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Thread: Who are affected by the new property cooling measures?

  1. #1
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    Default Who are affected by the new property cooling measures?

    http://propertysoul.com/2013/01/14/w...ling-measures/

    Who are affected by the new property cooling measures?

    January 14, 2013


    The objective of the comprehensive package of property cooling measures, according to the government, is “to ensure a stable and sustainable property market”.

    Government intervention can definitely delay the onset of a bubble burst, making the market ‘sustainable’ for the time being.

    As for 'stable’, I don’t think this is what investors/speculators or real users want. The former wish prices will continue to go up while the latter want the other way round.

    You may say it is just another government attempt to stem out speculation in the property market. But this time round, it may affect more people than just the target group.

    This is similar to the scenario of carrying out a fogging exercise in the neighborhood for the purpose of pest control. It kills not only mosquitoes and flies, but also lizards, butterflies and other insects that have done no harm but have to sacrifice for a bigger cause.

    With the new restrictions kick in, who are likely to be the unfortunate living things in the property ecosystem?

    1) Developers, property agents and mortgage banks

    Buyers are going to wait on the sidelines at least for the next few months. Fortunately, first quarter is usually a slow quarter that everyone expect disappointing results anyway. Blame it on the New Year and Chinese New Year!

    2) Permanent Residents (PRs)

    This is definitely bad news for PRs, especially for long-term staying PRs who have no intention to convert to Singaporeans or don’t seem to get approved for their Singapore citizenship. From now on, whatever they are going to buy, they are going to pay more than Singaporeans.

    3) Public housing tenants

    PRs are no longer allowed to sublet the whole HDB flat. In the forseeable future, less supply of HDBs for rent may result in higher rental rate for the tenants.

    4) Public housing owners

    Thanks to the lower cap on Mortgage Servicing Ratio at 30 to 35 percent of the borrower’s gross monthly income. Less people can afford the higher-priced HDB units. Large-size and relatively new HDB, BTO and EC units at rarely-found good locations now have a smaller pool of buyers.

    5) The upgraders

    Those who can afford the current skyrocketing prices would have already bought their home. The Additional Buyer’s Stamp Duty (ABSD), lower LTV and higher minimum down payment only make the target properties of the upgraders more unreachable.

    6) Those who bought in the last three years

    Cooling measures that kick in over the last three years mean higher transaction costs (ABSD, seller’s stamp duty) and reduced monthly return. Even if they can sell in the near future, with only a slight increase in property prices, the chance of them having a profit is slim. That’s why they can’t sell now and are stuck with an overpriced property.

    Well, no matter what is going to happen in the property market, at least one party can benefit from the new round of cooling measures.

    Here’s to the government. May you enjoy another prosperous year collecting more buyer’s and seller’s stamp duties!

  2. #2
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    If I buy my next property, absd damn chor, I think I better keep cash or go into commercial property for now

  3. #3
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    Quote Originally Posted by vip
    http://propertysoul.com/2013/01/14/w...ling-measures/

    Who are affected by the new property cooling measures?

    January 14, 2013


    The objective of the comprehensive package of property cooling measures, according to the government, is “to ensure a stable and sustainable property market”.

    Government intervention can definitely delay the onset of a bubble burst, making the market ‘sustainable’ for the time being.

    As for 'stable’, I don’t think this is what investors/speculators or real users want. The former wish prices will continue to go up while the latter want the other way round.

    You may say it is just another government attempt to stem out speculation in the property market. But this time round, it may affect more people than just the target group.

    This is similar to the scenario of carrying out a fogging exercise in the neighborhood for the purpose of pest control. It kills not only mosquitoes and flies, but also lizards, butterflies and other insects that have done no harm but have to sacrifice for a bigger cause.

    With the new restrictions kick in, who are likely to be the unfortunate living things in the property ecosystem?

    1) Developers, property agents and mortgage banks

    Buyers are going to wait on the sidelines at least for the next few months. Fortunately, first quarter is usually a slow quarter that everyone expect disappointing results anyway. Blame it on the New Year and Chinese New Year!

    2) Permanent Residents (PRs)

    This is definitely bad news for PRs, especially for long-term staying PRs who have no intention to convert to Singaporeans or don’t seem to get approved for their Singapore citizenship. From now on, whatever they are going to buy, they are going to pay more than Singaporeans.

    3) Public housing tenants

    PRs are no longer allowed to sublet the whole HDB flat. In the forseeable future, less supply of HDBs for rent may result in higher rental rate for the tenants.

    4) Public housing owners

    Thanks to the lower cap on Mortgage Servicing Ratio at 30 to 35 percent of the borrower’s gross monthly income. Less people can afford the higher-priced HDB units. Large-size and relatively new HDB, BTO and EC units at rarely-found good locations now have a smaller pool of buyers.

    5) The upgraders

    Those who can afford the current skyrocketing prices would have already bought their home. The Additional Buyer’s Stamp Duty (ABSD), lower LTV and higher minimum down payment only make the target properties of the upgraders more unreachable.

    6) Those who bought in the last three years

    Cooling measures that kick in over the last three years mean higher transaction costs (ABSD, seller’s stamp duty) and reduced monthly return. Even if they can sell in the near future, with only a slight increase in property prices, the chance of them having a profit is slim. That’s why they can’t sell now and are stuck with an overpriced property.

    Well, no matter what is going to happen in the property market, at least one party can benefit from the new round of cooling measures.

    Here’s to the government. May you enjoy another prosperous year collecting more buyer’s and seller’s stamp duties!
    Point 6 not true. Esp for local buyers, remember, local can buy 2 props without absd, also, thrird prop absd was v cheap at 3% too.

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    CM7 does take away profit from last 3y ... for those who still holding properties will see their capital appreciation potential vastly reduced

    PAP has demonstrated that they are willing to sacrifice growth to control housing inflation ... next will be Hong Kong ... Leung will be under attack since Singapore is now way ahead in terms of cooling measures
    Ride at your own risk !!!

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    Love this para
    "This is similar to the scenario of carrying out a fogging exercise in the neighborhood for the purpose of pest control. It kills not only mosquitoes and flies, but also lizards, butterflies and other insects that have done no harm but have to sacrifice for a bigger cause."

    but can sum up in two words - collateral damage.

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    Quote Originally Posted by leesg123
    Point 6 not true. Esp for local buyers, remember, local can buy 2 props without absd, also, thrird prop absd was v cheap at 3% too.
    u sure?

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    Quote Originally Posted by may2012
    u sure?
    Yes, only the 3rd ppty will kena the 3% absd prior to early 2011 i think.

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    Quote Originally Posted by mcmlxxvi
    Love this para
    "This is similar to the scenario of carrying out a fogging exercise in the neighborhood for the purpose of pest control. It kills not only mosquitoes and flies, but also lizards, butterflies and other insects that have done no harm but have to sacrifice for a bigger cause."

    but can sum up in two words - collateral damage.
    not only that ... even if you bought in 2009 and try to sell now to lock in huge profit ... they want a cut (except first time SC buyer of course ... but end up sellers must lower price expectation also)

    best case - flat to -5% for now (but once the 4y SSD is over ... there will be more sellers ... which bring us to next level)
    most likely case - -5 to -10%
    worst case - -10 to -15%

    and for those just sell and lock in profit, if they buy back need to pay ABSD 7% (so it will be difficult to justify the buyback after u factor in buying/selling cost even if market down 10%)

    net net, total return is reduced even bought in 2009, like bro BJ said ... perfect CM until don't know what to say
    Last edited by phantom_opera; 15-01-13 at 09:15.
    Ride at your own risk !!!

  9. #9
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    Quote Originally Posted by may2012
    u sure?
    Now second property also kena ABSD

    I believe the problem now is not the ABSD.. That one only 7% more... It is the 50% LTV and 25% cash downpayment that is the killer.

    For example.

    Below the CM7

    1 million property

    BSD - $24600

    Downpayment is $400k (100k Cash, 300k CPF)

    Total cash in hand needed = $124k
    Total CPF in hand needed = $300k

    After CM7

    ABSD + BSD - $94600

    Downpayment is $500k (250k Cash, 250k CPF)

    Total cash in hand needed = $346k
    Total CPF in hand needed = $250k

    U see the difference? U will need $222k more in cash to purchase the second property... hahaha...

  10. #10
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    It is way to early to feel the impact.

    There are many factors not considered yet. The indicator will be the coming gls. If significant drop in bidding price, correction will be imminent. Otherwise developers and buyers will find more loopholes and prices will not go down.

    China/HK went through tough times last year but yet still cheong..

    See how first. Be ready to strike..

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    Quote Originally Posted by phantom_opera
    not only that ... even if you bought in 2009 and try to sell now to lock in huge profit ... they want a cut (except first time SC buyer of course ... but end up sellers must lower price expectation also)

    best case - flat to -5% for now (but once the 4y SSD is over ... there will be more sellers ... which bring us to next level)
    most likely case - -5 to -10%
    worst case - -10 to -15%

    and for those just sell and lock in profit, if they buy back need to pay ABSD 7% (so it will be difficult to justify the buyback after u factor in buying/selling cost even if market down 10%)

    net net, total return is reduced even bought in 2009, like bro BJ said ... perfect CM until don't know what to say
    Ya.. Like what I say in the other thread... It is like a trap...

    Phase 1: Good returns in rental and capital gain
    Phase 2: Low borrowing cost
    Phase 3: Make it difficult for those who enter to leave (SSD)
    Phase 4: Make it difficult for foreigner investor to come in (ABSD)
    Phase 5: Make it almost impossible for second timer and foreigner investor to come in (CM7)

    Future:
    Phase 6: FT (I believe it will be the immigrant policy. If government now announced to continuing tightening FT, then really die die die. As the recent price increased in really based on the fact we are going for the 6 million target)
    Phase 7: Interest Rate going up (If USA default=> Recession, Job Cuts, higher borrow cost. If USA don't default, economy will pick up and then inflation then interest rate will go up)

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    FT policy already tightening .. EP renewal many got rejected ..

    We are the Borg

    Borg is a collective proper noun for a fictional alien race that appears in the various incarnations of the Star Trek franchise. The Borg are a collection of species that have been turned into cybernetic organisms functioning as drones of the collective or the hive. A pseudo-race, dwelling in the Star Trek universe, the Borg take other species by force into the collective and connect them to "the hive mind"; the act is called assimilation and entails violence, abductions, and injections of cybernetic implants. The Borg's ultimate goal is "achieving perfection".

    Ride at your own risk !!!

  13. #13
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    For the short term, SPR will rent instead of buy.

    Why crash?

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    Quote Originally Posted by cnud
    For the short term, SPR will rent instead of buy.

    Why crash?
    Those SPR that are already here should have already rent ba... So the number should be market into the pricing... But if don't have a great increase of SPR, how to digest the great increase in supply from HDB and PC?

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    The good thing is those who bought in the past 3 years are not going to sell a single unit if they can afford to hold, reason being the cost to aquire a new one is so high. i for one would not be selling any.

    i think will be good we can track the number of listings on propertyguru for the next few weeks, my hunch is that owners will withdraw the sales.

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    Quote Originally Posted by leesg123
    The good thing is those who bought in the past 3 years are not going to sell a single unit if they can afford to hold, reason being the cost to aquire a new one is so high. i for one would not be selling any.

    i think will be good we can track the number of listings on propertyguru for the next few weeks, my hunch is that owners will withdraw the sales.
    If developers start to slash down prices, resale market will follow.

    The key lies on developer holding power now and whether global economy will pick up steam this year.

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    Quote Originally Posted by leesg123
    The good thing is those who bought in the past 3 years are not going to sell a single unit if they can afford to hold, reason being the cost to aquire a new one is so high. i for one would not be selling any.

    i think will be good we can track the number of listings on propertyguru for the next few weeks, my hunch is that owners will withdraw the sales.
    just checked out another unit in my development. buyer still holding firm to asking price, no room for negotiations in spite of the latest CM

    prices drop ? sales withdrawn ? maybe not?

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    Quote Originally Posted by Rosy
    If developers start to slash down prices, resale market will follow.

    The key lies on developer holding power now and whether global economy will pick up steam this year.
    developers purchased land at record high prices. any slash would be minimal - my guess is a 5% off-the-books discount.

    prices crash? maybe not.

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    Quote Originally Posted by eng81157
    developers purchased land at record high prices. any slash would be minimal - my guess is a 5% off-the-books discount.

    prices crash? maybe not.
    There are many existing unsold projects or land sales bought earlier than recent record high. Developers profit margin is quite high at 30% or more. 10-15% price drop is possible.

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    Quote Originally Posted by Rosy
    There are many existing unsold projects or land sales bought earlier than recent record high. Developers profit margin is quite high at 30% or more. 10-15% price drop is possible.
    there is no need for them to slash 10-15%, unless in dire need to shore up cash.
    big boys with loads of cash will have no worries. developers like wingtai, with little left in the landbank, are caught between the rock and deep blue sea.

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    Quote Originally Posted by eng81157
    there is no need for them to slash 10-15%, unless in dire need to shore up cash.
    big boys with loads of cash will have no worries. developers like wingtai, with little left in the landbank, are caught between the rock and deep blue sea.
    I am not saying prices will drop. But giving an alternative views and to point out the fact that property prices are largely dependent on developers and not the resale market.

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    Quote Originally Posted by Rosy
    There are many existing unsold projects or land sales bought earlier than recent record high. Developers profit margin is quite high at 30% or more. 10-15% price drop is possible.
    Even if prices drop, will not benefit prop investor unless u are a first timer.

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    Quote Originally Posted by jeaprp
    Even if prices drop, will not benefit prop investor unless u are a first timer.
    Yes, i am not buying until absd is removed.

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    They may make the wrong move:
    1) increase coe will make car owners unhappy. So some may switch side to opposition.
    2) increase absd will make current owners unhappy. So some may switch side too.
    3) helping the complainers. Complainers may not even vote for them.
    4) complainers will think more opposition party needed to bring price down further.

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    there is 90% chance price will correct 10% ... talking about holding power ... who is as powerful as mainland Chinese who can pay 100% cash upfront ... still property prices corrected in China last year under draconian CMs

    the danger is those who bought in 2009 eager to cash out at lower capital appreciation because they do not see future capital appreciation potential anymore ... e.g. I bought Caspian 600psf ... b4 CM7 I can sell 1100psf now I just sell 1000psf, 10% drop ... a few sell, bank valuation will go lower

    another danger is when 4y SSD expiring .. those sitting at 100k profit may just let go
    Ride at your own risk !!!

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    Quote Originally Posted by vip
    Who are affected by the new property cooling measures?



    5) The upgraders

    Those who can afford the current skyrocketing prices would have already bought their home. The Additional Buyer’s Stamp Duty (ABSD), lower LTV and higher minimum down payment only make the target properties of the upgraders more unreachable.
    We need to go deeper to look at who are sustaining the property market before CM7. As rightly point up by vip, they are the upgraders buying up mass market PCs. With CM7, this group would find it hard to upgrade with the ABSD, lower LTV and higher downpayment. They would also find it difficult to upgrade without selling their existing homes. They are going to face with the uncertainty of selling their flats at current price 6 months down the road (if they buy resale) or worst still, a couple of years down the road. Without the upgraders, the mass market segment is as good as dead in a few months time.

    How long can developers (even with strong balance sheet) keep adding on to their inventories. All you need is a few smaller developers starting to put prices to manage their cash flow and reduce inventories and the market will move the same.

    If we could recall the previous stand-still between buyers and developers; bigger developers who need to account to their shareholders cut prices drastically with various big launches at the same time to ignite the market. It was a long stand-still then. In between the long wait, many smaller developers were cutting prices to survive.

    Besides external factors, how long the stand still between buyers and developers will determine the magnitude of the price drops.

    We only need to look at history to understand how the market works.

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    Quote Originally Posted by phantom_opera
    there is 90% chance price will correct 10% ... talking about holding power ... who is as powerful as mainland Chinese who can pay 100% cash upfront ... still property prices corrected in China last year under draconian CMs

    the danger is those who bought in 2009 eager to cash out at lower capital appreciation because they do not see future capital appreciation potential anymore ... e.g. I bought Caspian 600psf ... b4 CM7 I can sell 1100psf now I just sell 1000psf, 10% drop ... a few sell, bank valuation will go lower

    another danger is when 4y SSD expiring .. those sitting at 100k profit may just let go
    I think not many people are selling since economy is expected to be better this year. What we can expect is no capital appreciation in H1 this year.

    Two of our key trading partners are improving:

    China: China economy to rebound in 2013: survey
    http://www.channelnewsasia.com/stori...247624/1/.html

    US: US economy to grow 2.5% in 2013
    http://www.globaltimes.cn/content/755800.shtml

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    Quote Originally Posted by hyenergix
    I think not many people are selling since economy is expected to be better this year. What we can expect is no capital appreciation in H1 this year.

    Two of our key trading partners are improving:

    China: China economy to rebound in 2013: survey
    http://www.channelnewsasia.com/stori...247624/1/.html

    US: US economy to grow 2.5% in 2013
    http://www.globaltimes.cn/content/755800.shtml
    I just hope our property mkt will not correct too much.
    Else is game over.

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    Quote Originally Posted by jeaprp
    I just hope our property mkt will not correct too much.
    Else is game over.
    Rental market will still be resilient. LT property investors only need to hold on, and rent out in the meantime to ride out this uncertain wave, and they will certainly benefit in due course when the CMs are removed.

    But there may be a few kan chiong spiders who would unload at a profit, and this may drive the price down temporarily.

    In conclusion, LT property investors have no fear because of the strong rental market but ST & over-leveraged investors may be twitching now, esp for the big CCR units.

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    Quote Originally Posted by jeaprp
    I just hope our property mkt will not correct too much.
    Else is game over.
    Hope the govt has calculated correctly not to crash the market. The alternative (market overheating) is also not healthy for us economically. The prices will soar beyond our reach and that of our chewren.

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