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

  1. #1
    property soul

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    Default Who are affected by the new property cooling measures?

    [URL="http://propertysoul.com/2013/01/14/who-are-affected-by-the-new-property-cooling-measures/"]http://propertysoul.com/2013/01/14/who-are-affected-by-the-new-property-cooling-measures/[/URL]

    [B]Who are affected by the new property cooling measures?[/B]

    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?

    [B]1) Developers, property agents and mortgage banks[/B]

    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!

    [B]2) Permanent Residents (PRs)[/B]

    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.

    [B]3) Public housing tenants[/B]

    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.

    [B]4) Public housing owners[/B]

    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.

    [B]5) The upgraders[/B]

    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.

    [B]6) Those who bought in the last three years[/B]

    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!
    [URL="http://propertysoul.com"]http://propertysoul.com[/URL]

  2. #2
    Senior

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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
    ipropertyguru

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    Quote Originally Posted by vip
    [URL="http://propertysoul.com/2013/01/14/who-are-affected-by-the-new-property-cooling-measures/"]http://propertysoul.com/2013/01/14/who-are-affected-by-the-new-property-cooling-measures/[/URL]

    [B]Who are affected by the new property cooling measures?[/B]

    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?

    [B]1) Developers, property agents and mortgage banks[/B]

    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!

    [B]2) Permanent Residents (PRs)[/B]

    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.

    [B]3) Public housing tenants[/B]

    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.

    [B]4) Public housing owners[/B]

    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.

    [B]5) The upgraders[/B]

    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.

    [B]6) Those who bought in the last three years[/B]

    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.

  4. #4
    Music of the night

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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 !!!

  5. #5
    东方

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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.

  6. #6
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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?

  7. #7
    Mercedes Lover

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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.

  8. #8
    Music of the night

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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; 15th January 2013 at 09:15 AM.
    Ride at your own risk !!!

  9. #9
    Newbie

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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
    GOD good old days

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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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