the number of HDB resale transactions has fallen some 30 per cent in the fourth quarter thus far compared to last quarter.

The COV hit a high of $30,000 for two straight quarters this year, sparking concerns that first-time home-buyers might be priced out of the resale market.

Said Mr Mah: "Now, you are seeing that resale prices and the COV are not only stabilising but are starting to come down. So, I think there's really no need to rush (to buy a flat)."

Transaction numbers from property firm Dennis Wee Group (DWG) also reflect the downward trend of COV and sale volume.

DWG director Chris Koh said he expects the COV to drop to $20,000 this month.

He said: "Things usually slow down (in December) because of Christmas, New Year, school holidays ... So, with the measures in place, (and) with new flats coming up, we should see demand ease off a little."

Mr Mah said the Government was comfortable with the current situation and there was no need for further cooling measures for now. More steps would be taken only if necessary, he added.

While prices appeared to have stabilised, Mr Mah acknowledged housing "would probably be more (of) an issue" at the next General Election.

He said: "It's always been an issue at every election as far as I can remember ... The main thing is that in an election, we have to offer - to the residents (and) voters - our platforms, our polices. Whoever can convince the voters they can do a better job in improving their lives will get and deserves to get the vote."

Source: www.todayonline.com

Published December 6, 2010

A few speculators forced housing curbs: Hwee Hua

THE government had to introduce cooling measures to curb speculation in the public housing market due to a small group of private property owners, says Lim Hwee Hua, Minister in the Prime Minister's Office.

She was responding to questions at a dialogue session yesterday morning, which was part of a community visit to Kampong Chai Chee.

'(The Housing and Development Board's) feedback to us is that, for resale flats, the Cash-Over-Valuation (COV) is rising all the time. So HDB and the Ministry of National Development looked at what's causing this to rise and who are the participants in the market,' Mrs Lim was quoted by the media as saying.

'They realised that there is a group of private property owners, a small percentage who speculate (on) the properties . . . and this has caused prices in certain areas to rise faster.'

Cooling measures were announced some months back, such as extending the holding period for the seller's stamp duty to three years.

The minister added: 'It's not a restriction on private property owners but a whole series (of measures) to cool the market down. And the starting point is meeting the needs of Singaporeans who would like to own a flat.'

HDB has said that it plans to launch up to 22,000 flats in 2011 if strong demand persists.

Other issues that came up during the dialogue included the Lehman Brothers minibond debacle, which underlined the need for stricter financial regulation.

'The Monetary Authority of Singapore (MAS) has imposed stricter regulations. So the tightening of regulations is one important aspect. The other area is that of compensation - how much compensation there should be,' she was quoted as saying.

MAS also worked together with all the banks to set up a process whereby investors can approach the banks where they bought the bonds to submit a request for compensation.

'The banks would have to decide whether the investor, at the point of making the investment, was misled. And some of them have gotten the full compensation. A lot depends on how knowledgeable the person is at the point of investing. That is how MAS approached the whole problem with all the banks,' Mrs Lim said

Source: www.businesstimes.com.sg