Cooling measures or market booster?

[reporter2]

http://www.todayonline.com/business/...market-booster

Property

Cooling measures or market booster?

By COLIN TAN

19 April

Based on the new private home sales data for March, the seventh round of the Government’s property market cooling measures must definitely qualify as an own goal, as a colleague put it. Instead of cooling the market, the latest curbs unveiled in January actually boosted it as buyers turned up in droves.

In October last year, following the announcement of the sixth round of curbs, I wrote in this column that the Government’s cooling measures were in danger of losing their credibility.

To date, we have had seven rounds of such measures. In the sixth round, where home loan tenors were curbed, show flats were packed the day after the announcement with prospective buyers unfazed by the new measures.

I expressed the fear then that this loss of credibility may soon unleash a new wave of buyers into the market, namely those interested in buying but who had hitherto stayed prudent and waited on the sidelines for the numerous sets of cooling measures to work their effect.

I did not have to wait long. The market quickly worked itself into another frenzy towards the end of last year, prompting the Government to introduce the seventh round in January.

But in what must be the most bizarre response to any set of cooling measures introduced so far, show flats were kept open long into the night on the day of the announcement as buyers rushed their purchases to avoid the impact of the new measures. Confirming that the unusual market behaviour that day was not an anomaly, new private home sales for March were sent flying to the moon after the Chinese New Year lull in February.

An astounding 2,793 units were sold last month, the highest monthly new home sales volume since such data were compiled and released by the Urban Redevelopment Authority in 2007. To get a feel of the pace of buying, this is equivalent to an annual volume of over 33,000 units — which will more than double last year’s sales figure.

Fuelling the latest burst of buying was the anxiety that more cooling measures might be imposed, which may make it harder to buy a property even if you are a first-time private property purchaser or an upgrader.

As one such buyer put it, the window is fast closing. For first-time investors in particular, they feel that if they do not act now, they may not be able to purchase a home in the current cycle. They will then have to wait for the next cycle or have to risk paying higher stamp duties and settle for a shorter or smaller home loan.

With the seventh round of curbs failing to cool the market, policy makers may have to go back to the drawing board and ponder whether more of the same will hack it.

In another development this week, the Government announced it would be closing the tenders for three Executive Condominium site sales on the same day. The idea is to help moderate tender bids and hopefully future property prices. I feel this move is long overdue.

Some analysts have argued that the bids may not necessarily come in lower and that developers with greater financial muscle could have a clean sweep of the sites. Yes, it may not make a difference to bigger developers, but can they afford to put in record-high bids for all three sites? This would risk tripling their exposure in what is already a toppish market.

As for the clean sweep that could occur, what is stopping such a move from already happening under the current system of closing tenders one after another? And do not forget that sites awarded at the same time are likely to have closer or similar launch dates.

This would lead to greater competition in the market and less scope to push prices as high as the market will bear. So let us not knock it. It took the authorities a very long time to come around to it, just as they did with shoebox units. I feel that the chances are very high that this move will help moderate prices.

ABOUT THE AUTHOR:

Colin Tan is head of research and consultancy at Chesterton Suntec International.

[Pikachu1245]

http://www.todayonline.com/business/...market-booster

Property

Cooling measures or market booster?

By COLIN TAN

19 April

Based on the new private home sales data for March, the seventh round of the Government’s property market cooling measures must definitely qualify as an own goal, as a colleague put it. Instead of cooling the market, the latest curbs unveiled in January actually boosted it as buyers turned up in droves.

In October last year, following the announcement of the sixth round of curbs, I wrote in this column that the Government’s cooling measures were in danger of losing their credibility.

To date, we have had seven rounds of such measures. In the sixth round, where home loan tenors were curbed, show flats were packed the day after the announcement with prospective buyers unfazed by the new measures.

I expressed the fear then that this loss of credibility may soon unleash a new wave of buyers into the market, namely those interested in buying but who had hitherto stayed prudent and waited on the sidelines for the numerous sets of cooling measures to work their effect.

I did not have to wait long. The market quickly worked itself into another frenzy towards the end of last year, prompting the Government to introduce the seventh round in January.

But in what must be the most bizarre response to any set of cooling measures introduced so far, show flats were kept open long into the night on the day of the announcement as buyers rushed their purchases to avoid the impact of the new measures. Confirming that the unusual market behaviour that day was not an anomaly, new private home sales for March were sent flying to the moon after the Chinese New Year lull in February.

An astounding 2,793 units were sold last month, the highest monthly new home sales volume since such data were compiled and released by the Urban Redevelopment Authority in 2007. To get a feel of the pace of buying, this is equivalent to an annual volume of over 33,000 units — which will more than double last year’s sales figure.

Fuelling the latest burst of buying was the anxiety that more cooling measures might be imposed, which may make it harder to buy a property even if you are a first-time private property purchaser or an upgrader.

As one such buyer put it, the window is fast closing. For first-time investors in particular, they feel that if they do not act now, they may not be able to purchase a home in the current cycle. They will then have to wait for the next cycle or have to risk paying higher stamp duties and settle for a shorter or smaller home loan.

With the seventh round of curbs failing to cool the market, policy makers may have to go back to the drawing board and ponder whether more of the same will hack it.

In another development this week, the Government announced it would be closing the tenders for three Executive Condominium site sales on the same day. The idea is to help moderate tender bids and hopefully future property prices. I feel this move is long overdue.

Some analysts have argued that the bids may not necessarily come in lower and that developers with greater financial muscle could have a clean sweep of the sites. Yes, it may not make a difference to bigger developers, but can they afford to put in record-high bids for all three sites? This would risk tripling their exposure in what is already a toppish market.

As for the clean sweep that could occur, what is stopping such a move from already happening under the current system of closing tenders one after another? And do not forget that sites awarded at the same time are likely to have closer or similar launch dates.

This would lead to greater competition in the market and less scope to push prices as high as the market will bear. So let us not knock it. It took the authorities a very long time to come around to it, just as they did with shoebox units. I feel that the chances are very high that this move will help moderate prices.

ABOUT THE AUTHOR:

Colin Tan is head of research and consultancy at Chesterton Suntec International.

Garmen CMs seems to have slowed the price growth of PCs and ECs liao lor. If not ,the upward thrust force is even more ' Hiong Di'. So many people can and willing to pay, what more you want our garmen to do?

Seems like now the pricing of new OCR condo (in general) is slow and steady and as follows:

Doorstep with mall and mrt:$1500++ psf upwards
Within 0-150m to mrt :$1400++ psf upwards
Within 150-250m to mrt :$1200++ psf upwards
Within 250m to 500m mrt :$1000++ psf upwards
Within 500m to 800m mrt :$900++ psf upwards
From 800m to 1.1km mrt :$800++ psf upwards
EC within 1 km :$720++ psf upwards

[Kelonguni]

Garmen CMs seems to have slowed the price growth of PCs and ECs liao lor. If not ,the upward thrust force is even more ' Hiong Di'. So many people can and willing to pay, what more you want our garmen to do?

Seems like now the pricing of new OCR condo (in general) is slow and steady and as follows:

Doorstep with mall and mrt:$1500++ psf upwards
Within 0-150m to mrt :$1400++ psf upwards
Within 150-250m to mrt :$1200++ psf upwards
Within 250m to 500m mrt :$1000++ psf upwards
Within 500m to 800m mrt :$900++ psf upwards
From 800m to 1.1km mrt :$800++ psf upwards
EC within 1 km :$720++ psf upwards

Must ask Mr Khaw for one option: far far away from mrt @ 600+ psf. possible?

[economist]

Garmen CMs seems to have slowed the price growth of PCs and ECs liao lor. If not ,the upward thrust force is even more ' Hiong Di'. So many people can and willing to pay, what more you want our garmen to do?

Seems like now the pricing of new OCR condo (in general) is slow and steady and as follows:

Doorstep with mall and mrt:$1500++ psf upwards
Within 0-150m to mrt :$1400++ psf upwards
Within 150-250m to mrt :$1200++ psf upwards
Within 250m to 500m mrt :$1000++ psf upwards
Within 500m to 800m mrt :$900++ psf upwards
From 800m to 1.1km mrt :$800++ psf upwards
EC within 1 km :$720++ psf upwards

Don't think the difference is so much. Those very close to MRT may trade at 20% premium to those far from MRT, if everything else is the same.
That said, a lot of condos far from MRT are actually in prime areas with good environment or other amenities, therefore these condos may transact at very high price too, maybe even higher, just look at D15.

[Pikachu1245]

Don't think the difference is so much. Those very close to MRT may trade at 20% premium to those far from MRT, if everything else is the same.
That said, a lot of condos far from MRT are actually in prime areas with good environment or other amenities, therefore these condos may transact at very high price too, maybe even higher, just look at D15.

Just look at transacted price.......you will know what I mean......for new OCR condo that is adjacent to mrt/mall like Urban Vista, Hillion, Watertown, Midtown 1400++psf and above is a reality NOW

Condos further from mrt (800m or more) 800++ psf is already a reality e.g. Sea Esta, Sea Strand, Riverbay.......

EC at 720psf onwards is already a reality e.g. One Canberra, Heron bay etc.

Of course D15, D9,D10, D11, D5 is even higher regardless near mrt or not. Different league. Different buyer profile.....

[TMATT]

Join the - Singapore our conversation , that chair by him on property topic,
Contribute your view

Must ask Mr Khaw for one option: far far away from mrt @ 600+ psf. possible?

[Pikachu1245]

Join the - Singapore our conversation , that chair by him on property topic,
Contribute your view

Those who contributed has resulted in potential new control for new EC buyer leh.....see today's news.....

You still want cheap cheap EC when priority of garmen is to help those in dire needs like low income group? Be careful what you ask for

[DKSG]

Those who contributed has resulted in potential new control for new EC buyer leh.....see today's news.....

You still want cheap cheap EC when priority of garmen is to help those in dire needs like low income group? Be careful what you ask for

The EC loophole has been there for a loooong time.
Until now then they realised ?

EC should incur at permanent SSD of 50% of tax on the gross profit they make. EC should be a home first before being an asset.

Once the home becomes an asset (ie they sell), then it should be taxed as a asset sale transaction of a government subsidised housing unit.

It is not the government's role to use country's money to help a small group of $12K earners make $400K+++ on the sale of their ECs. This is way too much. The amount they make should be calibrated to be the same as a 5 room flat. The rest should go back to the government.

So that government can use the money to help the poorer folks who earn less than $1,500 a month. So that our country can achieve prosperity and progress for the Nation (as a whole).

DKSG

[teddybear]

As I said, it is not the govt's job to guarantee any citizen a private condo or EC for that matter (since it becomes a private condo after 10 years!). If they can't afford, go HDB, cheap and good. Should just use those money used to help the poor!

The EC loophole has been there for a loooong time.
Until now then they realised ?

EC should incur at permanent SSD of 50% of tax on the gross profit they make. EC should be a home first before being an asset.

Once the home becomes an asset (ie they sell), then it should be taxed as a asset sale transaction of a government subsidised housing unit.

It is not the government's role to use country's money to help a small group of $12K earners make $400K+++ on the sale of their ECs. This is way too much. The amount they make should be calibrated to be the same as a 5 room flat. The rest should go back to the government.

So that government can use the money to help the poorer folks who earn less than $1,500 a month. So that our country can achieve prosperity and progress for the Nation (as a whole).

DKSG

[TMATT]

Haha, actually we are against EC, very unfair scheme.

HDB should focus to build affordable flat, don't worry making those "middle class" getting 50% return or half a million by buying EC.

We very concern more young ppl will think it is govt duty to ensure they got an assets who can earn good profit, or, even they cannot afford Private condo, they demand govt give them EC, guarantee at 20-30% lower cost some more.

This scheme had been misuse!

However differ ppl differ opinion, all can join in conversation to made this country a better place

Those who contributed has resulted in potential new control for new EC buyer leh.....see today's news.....

You still want cheap cheap EC when priority of garmen is to help those in dire needs like low income group? Be careful what you ask for

[star]

The EC loophole has been there for a loooong time.
Until now then they realised ?

EC should incur at permanent SSD of 50% of tax on the gross profit they make. EC should be a home first before being an asset.

Once the home becomes an asset (ie they sell), then it should be taxed as a asset sale transaction of a government subsidised housing unit.

It is not the government's role to use country's money to help a small group of $12K earners make $400K+++ on the sale of their ECs. This is way too much. The amount they make should be calibrated to be the same as a 5 room flat. The rest should go back to the government.

So that government can use the money to help the poorer folks who earn less than $1,500 a month. So that our country can achieve prosperity and progress for the Nation (as a whole).

DKSG

Yes tax them 50%.

[DKSG]

Yes tax them 50%.

I never understand why need to subsidised people to staying EC ?
If they cannot afford PC, over ceiling for HDB, then ... they buy resale lor !

Just because people aspire for private, we have to use OUR money to subsidise them ? why ?

I also aspire to stay in The MarQ, so can I ask for a subsidy also ?

Think, my friends, Think.

DKSG

[DC33_2008]

It is really time to review all the housing polices. There are just too much of inequality and a progressive system should be applied. Otherwise the line drawn may favour some but upset others.

[DKSG]

It is really time to review all the housing polices. There are just too much of inequality and a progressive system should be applied. Otherwise the line drawn may favour some but upset others.

People should find it easy to own a HDB flat from the government. But anything more than that is considered dishing out cash to them.

DKSG