THE Ministry of National Development (MND) is publishing a booklet containing the musings of its minister, Mah Bow Tan, in a bid to reach out to more Singaporeans and explain housing policies.

In response to a query from BT, Mr Mah said that the booklet will contain nine commentaries that encapsulate his thoughts on Singapore’s public housing programme over the past five decades.

This should give readers an insight into the thinking behind the policies that shape the system Singapore has today.

Said Mr Mah: ‘Today, eight in 10 Singaporeans stay in HDB flats, and nine in 10 of them own the flats they live in. This is the highest home-ownership rate in the world. No other country comes close.

‘But, public housing is not just about putting roofs over people’s heads. It is also about building inclusive homes and communities.

‘This has not been an easy effort. There is a finite budget to work with, and policy trade-offs to be made.

‘With this booklet, I hope to reach out to more Singaporeans, to tell them about our ongoing housing story, and to enhance their understanding of the policy considerations behind this success story,’ he added.

The booklet will be released in either February or March this year.

MND plans to distribute the booklets to relevant entities such as HDB branch offices, town councils, public libraries, and academic institutions.

In addition, the booklet could be sold in selected bookstores.

It might also be available in a Mandarin version, sources said.

 Source: Business Times, 27 Jan 2011

ONE small group of property buyers will have to fork out a higher proportion of cash upfront than all other buyers as a result of the latest round of property market cooling measures.

Buyers who are not individuals – that includes companies, trusts and collective investment schemes – can borrow just 50 per cent of the property’s value.

They are being forced to put half of the property’s value on the table in cash after the loan-to-value ratio has been slashed for them.

The loan-to-value ratio represents the size of a loan as a percentage of a property’s worth.

This group accounts for a small but growing portion of property deals as these investors look to property as a way to protect themselves against the impact of rising levels of inflation.

This new limit comes into effect today and will also apply to joint property deals by an individual and purchaser who is not an individual.

In February last year, the limit for all housing loans provided by financial institutions was lowered to 80 per cent.

That was cut even further to 70 per cent for all housing loans in the last round of property measures last August.

Observers said that the number of purchases by non-individuals is small. But property consultancy Propnex’s chief executive Mohamed Ismail said he believes this latest measure has been introduced to prevent individuals from circumventing the earlier rules by incorporating companies to buy property.

Mr Png Poh Soon, head of research and consultancy at Knight Frank, said non-individual buyers do not make up a significant portion of all property buyers.

‘We do see companies and institutions coming in from overseas to buy property in bulk, but in terms of percentage purchased, it is not significant,’ said Mr Png.

He added investors prefer putting their money in Singapore because it is more stable and secure.

Urban Redevelopment Authority Realis data obtained by property consultancy Cushman & Wakefield shows this group of buyers made up 2.8 per cent of total private residential transactions in the first quarter of last year.

In the second quarter, this figure was 2.6, increasing to 4.2 per cent in the third quarter and then to 6.2 per cent in the last quarter.

Knight Frank’s Mr Png added that these buyers mostly look to buy commercial and office property but they may also turn their eye to the residential sector. He pointed out the latest measures might not deter these buyers, because some may be able to hold off selling the property for a longer period.

‘(These measures) are to make sure they think twice before buying and to encourage more long-term investors rather than short-term speculators,’ he said.

Source: Straits Times, 14 Jan 2011

Investors will think twice and developers are expected to delay launches
THE property cooling measures announced yesterday will effectively halt buying activity from property investors across the private market – at least for the time being.

Market analysts that The Straits Times spoke to said the drastic measures will make investors reassess their finances and think twice before signing on the dotted line.

Developers are also widely expected to postpone their property launches and may lower their prices to lure buyers back to the market in the coming months.

Yesterday’s measures, which included raising the seller’s stamp duty to a hefty maximum of 16 per cent of the purchase price, and lowering the amount banks can loan home buyers for a second property to 60 per cent of the property’s value, were described as ‘punitive’ by analysts.

Property consultancy International Property Advisor’s (IPA) chief executive Ku Swee Yong said the move was a ‘sledgehammer’ that came as a surprise to the industry.

‘Many of our clients who are genuine investors are now re-assessing their loans situation. The market will be frozen stiff for a while,’ he said.

And for sellers who buy a private property from today onwards but genuinely need to dispose of their properties in the short-term, such as those who have suffered losses in business or who have fallen critically ill, the stamp duty will ‘cripple them completely’, he added.

Property investor S.K. Cheah, 42, who is self-employed and already owns a few investment properties, said that genuine investors will find it hard to come up with the 40 per cent downpayment for new investments.

But he conceded that in the long run, this may be healthy for the market as there are many investors out there who may be heavily leveraged and may get into financial trouble when interest rates start climbing.

Mr Colin Tan, research and consultancy director of Chesterton Suntec International, said that the industry had somewhat anticipated another round of measures – but not so soon.

The last round of measures, which tightened ownership rules and restricted financing, was announced last August and the market was still reacting to that, he said.

Demand will most certainly be dampened, added Mr Tan, but he noted that investors who are ‘comfortably well off’ will not have problems forking out a higher amount upfront for investment homes.

Foreign capital inflows into Singapore – a well-known destination for property investment on the international property circuit – could still create demand in the market, he added.

All eyes are on developers now for their next move.

CapitaLand, for example, was expected to launch around 1,700 new homes this year across some projects such as The Nassim, Urban Resort Condominium, The Interlace and d’Leedon.

City Developments and Far East Organization also had new launches slated for the next few months. When contacted, all three developers declined to comment.

Mr Tan said he expects a knee-jerk reaction from developers, who will now most likely postpone these launches.

Mr Lim Yew Soon, managing director of EL Development, said he is mulling over the effect of the measures on his company’s Skysuites 17 at Balestier, which is slated for launch in March.

‘If the market takes it lightly, our pricing will still meet market expectations. But if the market reacts drastically, based on upcoming launches, we may decide to hold off the launch by three months or so,’ he said.

IPA’s Mr Ku said developers may have to reduce their asking prices, and may drop them by 1 to 2 per cent initially to test the market.

Although yesterday’s measures did not directly address the public housing market, analysts say the measures could also have a trickle-down effect on HDB resale flat prices.

Mr Ku noted that if mass market home prices started declining to the level of sought-after HDB resale flats in good locations, resale flat prices could weaken as buyers look to buy private property instead.

First-time home buyers such as Ms Yvonne Koh, 26, a bank executive, said the prospect of falling prices is music to her ears. ‘I just started looking for a home and was deciding between a private apartment and a resale HDB flat. Hopefully the measures will bring prices down to a more affordable level so I can buy sooner rather than later,’ she said.

Source: Straits Times, 14 Jan 2011

Govt steps in for fourth time in two years, catching many by surprise
A CHILL is set to descend on Singapore’s property market after the Government unveiled tough new measures yesterday that analysts say will effectively kill off short-term speculation and make most property investors look before they leap.

They include hiking seller’s stamp duty to a new maximum of 16 per cent, up from 3 per cent previously, and making it payable for up to four years from the date of purchase of a property.

Anyone with an existing home loan looking to buy a second property for investment will also now need to fork out more cash and Central Provident Fund savings.

That is because the loan limit for such properties is now 60 per cent of the property’s value, down from 70 per cent previously.

The measures take effect today.

Yesterday’s announcement marked the fourth time in less than two years that the Government has stepped in to cool the property market here.

It caught many by surprise, since it comes barely five months after tighter financing and ownership rules were announced on Aug 30 last year.

In its statement, the Government said that while these previous measures had to some extent moderated the market, sentiment remained buoyant.

‘Low interest rates plus excessive liquidity in the financial system – both in Singapore and globally – could cause prices to rise beyond sustainable levels based on economic fundamentals,’ it added.

‘Moreover, when interest rates eventually rise, it could strain purchasers who have over-extended themselves financially.’

Even as the Government moved to temper exuberance in the market, homes were flying off the shelf.

Local developer Oxley Holdings separately announced yesterday that its 41-unit Loft@Holland condominium was sold out within two hours of its soft launch at prices from $1,630 per sq ft to $2,166 per sq ft.

‘Demand was strong enough to require balloting to be conducted for all but two units,’ it added. ‘On average, there were about three interested buyers per unit.’

The seller’s stamp duty was first introduced in February last year. Its impact is especially significant because it is payable regardless of whether the property is sold at a gain or loss.

The Government also introduced a new rule that will see institutions such as corporations, trusts and collective investment schemes face tighter financing rules.

The loan limit will be lowered to 50 per cent on housing loans granted to property purchasers of such types who are ‘not individuals or natural persons’. There was no rule specific to this class of investors previously.

But these tighter rules will not apply to loans granted to property developers for en bloc sales or land zoned for residential purposes, the Monetary Authority of Singapore said.

Although the new measures have been introduced to cool the market in general and encourage greater financial prudence among home buyers, some property buyers will remain unaffected.

First-time buyers, as well as property owners without outstanding home loans, continue to be able to borrow up to 80 per cent of the value of the property.

Private home prices climbed 17.6 per cent last year as a record 15,025 new homes were sold in the first 11 months of the year.

A surfeit of liquidity and low borrowing rates have also fuelled concerns that asset bubbles are forming not just in Singapore but in regional economies like Hong Kong and China.

In November, Hong Kong announced some of its toughest-ever measures to cool the property market, applying a stamp duty of as high as 15 per cent on apartments sold within six months of purchase.

Downpayments for homes costing HK$12 million (S$2 million) or more also rose to 50 per cent, from 40 per cent previously.

Sounding shell-shocked, industry players said the market will probably react in a knee-jerk manner.

Buying interest will dry up initially and new property launches will slow down as the market digests the news.

Ms Tay Huey Ying, director of research and consultancy at Colliers International, expects home buyers to be on their guard, leading to a fall in sales volume in the short term before possibly recovering later.

She has revised her price growth forecast for this year down from 10 per cent to between 5 and 8 per cent.

The Real Estate Developers’ Association of Singapore (Redas) said that the measures will discourage speculative demand and will encourage longer-term holding of properties, contributing to the stability of the market.

‘It is in the interest of the market to see a more gradual trend in growth and value for genuine home owners and investors,’ it said.

Ms Valerie Lee, 24, a first-time buyer looking for a private home, welcomed the new measures, saying that property prices have remained out of her reach even after the Aug 30 measures were introduced.

‘As a genuine buyer, I think it’s a good move,’ said the executive in a utility and energy company. ‘The property price index is still going up, so hopefully these new measures will work and be substantial enough to keep speculators away. I’m hoping that prices will come down.’

Source: Straits Times, 14 Jan 2011

Nod for 1,190 property firms, 27,754 agents; public register on CEA website from Jan 1
THE newly set up Council for Estate Agencies (CEA) has approved 1,190 licence applications from real estate firms as well as 27,754 registration applications for property agents, it said yesterday.

Previous estimates from the government – provided before CEA was set up – put the number of property firms and agents at 1,700 and 30,000 respectively. But industry players were expecting the number of firms and agents to fall with the establishment of the industry watchdog and stricter rules.

CEA also said that it turned down 210 applicants who do not meet the required criteria to be agents. The denied would- be agents were mainly found to have criminal records or records of offences involving fraud or dishonesty.

A public register of licensed firms and registered agents will be available on CEA’s website from Jan 1. The register will display the name, licence or registration number, the firm the agent is working for, validity period, and records of offences committed or disciplinary actions taken, if any. Recent photographs of agents will also be available for easy identification from March 1.

CEA has been receiving licensing applications from both new and existing real estate firms since Nov 1. Property firms were also required to register salespersons who meet all of CEA’s criteria by Nov 30.

Going forward, CEA will also implement a prescribed dispute resolution scheme – involving mediation and arbitration – in January. Firms are required to participate in the scheme once the consumer has elected to proceed.

The agency also clarified yesterday that estate agency work concerning land banking products will not be regulated under the Estate Agents Act 2010.

Said CEA: ‘This is because estate agents marketing land banking products are more likely to provide financial investment advice than to make representations on a property. Consumers should practice caution and exercise due diligence when investing in land banking products.’

Source: Business Times, 30 Dec 2010

Only licensed agents can work by Jan 1, in bid to up standards

COME Jan 1, Singapore’s real estate industry will mark not just a new year but a new dawn. Only licensed agents will be allowed to work, in a nationwide bid to raise the industry’s professionalism.

The industry will for the first time be regulated by the Council for Estate Agencies (CEA), which has been given powers to discipline agents in a sector often called a ‘cowboy town’.

But it has got its work cut out for it.

Barely two months since it began operations on Oct 22, it has already received 228 complaints as of last Friday. This works out to 114 complaints a month – higher than the average 90 complaints a month filed with the Consumers Association of Singapore (Case) last year. Almost half – 47 per cent – concerned unprofessional or poor service, a big bugbear in the industry.

Speaking to the media for the first time since he was appointed CEA’s executive director, Mr Chionh Chye Khye told The Straits Times the new body’s core mission will be to raise standards.

To do this, CEA will deploy a three-pronged strategy, he revealed. The first is effective regulation. It is a balancing act for CEA, which ‘should not overregulate or be too lax in regulation’, he explained.

For example, agencies have said they fear CEA could overregulate by imposing stifling restrictions or making eligibility criteria for agents too stringent. ‘Regulation must be for better outcomes, and hence, effective regulation is key,’ Mr Chionh said.

Second, CEA aims to actively work with estate agencies as it cannot raise the industry’s standards alone. ‘(The agencies) are at the front line and can sense consumer needs and changes in trends,’ he said. Lastly, education of home buyers and sellers will be a key strategy as they come from a wide spectrum, from the less educated to the highly educated. ‘If consumers do not understand, they make errors of judgment or bad decisions and can be misled by rogue salesmen,’ he added.

CEA’s 33-strong staff will also have to deal with other complaints such as disputes over fees paid to agents, which make up 12 per cent of complaints. CEA will look into each case and will investigate if the agent is in the wrong.

As of Jan 1, it will hand out licences to agents who make the cut, and will have the power to mete out penalties such as warnings, fines and suspensions and even revoke licences. Its service will be free for consumers, said Mr Chionh.

CEA collects a registration fee from each licensed agent and estate agency.

Consumers with complaints will have to pay a mediation fee if they choose to use CEA’s dispute resolution scheme. Details on how this scheme works and the size of the fee will be released at a later date, he said.

Mr Chionh added that CEA’s inquiries, complaints and appeals come via its hotline, website, e-mail messages and walk-in public counter in Toa Payoh’s HDB Hub. It has been looking into ‘fine-tuning’ its processes.

Case executive director Seah Seng Choon told The Straits Times he was not surprised at the high number of complaints. He said given that the regulation is new and that there is greater awareness of a proper channel for consumers, ‘this number will continue to grow and might escalate before it comes down’.

He is positive, however, that the new regime will improve the professionalism of the industry in the long run. ‘Now agents are registered, they will think twice before doing something unprofessional,’ he said.

The new rules will also make it unlikely that property agents will moonlight. There are no specific records of the number of people who have a day job but work as agents in their spare time and on weekends. But, PropNex spokesman Adam Tan said, with the new rules, such agents will be unable to continue as they must be registered in a database available to the public.

Another group affected are those who have problems reading and writing in English and are unable to pass recognised industry examinations conducted in English.

Ms C.H. Lee, 40, is one such agent. She has sold some 100 properties in recent years, but only has N-level qualifications. ‘My English is poor. Property is the only thing which I can do well now so I feel uncertain about my family’s future,’ she said.

Meanwhile, the new regime has brought cheer to consumers. Home buyer Madam L.H. Goh, 51, a personal assistant, engaged an agent who failed to declare that the flat seller’s agent was his wife.

‘There was a conflict of interest and he misled me right from the start, so I’m glad CEA is able to look into this and has the power to punish unpro-fessional agents,’ she said.

Mr Chionh added that generally, agency heads and agents themselves welcomed the greater regulation. This will enable them to ‘weed out the few bad hats and upgrade the image and professional standards of the industry’, he said.

Mr Chionh is a professional civil engineer and previously held the positions of deputy secretary at the Ministry of National Development and chief executive of the Building and Construction Authority.

CEA’s vision is of a professional and trusted real estate industry, he said, adding: ”Professional’ relates to the pursuit of standards in upgrading the industry, while ‘trusted’ refers to the trust that the consumers must have in the industry.’

Source: Straits Times, 23 Dec 2010

ONE applicant was once jailed for seven years for having sex with a child. Others had histories of drug trafficking, illegal money-lending, stealing and fraud-related offences.

Of the estimated 32,800 existing property agents who applied for registration with the Council for Estate Agencies (CEA) earlier this year, about 27,800 passed muster.

So far, CEA said it has rejected 210 applicants based on their past convictions or involvement in court cases, while others might have dropped out because of tightening regulations.

From Saturday, all new and existing agents have to be registered. It is part of the Government’s first foray into regulating and disciplining agents in the real estate industry – the sixth most-complained-about sector last year.

Those who made the cut will have their details displayed for the public on CEA’s website. Only these agents are allowed to work. The council has the authority to fine, suspend or revoke the licences of those who break the rules.

The public register will display the agent’s name, licence number and a recent photo. It will also show information on the 1,190 estate agency businesses.

Agents who have passed a recognised industry exam, such as the Common Examination for House Agents, have had their registrations approved.

CEA will also register those who have done at least three property deals over the last two years. But these agents will be granted only a one-year provisional licence and need to pass the Real Estate Salesperson (RES) exam by Dec 31 next year if they want to continue practising.

CEA is also launching a dispute resolution scheme next month.

This process aims to provide a means of resolving issues such as contractual disputes between consumers and agents. The agent involved will be compelled to participate in it.

Barely two months after it started operating, CEA has already received 228 complaints – about 114 a month.

Real estate agents and home buyers interviewed by The Straits Times welcomed the tightening of regulations.

Prospective home buyer Vanessa Chew, 26, said: ‘Many of us, either rightly or wrongly, look to real estate agents for guidance and information. The new regulations will hopefully ensure that real estate agents are in a better position to assist us and minimise any potential conflicts of interests.’

Dennis Wee Group (DWG) director Chris Koh said a ‘substantial’ number of agents still made the cut. He said measures like the standardisation of buyer and seller agreements will help improve the industry. Almost all the 2,400 agents DWG submitted to CEA qualified.

Mr Koh added: ‘The public registry will boost consumer confidence… buyers will know they are working with bona fide personnel.’

PropNex also had most of its 4,000 agents qualify. But spokesman Adam Tan said Singapore’s total number of CEA-registered agents is likely to drop, in part because of the difficulty agents possessing provisional licences might have with passing the required exams.

About 6,000 property agents have a one-year provisional licence.

Mr Tan added: ‘People who want to join the real estate industry now will have to be serious about it as a career.’

CEA said property developers and estate agents marketing land banking products are not affected by the new rules.

Source: Straits Times, 30 Dec 2010

This is according to the latest survey by property listings site PropertyGuru.com.sg.

Steve Melhuish, Chief Executive Officer, PropertyGuru.com.sg, said: “One of the things that came out in terms of the most recent research findings is that people still think that HDB is expensive. 67 per cent of people we surveyed are of the view that HDB is still expensive.

However (in) the last survey we did, which is in May and June, the number was 75 per cent. Interestingly, for the next 12 months for the forward looking view, 59 per cent feel that HDB prices will stabilise or not change, or decrease versus 23 per cent in the previous survey.”

Forty one per cent of the survey’s respondents feel that more steps are needed to control property prices while 42 per cent of respondents will consider investing in cheaper office or retail units due to high home prices.

Ong Kah Seng, Senior Manager of Research, Asia Pacific, Cushman & Wakefield, said: “Definitely the yields for commercial properties have been traditionally higher than residential properties.

For residential properties, most yields are going at 3 per cent. For industrial properties, it will be about 6 per cent or more. And retail properties will be about 5 per cent.”

Earlier this week, the Ministry of National Development said that the full effects of the cooling measures would be realised in the next one to two months.

The cash over valuations for HDB resale units slipped to $22,000 last month.

According to data from the Urban Redevelopment Authority, property price growth has slowed to 2.9 per cent in the third quarter compared to 5.3 per cent previously.

Going forward, analysts say home prices will grow by 10 per cent next year, led by the luxury segment but HDB prices will grow at a marginal 5 per cent due to the cooling measures.

Source: Channel News Asia, 10 Dec 2010

Residents had asked about poor forecasting, latest HDB restrictions

THE housing market may be cooling, but it was a hot issue for two veteran Kampong Chai Chee grassroots leaders who quizzed Minister in the Prime Minister’s Office Lim Hwee Hua on policy changes and what they saw as shortcomings.

Residents’ committee member Bernard Choo, 64, wondered if the housing authorities slipped up in planning for population growth, leading to ‘a huge housing demand chasing a very limited supply’.

Former community centre management committee chairman Png Wee Chor, 71, took issue with the tightening of restrictions on HDB owners buying private property, and private property owners buying resale HDB flats.

Both questions dominated an hour- long dialogue Mrs Lim had with residents during her visit yesterday to the Kampong Chai Chee ward of East Coast GRC. Other issues raised included future plans for the ward and amenities such as the food centre and sports facilities.

Mrs Lim, who acknowledged that housing was an issue close to people’s hearts, used the opportunity to explain the complexities of planning for housing demand.

She noted that it was extremely difficult to be precise about a country’s future needs as trends and preferences change.

In outlining the thinking behind the latest measures, she told Mr Png that when the Government saw that younger couples found it hard to get a flat, it discovered that a key obstacle was the rising cash-over-valuation for resale flats.

The HDB and National Development Ministry realised that a small group of private property owners were speculating on these flats, causing prices to rise faster.

Hence the Government decided to impose new ownership restrictions.

‘The starting point is one of trying to meet the needs of Singaporeans who would like to own a flat, who feel that they have not been able to do so because others are participating – who perhaps can be left out until such time as the needs of younger Singaporeans especially have been met.’

Soaring resale flat prices of late prompted concerns that these are out of reach for many. New rules took effect in September, and on Nov 27, National Development Minister Mah Bow Tan said there were signs that these were working.

On Mr Choo’s point about poor forecasting having led to ‘a very mismanaged situation’, Mrs Lim said:

‘It’s extremely difficult to do forecasting on a macro basis just based on straightforward population growth. The other difficulty revolves around shifting patterns of behaviour.’

She cited how young couples previously did not mind living with their parents after marriage, or renting a flat first. But now they want their own place, and are willing to live further away from the city.

She noted that 22,000 new flats – plus 4,000 Design, Build and Sell Scheme units and 4,000 executive condominium units – will be launched next year.

But, she added: ‘It is of course in everybody’s interest to try and get the projections right. The Government takes in some of these shifting preferences and puts out sufficient flats or sale of land to the private sector and makes sure there will be enough supply of public housing.’

Mr Png backed measures to cool the market, but found it unreasonable to bar HDB owners from having homes abroad.

‘The Government asks us to venture and invest overseas, we need a place to stay,’ he said in Mandarin.

New residents wanting to keep homes abroad for their parents there could no longer buy an HDB flat, he added.

Responding, Mrs Lim said that for exceptional cases, residents should approach their MP to appeal to HDB as it has said that it will consider such cases.

At the dialogue, Mr Png also said the Government should compensate those whose investments in financial products had collapsed during the 2008 economic crisis. ‘Many suffered a lot of anguish and pain which may be reflected in the (next) election,’ he said.

Mrs Lim, who is also Second Finance and Transport Minister, said the Monetary Authority of Singapore had imposed stricter regulations on financial products, and worked with banks on compensation processes. ‘You can’t have a blanket ruling saying everybody will get so much. A lot will depend on how knowledgeable the person is at the point of investing.’

Source: Straits Times, 6 Dec 2010