http://www.straitstimes.com/archive/...redas-20121006

LATEST COOLING MEASURES: HOW ARE DEVELOPERS AFFECTED?

Market unlikely to be hit hard: Redas

Not many home buyers take long tenure loans, it says

Published on Oct 06, 2012

By Amanda Tan


MANY developers seem to feel the new cooling measures will not have a big impact although those with more exposure to the local market could feel the pinch.

The response to yesterday's announcement from the Monetary Authority of Singapore (MAS) of the new rules was low key.

The Real Estate Developers' Association of Singapore (Redas) issued a statement saying that the cap "will not have significant impact on the property market".

"Based on past experience, not many buyers take long tenure loans," it said.

Mr Cheang Kok Kheong, chief executive of Frasers Centrepoint Homes, said: "We have always been supportive of the Government's measures aimed at curbing excessive speculative activities, as we believe in the importance of having a stable and sustainable housing market."

He said the move "is not expected to have a significant impact on the residential market".

A Keppel Land spokesman said: "We believe that there is still genuine demand for homes and well-located properties with good attributes should continue to see healthy sales."

Two other developers which declined to be named also said the new measure was not a big issue.

Far East Organization, City Developments, Hong Leong and CapitaLand declined to comment.

Consultants said the new rule to cap mortgages at 35 years could hit sales as investors and those who are stretching themselves financially will likely stay away from the market.

SLP International research head Nicholas Mak said: "If you limit the amount of the loan, you will push borderline cases out of the market."

The rules also tighten loan-to- value limits for mortgages that exceed 30 years or if the loan goes beyond the borrower's retirement age of 65.

"It will also discourage investors who were hoping to buy the property and then use rentals to pay the mortgage," said Mr Mak.

"Now buyers who are affected have to decide if they want to pay more cash up front or pay more every month."

Although he did not expect any drastic action in the next week, he said buyers could be more cautious and hold back on purchases as they make sense of how the new measures would affect them.

"Buyers will wait and see if developers give discounts... but developers probably won't do that first, they'd wait and see if volume drops first," Mr Mak noted.

He added that launches with many small units, which generally target investors, may see the most impact.

Dennis Wee Group's senior manager of training, research and consultancy, Mr Lee Sze Teck, called the move a "pre-emptive" one to "counter any effects of QE3". This refers to the new round of money-printing announced by the United States last month.

"If funds from QE3 do flow in, it will keep interest rates low and might encourage more borrowing," he said.

Mr Lee expects younger buyers to be more prudent and not over- commit. HDB upgraders may also think twice, especially if they have to pay 60 per cent in cash.

HSR Property Group special adviser Donald Han expects property shares to drop as is typical after cooling measures are imposed.

"But interest rates will remain low... that's the bottom line that will spur on purchases," he said.

Skies Miltonia by TG Development and Qingjian Realty's Waterbay executive condominium are launched today.

Mr Han expects it to be business as usual at showflats.

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