But minister says situation being closely watched, promises more action if needed

With govt intending to tighten immigration, release of new sites may not be readily absorbed; developers welcome the new supply and predict prices will hold

THE government’s move to roll out a bumper supply of new residential sites for development in the first half of 2011 was largely expected by the industry.

But on top of that, there is also an increasing sense that more demand-side measures to cool the property market are on the way.

Home buyers, developers and the stock market have all largely shrugged off the last round of anti-speculation measures introduced on Aug 30.

On Thursday, Singapore’s central bank said low borrowing costs and excess liquidity globally may push the island’s property prices higher again, setting back government efforts to cool the market.

There are also risks of buyers taking on ‘excessive leverage’ amid expectations of a sustained period of low rates, and financial institutions easing lending standards and extending more loans to make up for narrowing interest margins, the Monetary Authority of Singapore (MAS) said in its Financial Stability Review report.

The MAS report comes hot on the heels of recent statements by Prime Minister Lee Hsien Loong and Finance Minister Tharman Shanmugaratnam, leading to speculation that the potential for further government intervention has increased significantly.

‘While sentiment was dampened in the weeks that immediately followed the Aug 30 measures, there are signs to suggest the property market is becoming active again,’ said Nomura analyst Min Chow Sai. ‘These have not escaped the government, judging by the recent comments from officials, including the Prime Minister.’

The government is likely concerned the market appears to have shrugged off the February and August measures relatively quickly. Home sales in September declined after the latest round of anti-speculation measures, but picked up again in October. The private property price index also moderated only slightly in the third quarter, with the quarter-on-quarter change in the index falling from 5.3 per cent in Q2 2010 to 2.9 per cent in Q3.

This is partly due to excess liquidity, as pointed out by MAS. But prices and transaction volumes are also being propelled by genuine demand – just as developers here have been saying.

Much of the current tight supply situation is caused by the large growth in population numbers from 2005 to 2009, said Citigroup economist Kit Wei Zheng. Over those five years, Singapore’s population rose by more than 800,000.

But with the government’s present intention of tightening immigration, the population is not likely to keep growing at the same pace. So the new supply announced on Thursday – which is likely to come on stream over the next four to five years – may not be as readily absorbed.

‘The key sense of uncertainty in the medium term is to what extent the immigration policy will be tightened,’ Mr Kit said.

Add possible new demand-side measures into the mix and the whole picture gets even more hazy. One policy change seen as likely is a further reduction in the loan-to-value (LTV) ratio cap.

The supply card has already been played. The Ministry of National Development (MND) plans to offer 17 residential sites, with the potential 8,100 private and executive condominium units, under the Confirmed List of the Government Land Sales (GLS) Programme for first-half 2011. This is close to the record 8,135 units offered under Confirmed List sites in the current H2 2010.

Including Reserve List sites, the H1 2011 GLS Programme will have a total of 30 sites that can generate a record 14,300 residential units – even higher than the record 13,900 residential units offered for H2 2010.

‘When put into context of demand take-up, H1 2011 total potential land sales of 14,310 units (12,020 private units and 2,290 executive condominiums) are tracking close to our full-year 2010 estimated take-up of 14,500 private units and are likely to compound the basic picture of over-capacity build-out from H2 2012,’ Goldman Sachs analysts Paul Lian and June Zhu said in a Nov 25 note.

But perhaps the more telling number is this: According to MND, the total potential supply of private housing units that can be completed in the next few years will be about 80,200 units.

Real estate stocks fell slightly yesterday in response to news of the new supply and speculation about more impending measures. CapitaLand lost 0.8 per cent, City Developments shed one per cent and Keppel Land ended the day 1.3 per cent lower.

But developers BT spoke to – including CapitaLand, City Developments’ parent company Hong Leong Group and Keppel Land – said they welcome the release of more sites, and predicted that prices will hold.

‘The government is wise in ensuring adequate supply of residential and commercial property,’ said Hong Leong spokesman Gerry de Silva. ‘More land supply means that tender prices are likely to be moderated as there will be less aggressive price bidding among developers, who now have a wider variety of choices to tender for and can selectively replenish their land banks. This will be good in ensuring a sustainable property market and will ensure there are no runaway property prices. We expect prices to hold.’

Source: Business Times, 27 Nov 2010

It stands ready to act to cool fever as low interest rates, overseas fund flow raise heat

LOW interest rates in a market awash with cash are just the ingredients that could heat up property prices and encourage excessive borrowing.

But the Monetary Authority of Singapore (MAS) said the Government is keeping a close tab on the market and stands ready to introduce additional cooling measures if necessary.

The central bank’s annual Financial Stability Review warned yesterday that the flow of funds from overseas and rock-bottom interest rates could add more fuel to the red-hot property sector.

Concerns were raised over what is expected to be a ‘sustained period of low interest rates’ where home buyers may be tempted to take on excessive borrowing while lenders may loosen standards in a bid to extend more loans in the face of thinning interest margins.

‘As the property market is sentiment-sensitive, a pick-up in activity could lead to rapidly escalating prices,’ said the MAS.

‘In turn, if economic recovery dis-appoints on the downside amid continued uncertainties in the global economy and market confidence is dented, prices could fall.’

It added that this could have widespread implications on buyers who are overextended when interest rates eventually go back up.

But the MAS said the Government will keep monitoring the property market and adopt additional cooling measures if needed.

In August, the Government imposed steps to tighten ownership rules on buyers of HDB flats, set new loan limits and increased the amount of time a buyer must hold a property before reselling it.

Similar moves in February and September last year were also brought in to curb rocketing prices.

Urban Redevelopment Authority figures are already showing signs of a moderation. Private property prices were up just 2.9 per cent in the third quarter compared with the 5.3 per cent jump in the second quarter.

However, soaring property valuations – a by-product of Singapore’s strong economic growth – have helped lower the relative indebtedness of home owners with mortgages.

The share of outstanding loans to the value of the property fell significantly in the third quarter. This is because as a property’s value goes up, the ratio of the loan to its value falls.

The proportion of mortgages with loan-to-value (LTV) ratios above 80 per cent dropped from 17.3 per cent in the third quarter last year to just 7.1 per cent this year.

LTV ratios above 70 per cent also fell, from 35.1 per cent to 27 per cent over the same period.

International Property Advisor chief executive Ku Swee Yong said lower LTV ratios point to a systemically sound lending environment.

‘It is not a risk from a financial institution’s viewpoint because with the low LTV ratio, the banks can withstand, say, up to a 20 per cent drop in property prices, without calling on the margin of the borrower,’ said Mr Ku.

‘For home owners, the news will also be a comforting thought.’

Source: Straits Times, 26 Nov 2010

(SINGAPORE) Prime Minister Lee Hsien Loong said yesterday that the city- state’s red-hot property market was a matter of concern and needed careful monitoring to avoid the creation of a bubble.

‘Our property market has been taking off, which is causing some consternation,’ he told Reuters in an interview. ‘We have had a series of measures to squelch the property market but liquidity is awash, sloshing around the whole region.

‘We are watching carefully. The last set of measures were announced at the end of August, they seem to have dampened sentiment some, but we will have to watch and see.’

Singapore announced restrictions to cool its residential market on Aug 30, including a reduction in the amount those with existing mortgages could borrow to buy second properties and extending a stamp duty on those selling property within three years of purchase.

Mr Lee said Singapore could define itself as one of the world’s most attractive global financial centres with a less reactive approach to currently emotional issues like regulation.

‘We want to maintain a system where there are adequate safeguards, but at the same time the basic principle is free market and caveat emptor,’ he said, drawing a contrast with the swift legislative responses to the financial crisis in countries like the United States and Britain.

‘We are trying to be stable. I don’t say that we are consciously less volatile than others but I think it is good for us if we can maintain a stable long-term perspective and rise above the immediate pressures of the crisis at the moment.’

Mr Lee also said that Singapore needs US and China to work out their differences to ensure its prosperity. Singapore has interlinked trade and financial relations with both powers and feels the tensions between them keenly.

‘The key, of course, is America-Chinese relations and that’s very difficult because on the ground in America the mood is quite sour,’ the prime minister said. ‘And not just among the unions and the Democratic (Party) left wing, but even the corporates, the businessmen.’

Mr Lee said he worried that short-term thinking could lead to bad decisions. ‘Nobody is speaking up to say ‘please manage this with a long-term perspective’,’ he said.

He said he had a basic optimism about the eventual health and development of both the US and the Chinese economies, even though in both cases many years of transformation would be needed.

Beijing required fundamental structural change to drive more domestic demand and investment.

‘I believe the Chinese understand this and I believe they are going to do something about it,’ said Mr Lee. ‘It’s not going to happen overnight but over 10 years I see change.’ The United States needed to transcend the difficulties of domestic partisan politics to take tough decisions on fiscal policy.

‘If you look at it on a five-year time frame, you can’t help being worried but if you look at it in a 20-year time frame you say of all the economies in the world, the Americans are the ones most capable of re-inventing themselves,’ Mr Lee said. — Reuters

Source: Business Times, 3 Nov 2010

PRIME Minister Lee Hsien Loong said yesterday that the Government is keeping a close eye on the property market to avert the formation of an asset bubble.

Recent measures to cool the market have dampened sentiment, but liquidity is awash in the region, he told news agency Reuters in an interview on the risks facing Singapore.

Mr Lee also vowed to continue to take action if necessary, Reuters reported.

‘Our property market has been taking off, which is causing some consternation,’ he said.

‘We have had a series of measures to squelch the property market, but liquidity is awash, sloshing around the whole region.

‘We are watching carefully. The last set of measures were announced at the end of August, they seem to have dampened sentiment some, but we will have to watch and see.’

The latest Government measures to stem overheating include reducing the maximum loan for buying a second residential property, imposing stamp duty on owners who sell properties within three years of buying them and tighter restrictions on those buying HDB resale flats.

As for Singapore’s future, Mr Lee said it could define itself as one of the world’s most attractive global financial centres with a less reactive approach to currently emotional issues like regulation.

He noted the swift legislative responses to the financial crisis in countries such as the United States and Britain, saying: ‘We want to maintain a system where there are adequate safeguards, but at the same time, the basic principle is free market and caveat emptor (buyer beware).’

He added: ‘We are trying to be stable.

‘I don’t say that we are consciously less volatile than others, but I think it is good for us if we can maintain a stable long-term perspective and rise above the immediate pressures of the crisis at the moment.’

Mr Lee also touched on relations between the United States and China.

He said Singapore needed both countries to work out their differences to ensure prosperity.

‘If that turns sour, a lot of things can go wrong,’ he said, noting that the mood towards China was quite sour on the ground in the US.

‘And not just among the unions and the Democratic (Party) left wing, but even the corporates, the businessmen.’

Mr Lee said he was worried that short-term thinking could lead to bad decisions.

‘Nobody is speaking up to say ‘please manage this with a long-term perspective’,’ he said.

But he was optimistic about the eventual health and development of both major powers’ economies, even though both needed many years of transformation.

Beijing, he noted, required fundamental structural change to drive more domestic demand and investment.

‘It is not going to happen overnight, but over 10 years, I see change,’ he said.

The US needed to transcend the difficulties of domestic partisan politics to take tough decisions on fiscal policy.

‘If you look at it on a five-year timeframe, you can’t help being worried, but if you look at it in a 20-year timeframe, you say of all the economies in the world, the Americans are the ones most capable of re-inventing themselves,’ Mr Lee said.

‘Our property market has been taking off, which is causing some consternation. We have had a series of measures to squelch the property market, but liquidity is awash, sloshing around the whole region…We are watching carefully. The last set of measures were announced at the end of August, they seem to have dampened sentiment some, but we will have to watch and see.’

Prime Minister Lee Hsien Loong

Source: Straits Times, 3 Nov 2010

SINGAPORE: The Council for Estate Agencies (CEA) released new rules on Friday that will set standards and regulate the conduct of estate agency work.

From 15 November, salespersons cannot represent both buyers and sellers in a property transaction under the Estate Agents (Estate Agency Work) Regulations.

It will also prohibit estate agents and salespersons from handling cash in certain transactions or referring their clients to any moneylender.

Other provisions will kick in on 1 January.

They include prescribed estate agency agreements that estate agents will use with their clients for the sale, purchase or lease of residential property in Singapore.

Individuals who undertake estate agency work will also be required to take part in continuing professional development programmes for a minimum of 6 hours per year from 2011.

From March next year, the regulations will require salespersons to display their estate agent’s card, when doing estate agency work. This is to allow the industry sufficient time to comply with the estate agent’s card requirement.

Separately, the Estate Agents (Licensing and Registration) Regulations and the Estate Agents (Fees) Regulations will take effect on 1 November.

Application for estate agent’s license and salesperson’s registration will start from that date and those who successfully register with CEA will have their names published on its website from 1 January.

Those who do not meet the licensing or registration criteria will not be granted a license or registration. This includes those with criminal records, especially for fraud and dishonesty.

Also from January next year, it will be an offence for sales persons who are not registered with CEA to handle estate agency work.

They must also have written agreements with estate agents before they can practise.

Source: Channel News Asia, 29 Oct 2010

The Council for Estate Agencies (CEA) released new rules today that will set standards and regulate the conduct of estate agency work.

Estate Agents (Estate Agency Work) Regulations 2010
The Estate Agents (Estate Agency Work) Regulations 2010 (“EAW”) contains two Codes in its schedules: (i) the Code of Ethics and Professional Client Care, applicable to estate agents and salespersons; and (ii) the Code of Practice applicable to estate agents. The two Codes will guide estate agents and salespersons and help to enhance professionalism in the industry and encourage ethical behaviour and good service to consumers.

The EAW will prohibit dual representation by salespersons (i.e. no salesperson is allowed to act for both buyer & seller or landlord & tenant in any property transaction), and prohibit estate agents and salespersons from handling cash in certain transactions or referring their clients to any moneylender. The EAW also contains responsibilities for estate agents. For instance, it stipulates guidelines regarding advertisements and requires estate agents to have systems and processes for the management and supervision of their business and salespersons. Estates agents are also required to have a proper complaints handling system. These provisions of the EAW will take effect from 15 November 2010 onwards.

Other provisions, which will start from 1 January 2011, include the following: prescribed estate agency agreements that estate agents will use with their clients for the sale, purchase or lease of residential property in Singapore, and the requirement for persons doing estate agency work to have professional indemnity insurance coverage. It will also be a requirement for every individual who undertakes estate agency work to take part in continuing professional development programmes for a minimum of 6 hours per year from 2011.

The EAW will require salespersons to display their estate agent’s card, when doing estate agency work. This will take effect from 1 March 2011 to allow the industry sufficient time to comply with the estate agent’s card requirement. The full Regulations are available on CEA’s website at www.cea.gov.sg

Commencement of Other Regulations and Regulatory Requirements
 The Estate Agents (Licensing and Registration) Regulations 2010 and the Estate Agents (Fees) Regulations 2010 will take effect on 1 November 2010. Application for estate agent’s licence and salesperson’s registration will commence on the same date. The application forms can be downloaded from CEA’s website at www.cea.gov.sg. Applications should be submitted through the respective estate agents by 30 November 2010. Those who successfully register with CEA will be published on CEA’s website from 1 January 2011 for the public to check. As at 22 October 2010, the estate agents informed CEA that they have 32,800 existing salespersons who meet CEA’s criteria  ¹.

To uphold standards in the industry and safeguard consumer interests, those who do not meet the licensing or registration criteria will not be granted a licence or registration. This includes those with criminal records, especially for fraud and dishonesty. For individuals with such records, the Council will assess them on a case-by-case basis, taking into account factors such as the severity of the offence and time lapsed.

From 1 January 2011, all persons performing estate agency work must be registered with CEA as salespersons via their estate agents and it will be an offence if they operate without registration. They must also have written agreements with estate agents before they can practise.

Besides this, the Estate Agents (Composition of Offences) Regulations 2010, which lists the compoundable offences, and the Estate Agents (Appeals) Rules 2010, which provides information on appeals procedures for persons aggrieved by a decision of the Council or a Disciplinary Committee, will also commence on 1 November 2010. The timeline for commencement of the various regulations and regulatory requirements is summarised in Annex A.

Meeting with Major Industry Players

As part of our on-going industry engagement, Mr Greg Seow, Council President, met major industry players on 29 October 2010. He shared with them CEA’s expectations of the industry and sought their cooperation for the new regulatory requirements. He stressed that CEA would not hesitate to take firm action against estate agents and salespersons for non-compliance. He urged the industry to work together with CEA to uphold and improve overall professionalism and ethics of estate agents and salespersons.

Issued by:

COUNCIL FOR ESTATE AGENCIES
29 October 2010

ANNEX A – TIMELINES FOR COMMENCEMENT OF VARIOUS REGULATIONS AND REGULATORY REQUIRMENTS

¹  These salespersons either have passed an industry examination or have met the minimum of 3 property transactions over the last 2 years to qualify for the transitional arrangement given to pass the CEA examination by 31 December 2011.

Source: CEA

THE Government has appointed key personnel to a new statutory board set up to regulate the real estate agency industry, which starts operating today.

The Council for Estate Agencies (CEA) was set up in response to growing public complaints about errant agents. Mr Greg Seow, chairman of AMP Capital Investors (Singapore), has been appointed as president. Its executive director is Mr Chionh Chye Khye, a senior civil servant.

From Jan 1 next year, all property agents will have to be registered with the CEA and have to meet certain standards.

A statement issued by the Ministry of National Development said that key elements of this framework include enhanced licensing conditions for estate agents, registration of salespersons, regulation on the conduct of estate agency work, mechanisms for discipline and dispute resolution, and public education. It also bars property agencies and agents from simultaneously acting as moneylenders by featuring a new code on ethics and conduct, which bans agents from making referrals to moneylenders, among other practices.

The CEA is empowered to investigate complaints and impose penalties, such as fines, suspension and revocation, against errant estate agents and salespersons. Serious offenders may be prosecuted in court.

New and existing real estate agents can apply to the CEA for the licence from Nov1. The public can find out more details by calling the CEA on 1800-643-2555 or visiting www.cea.gov.sg

Source: Straits Times, 22 Oct 2010

PROPERTY firms have begun the process of registering their agents as the new statutory board set up to regulate real estate agents here, the Council for Estate Agencies (CEA), begins operations today.

With CEA up and running, new and existing real estate firms can apply to the council for new licences from Nov 1.

The firms are also required to register their agents under the new regulatory framework, which states that anyone doing estate agency work must be registered as a salesperson before he/she can practise.

Under a transitional arrangement provided by CEA, firms have until today to submit a list of existing agents who have passed an industry examination or have completed at least three property deals over the last two years.

After this, agents will have to apply as a new salesperson and satisfy the full registration criteria – which includes passing a new CEA examination – to practise.

BT understands that as of yesterday, a few hundred small property firms have submitted lists of their agents who meet the transitional criteria.

But most of the larger property firms have yet to make their submissions ahead of today’s deadline.

Agency bosses here have estimated that the current pool of more than 30,000 agents will shrink by a third to about 20,000 once the new rules kick in.

They also hope that the government’s move to set up CEA will ensure that property firms and agents have the knowledge to provide professional service while working ethically.

Minister for National Development Mah Bow Tan said yesterday that the establishment of CEA is a major milestone to raise professionalism in the real estate agency industry and protect consumer interest.

Added CEA: ‘The immediate focus for CEA is to prepare the estate agents (property firms) and salespersons to meet the higher standards of the enhanced licensing and new registration framework.’

The council will be headed by executive director Chionh Chye Khye, who was previously executive director (designate) with the Ministry of National Development.

The Business Times had earlier in December 2009 reported that he had been picked to helm the new statutory board.

Greg Seow, chairman of AMP Capital Investors (Singapore), has been appointed as CEA’s president.

Other council members include representatives from the Urban Redevelopment Authority, the Housing and Development Board, the Consumers Association of Singapore, and the National University of Singapore’s real estate department.

Source: Business Times, 22 Oct 2010

Stricter standards from sector’s first regulator to target errant agents

FEWER property agents will be plying the trade from next year, but they will – hopefully – be better informed.

The property industry is bracing itself for a mass cull of estate agents as the industry’s first ever regulator, the Council for Estate Agencies (CEA), begins operations tomorrow.

Agency bosses estimate that the current national 30,000-strong pool of agents will shrink by a third to about 20,000 overnight because of stricter standards laid down by the new council.

The new regulations mainly involve the strict enforcement of industry exams, and are aimed at ridding the industry of errant, sub-standard agents who have tarred its reputation.

Industry watchers expect the rising number of complaints in recent years to decline as the quality of agents rises.

Agencies are expected to submit a final list of names of agents who make the cut to the CEA by midnight tomorrow.

Registration with the council, which comes under the Ministry of National Development (MND), will become mandatory from Jan 1.

PropNex chief executive Mohamed Ismail said his firm’s headcount will slide from 6,000 to about 4,000.

HSR chief executive Patrick Liew said his firm will lose about half of its 7,000 agents.

It is the same story islandwide: Dennis Wee Group director Chris Koh said its number of agents will fall from 5,000 to 3,000, while ERA Asia Pacific will lose almost half of its agents, falling from 8,000 to 4,200. At OrangeTee, the 3,600 agent pool will shrink to 2,500.

The CEA was set up after legislation to regulate property agents for the first time was passed in Parliament last month. It was a milestone for the real estate sector here.

For many years, consumers had lobbied for greater regulation of an industry dogged by a rising number of complaints against agents who were attracted by Singapore’s periodic property booms.

Complaints against real estate firms and agents shot up almost 60 per cent in recent years: from 670 in 2005 to 1,070 last year, according to the Consumers Association of Singapore.

To make the cut, agents must have passed existing industry examinations. Those who have not must have brokered at least three deals in the past two years. The latter group are given more time to pass the exams.

Agents who fail to meet these criteria will be treated like new applicants who must take new courses and a stricter exam set by the CEA.

Dennis Wee’s Mr Koh said the agencies had been prepared for the new regime ‘for some time’ as a result of frequent updates from the MND.

‘The quantity of agents will go down, but at least the quality will go up, because for the first time, all agents have to pass an exam before being able to practise in the property market,’ he said.

HSR’s Mr Liew noted that smaller to mid-sized agencies would have to spend money to ensure their systems were up to scratch to meet CEA standards.

Further industry consolidation is also expected. Already, C&H Realty has merged with its sister company C&H Properties to reduce overhead costs.

‘There will be less competition in the industry now, which will be a good thing as service standards should go up,’ said C&H Realty managing director Albert Lu.

The existing Institute of Estate Agents (IEA) and Singapore Accredited Estate Agencies (SAEA) will still operate.

Mr Ismail, who is also the IEA president, said the institute, which has about 2,000 property agents as members, will apply to be an approved trainer to offer training for new recruits to property agencies.

SAEA chief executive Tan Tee Khoon said the body, with the Singapore Institute of Surveyors and Valuers, will continue its enhanced accreditation scheme, which will complement the Government’s mandatory licensing scheme.

Property agents interviewed welcomed the regulation of the industry, saying that for too long, inexperienced agents or part-timers made promises they could not deliver, and tarnished the profession.

Property agent Jasmine Png, 29, said agents who are experienced will not be affected by the rules. ‘The regulations will make sure only the professionals make the cut,’ she added.

—————————————————————
WHO WILL MAKE THE CUT?
PropNex: 4,000 of its 6,000 agents
HSR: 3,500 of its 7,000 agents
Dennis Wee: 3,000 of its 5,000 agents
ERA Asia Pacific: 4,200 of its 8,000 agents
OrangeTee: 2,500 of its 3,600 agents

Source: Straits Times, 21 Oct 2010