Singaporeans may be cautious as prices have not recovered from peak or they may have bought landed homes

Singaporeans may be cautious as prices have not recovered from peak or they may have bought landed homes

FOREIGNERS are snapping up posh apartments and contributing to much of the activity in the high-end market that has been languishing since the heady days of 2007.

Foreigners, including permanent residents, have bought 162 non-landed units with a price tag of more than $5 million in the first half of this year.

That is about 60 per cent of the transactions at the top-end market, according to an analysis by Cushman and Wakefield of caveats lodged with the Urban Redevelopment Authority. These include both primary and secondary sales.

On that same basis, foreign buyers accounted for 46 per cent of the high-end market last year and only 24 per cent in 2005.

Chinese and Indonesians have dominated the upmarket segment this year, making up almost half of all high-priced purchases. They were followed by Malaysians, British and Indians.

Singaporeans have retreated, accounting for just 20 per cent of purchases of more than $5 million in the six months to June 30.

Last year, they had 34 per cent of the market and 25 per cent in 2007.

Companies make up the rest of the transactions.

Experts say the increased interest from foreigners is not entirely surprising, due in part to the buzz created by the two integrated resorts and the country’s growing strength as a financial hub.

Dennis Wee Group director Chris Koh said many see Singapore as the most stable country in the region, with a strong government, developed infrastructure and quality medical and educational services.

Mr Colin Tan, Chesterton Suntec International’s research head, noted that the foreigner share has increased mainly due to the reduced interest from locals.

‘In 2007, many of the locals bought into the high-end segment in a big way. Some might not have seen their prices recover yet and so demand is lower now,’ he added.

SLP International research head Nicholas Mak said high-end homes have always depended significantly on foreign buyers.

Demand from Singaporeans could have fallen as those with bigger budgets might have decided to go into the landed home segment instead, which has recorded robust price growth of 31 per cent last year.

‘Since 2007, the landed homes market has seen stronger interest, with Sentosa Cove prices influencing those on the mainland. Singaporeans see it as a lifestyle and investment choice and are starting to see more value in such homes,’ added Mr Mak.

The luxury market – defined here as an elite club of projects that have achieved both unit prices of $3,000 per sq ft (psf) and total quantums edging past $5 million – has flatlined since last year.

There were 79 such homes sold in the first eight months this year while 73 were picked up in the same period last year. But go back to the boom of 2007, and 237 posh apartments found buyers in the same period.

Prices are also languishing about 6 to 8 per cent below their 2008 peak, despite the property boom that has seen all other segments surpass their historical highs.

Only around two dozen upscale projects made the elite club list of $3,000 psf and $5 million-plus pricing, including Nassim Park Residences, Tomlinson Heights and The Orchard Residences.

It was a foreign buyer who smashed the unit price record this year, picking up a 3,003 sq ft unit at The Marq on Paterson Hill for just under $6,400 psf – or about $19 million.

City Developments executive chairman Kwek Leng Beng said now is not the best time for luxury projects because sophisticated investors are waiting for the market to be more certain.

Transactions are few and demand is not as good as before, acknowledged Mr Kwek, who was speaking on the sidelines of a Real Estate Developers’ Association of Singapore event on Friday.

Source: Straits Times, 12th Sept 2011

Some savvy developers, analysts see opportunity in privatisation targets and undervalued stocks

IT’S not just shares that have fallen from favour over the past month. Sentiment in the residential property market has also cooled noticeably.

One sign came just last week when the top offer for a residential site at Upper Serangoon Road went at well below the winning bid for a nearby plot sold only three months earlier.

Still, while analysts expect private residential prices to drift slightly lower, nobody is anticipating the stomach-churning wild swings that have become the new normal in the stock market.

Developers are fairly sanguine too.

Mr Kwek Leng Beng, the boss of property giant City Developments, was quoted last month as saying that he believed ‘the (property) market will not crash unless, of course, the worldwide scenario is so bad’.

But this has not been the case so far. Mr Kwek noted that the debt crises in the United States and Europe would not have much of an impact here unless interest rates go through the roof. But at the moment, the market is full of liquidity and there is a lack of alternative investments.

But he added that sentiment plays an important role too.

‘That is human nature. Just like property, the higher property prices go up, the more you want to buy, I guarantee you. The lower it goes, the more scared you are,’ he said.

So it is not surprising to find analysts still willing to stick out their necks to make ‘buy’ calls on property counters, despite the stock market gloom.

For example, CLSA analysts Pang Chin Hong and Wong Yew Kiang noted in a report last Monday that property stocks ‘have priced in a significant downside after the recent market sell-down’.

‘Value has emerged with property prices trading at 40-60 per cent discount to revalued net asset value.

‘This has defied the sound fundamentals of developers which have strong balance sheets, earnings visibility from high unbilled sales and low inventory levels,’ they added.

They were convinced that while developers might be less aggressive in their land bidding going forward, sites near MRT stations or those with commercial potential would continue to attract a large number of offers.

Despite the bullishness of developers and analysts, there is no denying that any share market plunge would cast a pall over the property market.

This has prompted some market strategists to go through past data to try to determine the likely flash-points before they occur.

In a report last week, UBS strategist Tan Min Lan examined the Straits Times Index’s trading patterns during the four recessions over the past 15 years.

Based on past trends, she believed that once the STI’s decline from its peak hits 20 per cent, the private property price index could start to show a decline as well.

Ms Tan said: ‘This happened in 1998 and again in 2009. If this repeats itself, we expect the URA property index to start falling if the STI were to slip to 2,500 and below.’

If STI falls to 2,500, the market is flagging a recession, while in the unlikely event that it falls to 2,000, the market is anticipating a financial crisis, she added.

Last Friday, the STI closed at 2,846, or 13 per cent above the 2,500 support.

In any case, property consultants are hopeful that the Government will cushion a sudden softening in property prices by removing some of the anti-speculation curbs imposed in January this year to cool the market.

These included hiking the seller’s stamp duty to as high as 16 per cent and making it payable for up to four years from the date of purchase of a property.

The heavy sell-off in the stock market has also made property stocks more attractive than, say, investing in a condo.

Given the steep plunge in stock prices, some are hopeful that other real estate bosses will follow in the footsteps of sugar king Robert Kuok, who took Allgreen Properties private by buying out the remaining minority shareholders.

They were also heartened by the determination of some developers to defend their badly hammered shares from further bear raids by launching share buybacks.

Take property giant CapitaLand.

Although its management told analysts last month that share buybacks were unlikely, the company ventured into the market on Tuesday to snap up 1.5 million of its own shares in deals worth $3.65 million. It was the firm’s first buyback.

The move propelled its share price up 10.2 per cent over the next two days, raising its market value by $1.1 billion.

It has not escaped the attention of investors that some cash-rich developers are using the depressed stock market conditions to expand their business.

One example is UOL Group which is described by UBS as a developer that has the financial strength to ‘acquire opportunistically’ because 80 per cent of its residential properties have already been pre-sold.

‘Over the medium term, UOL could obtain statutory control of United Industrial Corporation (UIC) in which it and related parties have a 47.6 per cent stake.

‘Crossing the 50 per cent barrier would make UOL the second-largest developer in Singapore by assets,’ UBS said.

This is reflected by the purchases of UIC shares by UOL on the open market, it added.

It is clear from these corporate actions that even while the fear of financial Armageddon is keeping most investors sidelined, savvy developers are sniffing opportunities and making hay while it lasts.

Source: Straits Times, 12th Sept 2011

THE raised income ceiling for executive condominiums has helped the Arc at Tampines project to post strong results at its first day of sales yesterday.

About 220 of its 574 units were snapped up despite average prices of $721 per sq ft (psf) that put it at the higher end of the spectrum for executive condominium projects.

First-day sales totalled only about 150 units at both the Blossom Residences executive condominium in the Bukit Panjang area last month and Belysa in Pasir Ris in May. Prices had ranged from $650 to $750 psf, said analysts.

The Arc, developed by a consortium that includes Hoi Hup Realty, has two-, three- and four-bedroom units as well as penthouses across nine 16-storey blocks at Tampines Avenue 8.

Experts say yesterday’s robust sales were mainly due to the project being the first executive condominium to hit the market after the income ceiling was raised from $10,000 to $12,000.

UOB Kay Hian property analyst Vikrant Pandey estimated that 69,000 additional households are eligible for such units now.

Developers also have to set aside at least 95 per cent of executive condominium units for first-time home buyers in the initial month of a launch.

Mr Colin Tan, Chesterton Suntec International’s research head, said demand for such units would have definitely increased with the raising of the income ceiling, and is likely to remain firm.

‘It will be a surprise if the Government does not release more executive condo sites because a lot of people are waiting for it. Demand was good even before the ceiling was raised,’ he said.

The private market might also be enjoying an increase in sales, with developers launching new projects after last month’s inauspicious Hungry Ghost Festival, he added.

The Straits Times understands that close to 200 homes at Sim Lian Group’s 882-unit A Treasure Trove in Punggol found buyers at its preview yesterday.

Sim Lian said in a statement yesterday that 300 units at A Treasure Trove will be released in its first phase at an average price of $866 psf.

These prices are lower than those of nearby mass market condominiums like Waterfront Gold, where homes were launched at prices just shy of $1,000 psf earlier this year.

Homes at the Waterview condominium, also close by, were offered at an average price of $838 psf at last November’s launch.

The 99-year leasehold project comprises 14 blocks of 16 storeys. Conservation bungalow Matilda House will also undergo a facelift to become the project’s clubhouse.

An artist’s impression of the Arc at Tampines. About 220 out of its 574 units were snapped up yesterday. — PHOTO: HOI HUP SUNWAY

Source: Straits Times, 9th Sept 2011

Just three months ago, a plot next door went for a far higher price

ECONOMIC uncertainty is likely behind the poor response to a residential site in Upper Serangoon Road that ended up going for a song.

Allgreen Properties emerged tops in a three-cornered tussle for the 265,012 sq ft site with a bid of $270 million or $291 per sq ft per plot ratio (psf ppr).

That looks like a giveaway given that just three months ago, a 99-year leasehold plot next door at the junction of Buangkok and Sengkang East Drives went for $391 psf ppr.

It is the first time in a long while that Allgreen Properties has topped a tender exercise, said analysts, who added that the developer has been cautious with bids in recent months.

Property experts said the Allgreen bid, if successful, would be the lowest price for a non-landed site since City Developments paid $280 psf ppr for a Chestnut Avenue site in August 2009 that was developed into the Tree House condominium.

Allgreen was followed by a consortium of Frasers Centrepoint, Far East Organization and Sekisui House with an offer of $253 million, or $273 psf ppr for the 99-year leasehold. A unit of Chip Eng Seng bid $261 psf ppr.

Experts cited a number of reasons for the lacklustre bidding.

Mr Ong Teck Hui, head of research and consultancy at Credo Real Estate, said the low offers were a clear sign that residential land sales are softening amid a more uncertain economic climate.

He added: ‘The bids are getting more cautious with more buffer being provided in anticipation of a more difficult market.’

Mr Nicholas Mak, head of research and consultancy at SLP International, noted that the low number of bids could be a sign that developers did not see the site as that attractive.

‘(The developers) could be saving their resources for other site tenders which would be launched soon,’ said Mr Mak.

But he cautioned that the lower land prices might not translate to lower home prices.

‘Allgreen Properties would likely sell the condominium to be developed on this site at the going market price at the time of its launch,’ he added.

The nearest MRT station – Hougang – is some distance away. However, the site’s proximity to Punggol Park and Serangoon Reservoir will appeal to nature lovers and exercise enthusiasts.

The land can be built up to a maximum gross floor area of 927,545 sq ft, possibly yielding 860 apartments.

Units at neighbouring Boathouse Residences have been transacted at an average of $880 psf.

Analysts predicted an approximate break-even price of between $630 and $660 psf.

Source: Straits Times, 8th Sept 2011

Exec condos now offer much better value for money than DBSS flats

An EC choice to make — ST ILLUSTRATION: MANNY FRANCISCO

THERE is some talk in recent months that Singapore’s red-hot property market is finally cooling somewhat, dampened by global economic uncertainty and fears of a property bubble.

But one segment of the market still sizzles: executive condominiums (ECs), which have Housing Board-style ownership restrictions but all the facilities of private condominiums.

Hundreds of people turned up at the launch of the latest EC project, Arc at Tampines, last week to view the showflat before balloting for buyers starts tomorrow for the Hoi Hup Realty-led project.

In July, buyers snapped up 568 EC units – mostly at Blossom Residences in Bukit Panjang and RiverParc Residence in Punggol. The number boosted sales of new private homes, which climbed 40 per cent to 1,954 units, from 1,394 units in June.

The numbers are a stunning turnaround for a type of housing which only a few years ago had so few takers that the Government stopped supplying land for ECs altogether.

ECs were introduced in 1996 to provide a new housing option for the ‘sandwich class’ of middle-income buyers who aspired to private condo-style living but were unable to afford the prices.

ECs boast facilities of private estates such as swimming pools and a gated community, but are subject to such HDB rules as an income ceiling for buyers and minimum occupation period before they can be sold. They are considered a hybrid of public and private housing on purchase, but are converted into private housing after 10 years, when units can be sold freely, including to foreigners.

From the introduction of the scheme till 2005, 23 ECs were launched, the last at La Casa in Woodlands. Then, in 2005, as the property market dipped, there was a supply glut. Property prices fell across the board. Hopes of massive capital gains for those who bought ECs earlier vaporised. New buyers could also afford private condos, and did not need ECs. This category of housing became unattractive and the Government stopped releasing land to build ECs.

The HDB was also just launching its Design, Build and Sell Scheme (DBSS) to let private developers build and sell public housing, promising home-buyers more innovative designs.

Analysts even said then that the Government may scrap ECs if DBSS proved successful since both types of housing target the same group – young families from the middle-income group.

How things have changed in five years. Today, it is ECs that are popular and the DBSS scheme that has become unattractive.

The HDB is reviewing the DBSS programme. National Development Minister Khaw Boon Wan has suspended all future land sales for DBSS projects, even while 11 sites have been sold as EC projects since last March.

Why the reversal of fortunes?

First, the perception now is that ECs offer much better value for money. Private property prices have climbed to record highs and put homes out of the reach of many aspiring HDB owners, but some ECs remain affordable.

The Arc at Tampines may have set new records for EC prices at slightly above $700 psf. But it is still much cheaper than similar mass-market condos in the area such as Waterfront Gold, launched at just below $1,000 psf earlier this year.

One reason for the lower prices is that under HDB rules, only families who are citizens can buy ECs. There is an income ceiling, which was recently raised from $10,000 to $12,000 a month. First-time buyers also qualify for various housing grants.

In contrast, DBSS flats have been priced at a big premium over new subsidised HDB flats, which are their competitors. The Centrale 8 project in Tampines was priced in the $600 psf to $700 psf range – almost double that of comparable build-to-order (BTO) HDB flats.

Secondly, resale conditions favour buyers of ECs. After five years, DBSS flats become HDB resale flats, which are subject to HDB ownership restrictions which change from time to time. The latest rules prohibit foreigners and private property owners from buying HDB resale flats. In contrast, ECs eventually become private property, which can be sold to any Singaporean after five years, and to foreigners after 10.

An EC buyer thus competes with fewer people when buying a unit; but can sell the unit after five years to a much wider pool. This explains their capital gains after the property market rebounded. Many EC projects were launched in the $360 to $460 psf range. They fetched an average of $683 psf from June to date on the open market when sold, according to Credo Real Estate’s head of research Ong Teck Hui.

For example, Westmere, an EC in Jurong, was launched in 1996 at $400 psf. This year, its resale transactions averaged $707 psf – a price appreciation of 77 per cent. In its vicinity, the average price of private condominium Parc Oasis rose from $666 psf in 1996 to $760 psf this year – a 14 per cent increase.

This has reinforced buyers’ perception that, barring a crash in the market, ECs are a ‘sure win’ proposition.

The factors underpinning the rise of ECs and the decline of DBSS – and the clear preference of buyers today – raise the question of whether the Government should just let the DBSS scheme lie fallow and release more land for ECs.

In the past, the DBSS scheme was conceived as an experiment to outsource development of public housing to the private sector, leaving the HDB to eventually assume a more ‘regulatory role’. But this policy objective is less relevant today, as Singaporeans want affordable public housing provided by the state, not pricey private developers.

The right mix of public and private housing for Singapore may well be a simple one: new subsidised HDB flats on one end of the spectrum; private property on the other; and executive condominiums as the in-between class, catering to the aspirations of middle-class HDB upgraders.

Source: Straits Times, 7th Sept 2011

But surge unlikely despite weekend crowds, say experts

THERE were surprisingly brisk sales at property projects over the weekend, to give the month a rousing start after weeks of slow action.

No one in the market had expected sales to hit the levels of a year ago, but the numbers in recent days have lifted sentiment.

The Luxurie in Sengkang has sold 180 units since sales started last week at an average price of $980 per square foot (psf). Most of the project’s 622 units are two-bedders and three-bedders.

Its pricing is similar to that of neighbouring mass-market development H2O Residences by City Developments, but its proximity to Sengkang MRT and bus interchange makes The Luxurie more attractive, said DMG and Partners Research. The Sengkang Public Library and Community Hub are also nearby, as are CHIJ St Joseph’s Convent and Rivervale Primary.

The Meyerise, a freehold development in Meyer Road, has racked up about 80 sales since it started last Friday. Singaporeans and permanent residents comprised about 90 per cent of all buyers. The project has 239 units, a mix of two-bedroom, three-bedroom, four-bedroom and penthouse units. The average price was $1,950 psf, with three-bedroom units the most popular among buyers.

The Meyerise is minutes away from Parkway Parade and Katong Shopping Centre, with Playground@Big Splash and East Coast Park also nearby.

There were 24 units shifted at EuHabitat in Jalan Eunos over the weekend, bringing the total number of sales to 472 out of the 548 apartments available.

Another 20 homes were sold at Boathouse Residences in Upper Serangoon over the same period.

This strong response was also mirrored in the executive condominium market, where applications for the Arc at Tampines were expected to surpass 1,180 by yesterday’s 10pm deadline.

With 574 units up for grabs, this translates to a healthy subscription rate of about 2.1 times.

Anecdotal observations suggest that several showflats, including those at the Arc at Tampines and The Luxurie, were packed with prospective buyers, although that may not translate into big sales numbers.

Associate Professor Sing Tien Foo from the department of real estate at the National University of Singapore’s School of Design and Environment said he was surprised by the crowds. ‘I thought a lot of people are waiting to see how the global market situation will turn out,’ he said.

‘Some people could be going into the showflats to look for inspiration, others could be going out of curiosity, to see what the market situation is like before making a decision.’

ECG Property, which marketed several properties over the weekend, said that while crowds continued to visit showflats, they are not as big as those seen at the beginning of the year.

But ECG chief executive Eric Cheng is optimistic that the next few months will be better: ‘September is not a good month. We’re just getting over the stock market shock and the ghost month has barely ended. The market is still looking very uncertain. Some people may have lost money on the stock market and they might not be looking to put money into property for now.’

But Mr Steven Tan, OrangeTee’s director of residential, is confident that the demand for new homes will continue, despite lingering economic worries.

‘Now the main group of buyers are those who are purchasing for their own stay. Transactions from this group are driven by genuine demand, and they are less affected by all these economic uncertainties,’ he said.

Low interest rates will also go some way towards encouraging new home sales, say analysts.

The number of new home sales, including executive condominiums, hit 1,954 in July.

But the stock market turmoil last month – the Straits Times Index fell 9.5 per cent over the month – has market watchers keenly awaiting August’s figures.

Source: Straits Times, 6th Sept 2011

But home owners should make sure the savings outweigh the refinancing costs

It seems to be all doom and gloom on the global economic front but there is one silver lining for Singaporeans – rock-bottom interest rates that are making mortgages far more affordable.

That means there has probably never been a better time for homeowners to refinance their housing loans.

The Singapore inter-bank offered rate (Sibor) and the swap offer rate (SOR), two common benchmark interest rates used to set mortgage rates, are at record lows.

Sibor is the rate at which local banks lend to one another. On Friday, the three-month Sibor was 0.331. Sor has even turned negative. The three-month Sor was -0.051 on Friday.

Those numbers can add up to some serious savings if you refinance or switch to a new home loan, either with your existing bank or another institution.

Many savvy Singaporeans have clearly picked up on this, given that some loans experts are experiencing a 20 per cent to 30 per cent increase in the number of refinancing queries.

Mr Paul Arrowsmith, HSBC’s head of retail banking and wealth management, has seen home loan refinancing volumes increase about three-fold in the past year.

He said: ‘This is a good time to refinance, to take advantage of the low interest rates.’

Fixed or pegged rates?

Customers usually take fixed-rate loan packages – where the rates are fixed for the first two to three years – when they need protection against rate hikes.

The United States Federal Reserve has pledged to keep interest rates low until mid-2013 so rates here are also likely to remain flat. Packages pegged to the Sibor or Sor may be more cost-effective.

Mr Goh Eck Hong, a housing loan adviser at myhousingloan.com.sg, said: ‘People who took up fixed-rate packages should give some thought to refinancing.

‘Since local lending rates move in tandem with the US’, it is reasonably safe to assume that the local mortgage lending rate is going to stay where it is for some time to come.’

But there is no guarantee, so some customers might want to opt for the fixed-rate option, said Citibank Singapore’s business director for secured finance, Mr Peng Chun Hsien.

‘An attractive fixed-rate package, which will fix the interest rates for a specific duration, can offer peace of mind. There will be certainty in their monthly repayments for the next two to three years.’

Real estate investor and businessman Sameer Aswani, 35, prefers fixed-rate packages because he is more conservative.

He recently refinanced a property at the Marina Bay Residences.

He said: ‘I was paying 1.5 per cent interest yearly. Now the new revised rate would be at just 1 per cent with Maybank, fixed for one year.

‘Although the SOR floating three-month rates would be lower, I am more conservative and prefer to lock in my rates on a yearly basis. I am saving about $20,000 per year from just this one unit at the Marina Bay Residences so when the lock-in period ends for my other properties, I will surely have them repriced at a lower interest rate.’

Attractive packages

With many investors thinking like Mr Aswani, banks are offering competitive rates to get a slice of the refinancing pie.

Citibank is offering a one-month Sibor plus 0.7 per cent loan package. With the one-month Sibor at 0.218 per cent, this works out to effective interest rates starting from as low as 0.918 per cent throughout the loan tenure.

Their customers can also switch between one-, three-, six- and 12-month Sibor tenors, or from a floating rate to a fixed rate free of charge.

OCBC Bank’s deal has a three-year lock-in, and on top of the three-month Sibor, has a spread of 0.55 per cent for the first year, 0.6 per cent in the second, 0.65 per cent in the third, and 1.25 per cent thereafter.

DBS Bank’s latest offer is pegged to the one-month Sibor or three-month Sibor, with a spread of 0.85 per cent for the first three years. For the three-month Sibor package, the interest rate is capped at 1.49 per cent for the first three years.

HSBC has a loyalty package, which is Sibor plus 0.9 per cent for the first year, 0.85 per cent for the second and 0.8 thereafter. There is a cash incentive of 0.4 per cent of the loan amount, capped at $10,000.

However, Ms Phang Lah Hwa, OCBC Bank’s head of consumer secured lending, said: ‘With the myriad of refinancing packages available in the market, it is always advisable to evaluate your choices before making your decision.’

Is this a good time to refinance?

If you have borrowed $1 million over the next 20 years with a current interest rate of 3.75 per cent and refinance it to 1.18 per cent interest in the first year, the savings amount to about $1,000 a month.

Mr Derrick Ang, director of mortgage sales at consultancy portal SingaporeHousingLoan.sg, said that in general it is prudent for home owners to review their loans every three years or so, regardless of interest rates.

He added: ‘If there are significant cost or interest savings, I would recommend it.’

OCBC’s Ms Phang added: ‘With current market interest rates at low levels, home loan refinancing seems an attractive option for many.’

But there are various costs that come with refinancing, so home owners should make sure the savings outweigh them.

Cost-benefit analysis

As a rule of thumb, if you plan to sell your property in the short term, it may not be wise to refinance, taking into account the costs incurred and the limited time that home owners get to enjoy the interest savings.

Other costs incurred from refinancing

•Lock-in period of the existing loan

A typical lock-in period is two to three years so if you withdraw your loan within this time, there might be a penalty of 1 per cent to 1.5 per cent of the outstanding loan.

Property owners thinking of selling in the next two to three years should choose a package with a shorter penalty period or one with no penalties attached.

For a loan amount of $600,000, you would save about $6,000 to $9,000 if you choose a package with no penalties attached over one that imposes a penalty.

•Conversion fee

There is a conversion fee of $500 to $1,000 which will be incurred even if you are no longer within the lock-in period.

•Clawbacks

Refinancing requires conveyancing paperwork. However, the new bank will usually subsidise this cost, about 0.3 per cent to 0.4 per cent of the loan amount, capped at $2,500 for private properties and $2,000 for HDB flats.

Mr John Lee, head of free online home financing service LoanGuru. com.sg, said that the legal clawback is always three years; even if the lock-in period is two years, the legal subsidy has to be returned.

Some other subsidies, such as valuation and fire insurance, may also have a three-year full clawback period.

Is refinancing for me?

The choice comes down to whether there will be a significant amount of savings after subtracting the cost of refinancing.

DBS Bank’s managing director and head of deposits and secured lending, Ms Lui Su Kian, said: ‘Buyers should remain prudent and take into consideration how interest rates will impact their repayment and not focus solely on the initial years’ interest rates.’

UOB’s head of loans division, Ms Chia Siew Cheng, agreed: ‘Buying a home is a long-term financial commitment.

‘Regardless of the prevailing interest rate environment, home buyers should always assess what they can afford to ensure they are able to service a housing loan over a longer period of time.’

Source: Straits Times, 4th Sept 2011

If someone acts and talks like a real estate agent, does that make him or her one?

The watchdog body here, the Council for Estate Agencies (CEA), is looking into so-called ‘rental coordinators’ doing the work of accredited agents – who need to first clear exams to do the job – as well as the property firms recruiting them.

The lure being dangled by some property firms is attractive commission earnings of up to $10,000 a month.

Once recruited, such coordinators are asked to call prospective tenants and arrange for viewings – in effect, acting like agents.

The CEA started work in October last year, as part of the Government’s bid to raise the industry’s professionalism through regulation and disciplinary powers.

It has become aware that, in recent months, hundreds of recruitment advertisements have been appearing on online classified websites such as gumtree.sg and sgjobsearch.com.

One such ad read: ‘Rental Coordinator acts the same role as a Real Estate Agent. Why do people prefer to be a Rental Coordinator instead of a Real Estate Agent? The answer is simply as a Rental Agent, you do not need to undergo any Real Estate Examination…’

One former property agent, who wanted to be known only as Zack, found the lure of easy money tempting, but he did not bite.

In July, the 38-year-old attended a two-hour course conducted by a property firm.

He was told to contact prospective tenants, arrange viewings and act as a middleman. Every successful transaction at which he was present would earn him half the agent’s commission. So for a co-brokered property that costs $4,000 a month to rent under a two-year contract, the coordinator could take home $1,000.

Zack’s share would be cut to 20 per cent if he was not present at the viewing.

‘Instantly, I thought something was fishy as I know how the industry works. Basically, we end up doing the agents’ job and they just turn up to collect commission, simply because they passed the exams,’ he said.

Among the 20 others who attended the same course was a 25-year-old who wanted to be known only as Mei.

‘Each of us paid $200 after the talk for a set of names and numbers to call. What worries me more is that, currently, some of the agents have gone uncontactable,’ she said.

In a statement to The Sunday Times, the CEA said that, based on the job scope, what rental coordinators are asked to do may infringe the Estate Agents Act, which came out last year.

The watchdog said it would be contacting certain property firms and investigating further.

Since Jan 1, all property agents have to be registered with the CEA to conduct real estate work.

They must have passed existing industry examinations, or brokered at least three deals in the past two years. The latter group has until the end of the year to pass the exams. If they pass, they can carry on working as agents.

Agents infringing these rules may be fined up to $75,000, or face a jail term of up to three years.

Property experts felt that the issue of coordinators needed further scrutiny.

PropNex chief executive Mohamed Ismail said: ‘It’s not wrong to hire a helper but the role must be very clear. Agents should not find ways and means to be creative. If they do real estate work, they need to pass the exams.’

Dennis Wee director Chris Koh added that coordinators were a thing of the past.

He said his agents used to have coordinators who planned their itineraries, but they have been erring on the side of caution since last year.

‘When the coordinator makes the call about a property, it’s very easy to start talking about its price or facilities, but that’s an agent’s job.’

Source: Straits Times, 4th Sept 2011