by Chris Howells

Updated 11:12 AM Jan 14, 2011

SINGAPORE - A knee-jerk reaction to the latest round of property cooling measures is expected to hit banks and developers but industry players believe that normal service will resume.

For now though, banks here are likely to see a dip in new housing loan applications, while developers may postpone new launches.

Commenting on the latest measures, the Real Estate Developers' Association of Singapore (REDAS) said it expects these measures to discourage speculative demand but remains confident that the local "property market will continue to be underpinned by sound economic fundamentals and a favourable business environment".

Still, analysts expect developers to hold back on new launches.

Referring to the last round of cooling measures, which were rolled out on Aug 30 last year, Credo Real Estate managing director Karamjit Singh noted that, this time around, developers would also "hold back temporarily, as they assess demand and sentiment before launching their projects".

As a result, sales volumes would drop in the short term, he said.

Describing the latest measures as "a fourth and more decisive wave of prudential curbs", Barclays Capital economist Wai Ho Leong said any impact on prices may only be gradual.

Said Mr Leong: "We maintain that the risks for property prices and rents over the next four years are to the downside. Even so, the downward correction will occur gradually, given that Singapore is in the midst of a strong cycle of wealth creation, which has been fuelled by a surge in inward migration and rising asset values."

The cooling measures come at a time when home buyers have been keen to leverage on the low interest rates - and a fall in demand for mortgage loans could put further pressure on the profitability of banks here.

OCBC Bank head of consumer secured lending Phang Lah Hwa said: "The new property measures will have an impact on new housing loan applications, as we expect potential home buyers to be more cautious and will take their time to review their options."

Ms Lui Su Kian, DBS Bank's senior vice-president and head of deposits and secured lending, noted that the measures would mean investors would have to commit higher cash amount for their downpayments.

But with the Chinese New Year - traditionally a quiet period for the property market - around the corner, Ms Lui noted that it would take some time before the impact could be ascertained.

RBS head of South East Asian equity research Trevor Kalcic said: "There is very likely to be a slightly negative impact on the banks ... but it won't be a material impact. The reason is that mortgages are a relatively small component of overall earnings."

Source: www.todayonline.com

Published January 13, 2011

More developers see higher prices for new home launches
Property market's Future Sentiment Index rose to 5.7 in Q4 from 4.8 in Q3

By EMILYN YAP

(SINGAPORE) Developers' outlook for the property sector turned rosier in the fourth quarter last year, with a larger proportion of them predicting higher prices for new residential launches.

Preliminary findings from the Real Estate Sentiment Index (RESI) point to improved sentiment from the third quarter, when the industry was still coming to terms with the impact of property market cooling measures introduced on Aug 30.

Steven Choo, CEO of the Real Estate Developers' Association of Singapore (Redas), gave a preview of RESI results for Q4 at a seminar yesterday. Redas and the National University of Singapore's Department of Real Estate jointly developed RESI.

Based on survey responses so far, the Current Sentiment Index stood at 5.6 in Q4, up from 4.8 in Q3. For this category, respondents rate overall Singapore real estate market conditions now compared with six months ago.

The Future Sentiment Index - where respondents rate overall property market conditions over the next six months - rose to 5.7 in Q4 from 4.8 in Q3.

'We've actually seen a rebound,' Mr Choo said. 'We think it is an accurate reflection of our members' take on the market.'

While the index readings rose in Q4, they did not surpass the levels seen in Q1 and Q2.

Developers were also asked for their take on the primary residential market, and a majority of the respondents thought more launches and moderate price increases were possible.

In Q4, 60 per cent of respondents believed that unit prices would be moderately higher. In Q3, just 12 per cent thought so.

Some 76 per cent of respondents in Q4 also expected moderately or substantially more units to be launched, compared with 44 per cent in Q3.

A developer, who declined to be named, suggested that good take-up for several big launches in Q4 buoyed sentiment. Spottiswoode Residences, Waterview and Robinson Suites were some which reported strong sales.

Some industry watchers also reckoned that the sector's confidence grew as the impact of the tightening measures became clearer.

A Hong Leong spokesman told BT: 'While we took a cautious outlook immediately following the August 2010 cooling measures, buyer demand continued to remain strong for the group's various projects.' Low interest rates and liquidity in the market contributed to the demand, he said.

Credo Real Estate managing director Karamjit Singh also said: 'Like with any announcement, it takes at least a month or two for the dust to settle.'

Even so, improved optimism does not mean that the measures had no effect - there is still 'a sense of caution in the air', he stressed.

In the ongoing Q4 RESI survey, 69 per cent of respondents identified demand-side measures from the government as a potential risk to market sentiment.

Although this proportion is less than Q3's 83 per cent, it is still big enough to make state intervention the second most feared risk.

A possible slowdown in the global economy was the industry's top worry - 70 per cent of respondents said in Q4 that this was a potential risk. This is markedly higher than the 56 per cent a quarter ago

Source: www.businesstimes.com.sg

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