THE Government has served notice that it will introduce additional measures, if necessary, to promote a stable and sustainable property market.

On Friday, it announced two measures – a seller’s stamp duty and a lower housing loan limit – to help temper sentiment in the simmering residential property market, which it said is showing signs of starting to heat up again.

To pre-empt a property bubble from forming, the government said it is tightening the supply of credit to the housing market ‘to encourage greater financial prudence’ among property buyers.

‘The Government prefers to take small steps early, rather than be forced to impose more drastic measures after a bubble has formed,’ said a joint statement from the ministries of National Develop and Finance, and Monetary Authority of Singapore.

‘The Government will continue to monitor the property market closely and will introduce measures if required later, to promote a stable and sustainable property market,’ added the statement.

At the same time, it will also continue to ensure that there is adequate housing supply to meet demand.

Already, it has made available sites under the Government Land Sales (GLS) programme that can yield 10,550 private housing units in the first half of this year. This is the highest supply level in the history of the GLS scheme.

Source: Straits Times, 19 Feb 2010

THE Government has announced what it called two ‘calibrated’ measures to cool the exuberance in the private residential market and prevent a property bubble from forming.

From Saturday, it will introduce a seller’s stamp duty on all residential properties and lands that are bought after today and sold within one year from the date of purchase, and lower the housing limit to 80 per cent of the total purchase price.

These new steps came less than six months after the Government introduced a set of measures to temper the exuberance in the private residential market last September.

‘While the September 2009 measures helped to cool the property market, there are recent signs that it is starting to heat up again,’ said a joint statement from the Ministry of National Development, Finance Ministry and the Monetary of Singapore.

Demand for private housing units spiked sharply in January, with the the number of units sold by developers tripling that in December, and making it the highest monthly total since last September. Prices have also risen sharply in the second half of 2009, at a faster rate compared to previous rebounds from the troughs of property cycles.

There was no let up in the January price increases. Mortgage lending also soared by around 12 per cent year-on-year through 2009, said the statement.

‘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.

‘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.

‘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.’

Source: Straits Times, 19 Feb 2010

HOUSING Board (HDB) flat buyers taking private bank loans for their purchase will now have to fork out more cash for the downpayment on their homes.

The Government has lowered the home loan amount that buyers can borrow from banks from 90 per cent to 80 per cent of the total purchase price.

The new 80 per cent rule, also known as the loan-to-value (LTV) limit, will apply to both private and public flats.

But for those buying HDB flats with HDB loans, the LTV will still remain at 90 per cent.

In a joint statement on Friday, the Ministry of National Development, Ministry of Finance and the Monetary Authority of Singapore said that this is because HDB flats are already subject to other criteria to prevent speculation and encourage financial prudence.

For example, there is a minimum owner occupation period of three to five years and a 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.

Housing analysts said that the new measures would have an impact on the HDB market. Buyers who are not eligible for HDB loans must now fork out a higher downpayment as they can only borrow up to 80 per cent of their home purchase price.

This could depress the amounts of cash upfront paid to the seller above the flat’s valuation, known as cash-over-valuation, since buyers are now less likely to have excess cash.

Source: Straits Times, 19 Feb 2010

THE just-announced seller’s stamp duty, which will be imposed on all residential lands and homes bought before Saturday and sold within a year, will not apply to Housing Board flats, said the Government on Friday.

This is because HDB flats are already subject to a minimum one-year occupation ruling.

The Government said the new tax measure is to ‘discourage short-term speculative activity that could distort underlying prices’, and it is not targeted at the purchase of properties for owner-occupation or longer term investment.

Loans granted by the HDB for its flats, including the Design, Build and Sell Scheme (DBSS), will still continue to be capped at 90 per cent because they are subject to other criteria to prevent speculation and encourage financial prudence, said the Government.

HDB loans are offered to only eligible first-time flat buyers or second-timers who are upgrading. And they are required to use all of their CPF Ordinary Account balance before HDB would give them the loans, which is in line with HDB’s home ownership policy of helping eligible buyers, especially first-time buyers, to purchase public housing in a financially prudent manner.

But for all other housing loans provided by financial institutions regulated by the Monetary Authority of Singapore, they will be capped at 80 per cent of the property purchase price, instead of the current 90 per cent, from Saturday.

Source: Straits Times, 19 Feb 2010

Boutique Siglap V development raises eyebrows with high median prices

Few would associate the leafy suburbs of Siglap with lofty property prices.

But at least one unit at a boutique development there has been sold for $1,634 per sq ft (psf) – an eye-popping psf price for a project that isn’t located centrally.

The freehold development at East Coast Road, Siglap V, also achieved a high median price of $1,508 psf across 50 units sold in January. This is according to Urban Redevelopment Authority (URA) data.

Properties located some distance from town, or in the Outside Central Region (OCR), usually command prices below $1,000 psf.

But the hefty psf price tag at Siglap V has not deterred buyers because most of the apartments are relatively small. The 114 units available include one-bedders starting from 366 sq ft in size and one-bedroom plus study units starting from 463 sq ft.

This means that the absolute price of a small unit would be fairly modest. Assuming that a 366 sq ft one-bedder went for $1,634 psf, the buyer would have to fork out some $598,000.

‘The psf price may raise eyebrows but if you look at the total quantum, it’s very affordable,’ said Cushman & Wakefield Singapore managing director Donald Han.

A Huttons senior marketing associate Edmond Pak added that Siglap V’s location is a selling point. It is next to Siglap Centre and is near schools, cafes and other amenities.

From his experience marketing the project, Mr Pak observed that many buyers were interested in the one-bedroom units as investments. He also noted that several buyers are residents of landed properties in the area.

Developers have launched more shoebox apartments since early 2009 in a bid to keep overall prices attractive amid uncertain times. And the formula has worked to some extent. The 72-unit Suites@Guillemard for example, was sold out even though some units measured just 258 sq ft.

‘That’s where the market niche is for some of these developers with smaller land parcels,’ Mr Han said. The projects have smaller units and may not offer a full range of facilities, but they allow people to own a private address ‘at a fraction of the cost’.

Siglap V is not the only project in OCR with a high psf price tag.

In July last year, the 99-year leasehold Centro Residences at Ang Mo Kio made headlines for prices crossing $1,100 psf. According to URA, seven units there changed hands at $1,164-$1,233 psf last month.

Nearer Siglap V, buyers paid $883-$1,538 psf for five units at Elliot at the East Coast last month. Units at this freehold project are typically larger than those at Siglap V.

Source: Business Times, 19 Feb 2010

SINGAPORE’S economy, which contracted 2 per cent last year, is expected to grow at 4.5 to 6.5 per cent this year, adding to evidence of a sustained regional recovery.

The Ministry of Trade and Industry gave the revised GDP growth forecast in a statement on Friday morning. The earlier prediction was for the economy to grow 3 to 5 per cent in 2010.

The economy expanded by 4 per cent in the fourth quarter of 2009, from a year ago, after growing by 0.6 per cent in the previous quarter. On a seasonally adjusted quarterly annualised basis, Singapore’s GDP contracted by 2.8 per cent in the fourth quarter, said MTI.

The services sector grew by 6.6 per cent in the fourth quarter, compared to 8.2 per cent growth in the third quarter. The trade- and tourism-related sectors posted the strongest gains compared to the previous quarter. The financial sector, however, contracted from the previous quarter, in part due to declines in the fund management and stockbroking segments.

The manufacturing sector contracted by 29 per cent in Q4, reversing from the 25.6 per cent expansion in the third quarter. This decline was mainly due to a contraction in the output of the biomedical manufacturing and transport engineering clusters. Growth in the electronics and chemicals clusters strengthened on the back of continued recovery in global trade.

On the outlook for 2010, MTI said Asia is expected to experience a strong recovery this year. But the recovery in the G3 economies, is expected to be weaker, largely supported by fiscal stimulus measures and inventory accumulation in the first half of the year.

‘The outlook for the second half of the year remains uncertain. Private final demand in the G3 may remain weak, as there are still few indications that non-policy induced private demand is gaining strength,’ it noted.

‘The Ministry of Trade and Industry expects the Singapore economy to grow by 4.5 to 6.5 per cent in 2010. This upgrade from the earlier 3 to 5 per cent forecast largely reflects increased strength in the near term growth momentum.’

Source: Straits Times, 19 Feb 2010

ON FEB 4, I received a letter from HDB informing me that I had violated its rules in buying a subsidised flat from HDB by investing in a private property within five years of my purchase of the HDB flat.

HDB said it had the right to repossess my flat as I had bought it on Sept 1, 1993 and had subsequently invested in a private property without satisfying the five-year minimum occupancy requirement.

I was given two weeks to arrange an interview with HDB to plead my case.

I had obtained approval from HDB before buying the private property but as this was almost 15 years ago, I was worried about finding the documentary proof in time.

After nights of frantic searching, I found the written approval by HDB for the purchase of my private property.

According to the letter of approval, I was allowed to buy the private property because the temporary occupation permit of my intended purchase fell after the five-year occupation requirement.

When my daughter pointed out the error to HDB and asked why it had made the surprise request, she was told HDB needed the documents to facilitate investigation by its audit department and had no record of my letter of approval.

It sounded strange to me because the written approval originated from HDB.

I am concerned that citizens are expected to keep documents from 15 years ago. Should not such records be HDB’s responsibility?

What compounds my concern is that the Inland Revenue Authority of Singapore advises that all documents be shredded after five years.

There should be a timeframe for HDB to demand documents as it did in my case, relating to approval of such a purchase, perhaps up to five years.

Mavis Ng (Ms)

Source: Straits Times, 19 Feb 2010

DESPITE the occasional grouse, the overwhelming majority of public housing residents are happy with their flats and think they are good value for money, according to the Housing Board (HDB).

Its 2008 survey of 8,000 households shows that 96.4 per cent were satisfied with their flats, and 95.1 per cent, with their neighbourhoods.

High satisfaction levels were seen across flat types, age groups, ethnicities, educational qualifications and household income, said the HDB, which did its five-yearly survey via face-to-face interviews and online polls.

What residents most liked about their homes were their location, transport facilities and estate amenities. Cleanliness, maintenance and noise topped their list of grouses.

Just over 80 per cent were proud of their flats, thanks largely to their ability to own a home.

Close to nine in 10, or 86 per cent, said their flats were worth the money, thanks to capital appreciation, location, nearby facilities and affordability.

The survey also showed more people living in public housing than ever before – and they are older, wealthier and better educated.

The HDB flat population increased by 2.7 per cent to 2.92 million between 2003 and 2008.

This represented about 60 per cent of Singapore’s total population of 4.84 million people in 2008, according to the Department of Statistics.

Out of this HDB population, 88 per cent were Singapore citizens, 8 per cent were permanent residents and 4 per cent were foreigners.

The HDB population is ageing too, with the average age of flat-dwellers rising to 37 from 30 about two decades ago. About one in 10 was 65 years and older in 2008 – up from 7.6 per cent in 2003 and 5.4 per cent in 1987.

Education levels are up too. Just under a third of those with jobs had tertiary education, compared to 19.9 per cent in 1998.

More were in white-collar jobs: 34.5 per cent in 2008, compared to 29.5 per cent in 1998.

And average household income rose to $5,680 in 2008 from $4,238 in 2003.

National University of Singapore (NUS) sociologist Paulin Straughan, a Nominated Member of Parliament, said the satisfaction levels could reflect the HDB’s constant upgrading of housing estates.

‘The HDB has been careful not to allow the development of slum areas, and there has been a lot of upgrading of old estates such as Queenstown,’ she said.

She added that the changing profile of the average resident had implications for HDB, which would have to find ways to meet their higher aspirations.

Associate Professor Sing Tien Foo from the NUS real estate department noted that the ageing population meant that HDB would have to provide sufficient housing and amenities for the elderly.

Typical of residents surveyed, security guard Ahmad Noor Talim, 47, a married father of three, said his five-room flat in Tampines was a ‘good investment’, conveniently located near amenities and affordable when he bought it for $305,000 three years ago.

HDB is to release further survey findings on the social well-being of residents over the next two months.

Source: Straits Times, 19 Feb 2010

FINANCIAL institutions in Singapore have remained prudent in giving out housing loans.

Currently, less than 10 per cent of housing loans are granted at over the 80 per cent limit, ‘although there are signs that more housing loans are originating at higher loan-to-value bands’, said a government statement on Friday.

In a further bid to temper exuberance in the private residential market, the Government will, from Saturday, cap all housing loans at 80 per cent of the total purchase price, from the current 80 per cent limit.

The lower cap will apply to all housing loans given by financial institutions regulated by the Monetary Authority of Singapore.

‘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,’ said a Government statement on Friday.

Source: Straits Times, 19 Feb 2010

Aim is to hold only US govt securities in its portfolio

Federal Reserve officials set a long-term goal to keep only US government securities in their portfolio as they debated how and when to pull back on the most aggressive monetary policy in US history.

Central bankers are planning to eventually remove US$1.43 trillion of housing debt from the balance sheet after critics such as Stanford University economist John Taylor accused them of straying beyond monetary policy. Philadelphia Fed President Charles Plosser said on Wednesday that the Fed’s purchases of housing debt expose it to demands from politicians to support other industries.

Some of the Fed’s emergency actions ‘blurred the line between monetary policy and fiscal policy, thereby increasing the risk to the Fed’s independence,’ Mr Plosser said in a speech. ‘These policies have veered toward deciding how public money should be allocated across firms and sectors of the economy.’

Policy makers agreed that it ‘will eventually be appropriate’ to ‘return to holding only securities issued by the US Treasury,’ according to minutes of their Jan 26-27 meeting released on Wednesday.

‘They are putting down a marker, as much as a signal to the administration as anything else, that they don’t want to be in the credit-allocation game,’ said Dino Kos, managing director at Portales Partners LLC in New York and former executive vice president at the New York Fed.

US central bankers are channelling credit to housing markets through purchases of US$1.25 trillion in mortgage-backed securities and US$175 billion in housing agency debt. Those programmes end next month. Chairman Ben S Bernanke has said the purchases are needed to support housing markets, whose collapse triggered the worst crisis since the Great Depression.

Fed officials in their January meeting also agreed that it would ’soon be appropriate’ to raise the discount rate, at which banks borrow directly from the central bank, and reduce the maturity of the loans to overnight from 28 days.

The Fed’s actions to combat the financial crisis have created scrutiny of the central bank in Congress, which is taking up the most extensive rewrite of financial regulation since the 1930s.

The House voted on Dec 11 to approve a proposal by Representative Ron Paul, a Republican from Texas, to end a ban on audits of monetary policy over Mr Bernanke’s warnings the measure threatens to compromise Fed independence.

The Fed typically uses the purchase and sale of Treasury securities to change the benchmark federal funds rate by making bank reserves less or more available. At the start of 2007, the central bank’s securities portfolio was made up of mostly Treasuries.

Allocating Credit Before the crisis, the Fed avoided allocating credit to specific markets. In a study of open-market operations published in 2002, the central bank’s staff warned about changing the composition of the Fed’s portfolio.

The mission of the Fed ‘is statutorily cast in terms of macroeconomic outcomes,’ the document said. ‘Outcomes for specific sectors and for relative prices of credit or assets are within the purview of private markets and fiscal policy.’ A return to a policy of holding only Treasury securities, even if it’s a goal for now, indicates Mr Bernanke is seeking to assure investors the Fed is committed to independence and to its mandate to maintain stable prices and full employment, former officials said.

‘What the Fed is doing is showing markets a rope,’ said Vincent Reinhart, a resident scholar at the American Enterprise Institute in Washington and the former director of Monetary Affairs at the Fed’s Board of Governors. ‘They are trying to provide a safe port and show the Federal Reserve will always do what is right and has a long-run strategy.’

Fed officials closed four emergency lending programmes this month and are now considering the timing and use of several tools to remove or neutralise more than US$1 trillion in excess reserves from the banking system.

‘Most judged that a future programme of gradual asset sales could be helpful’ to shrink the balance sheet, while some officials were concerned about disrupting financial markets and the economy, the minutes said.

‘Several thought it important to begin a programme of asset sales in the near future,’ including spreading sales ‘over a number of years,’ according to the report.

Source: Business Times, 19 Feb 2010