Singapore Property Downcycle

[stl67]

If this condition persist till GE-2016 (or there about), we will know from GE voting results whether majority support lower property prices (which some minority group has been advocating and shouting very loudly) or they support higher property prices.........................

if gov lose the election, must quickly off load my properties, stocks and investments.. cant imagine when this happen..

actually gov very hard to do, do left kena, do right also kena...how to balance?

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http://www.stproperty.sg/articles-pr...homes/a/173906

Wary buyers shun completed homes

Fears of private housing glut, poor rental market hurting sales: Experts

The Straits Times - July 29, 2014
By: MELISSA TAN




THE threat of an oversupply of private homes and a poor rental market are deterring home-seekers from buying completed homes, especially in the city centre.

The upscale Districts 9, 10 and 11 account for the bulk of unsold units at completed developments across Singapore, according to data last week.

Consultants said that buyers were still wary of taking the plunge, particularly in the luxury segment, due to a flood of new units entering the market and the increased difficulty in finding tenants.

Private home vacancy rates have reached their highest point since 2006, according to Urban Redevelopment Authority (URA) figures.

Developers appear to be responding by cutting prices further to boost sales in order to avoid penalties for failing to sell all their units by a deadline, consultants added.

Fines are imposed if a builder fails to sell all the apartments in a project within two years of completion, under Qualifying Certificate (QC) rules.

There were 1,412 completed but unsold homes at the end of June - 1,259 condominium units and private apartments, and 153 landed houses - according to the URA last Friday.

The city centre accounted for the bulk of that - about 894 units, or 63.3 per cent - while the city fringe had about 414 unsold units, or 29.3 per cent of the total, said OrangeTee research head Christine Li.

Both areas far outstripped the suburbs, where there were only 104 unsold completed units, or 7.4 per cent of the total.

Ms Li pointed out that the prices of completed homes in the city centre slid 1.9 per cent in April through June from the previous three months, the largest quarterly drop since the second quarter of 2009.

"This could suggest that some developers have started to become skittish and have started to cut prices in order to move units to avoid QC fines."

Still, buyers will likely stay on the sidelines partly due to rising vacancy rates and a possible supply overhang in the near future, consultants said.

The islandwide vacancy rate for all private homes, including landed housing, climbed from 6.6 per cent in the first quarter of this year to 7.1 per cent in the second - the highest level since the 7.4 per cent recorded in the first quarter of 2006.

City centre homes were the worst hit in the second quarter of this year, with a vacancy rate of 8.5 per cent, said the URA.

R'ST Research director Ong Kah Seng said that owners of some city centre units may have left the apartments empty because they were unable to fetch rents high enough to be cost-effective, given the high maintenance costs.

For instance, tenants may speed up the normal process of wear and tear, or require the landlord to replace some parts of the house, he told The Straits Times. The cost of those repair or replacement work may not be worth the rent in some cases.

"When there are significant 'pitch-dark' condominiums in the prime districts, it will paint a negative picture of lifelessness in Singapore's central region," he added.

Consultants said that a bumper crop of completed homes could weaken the leasing market even further.

JLL Singapore research director Ong Teck Hui pointed out that there were 9,016 private homes completed in the first six months of this year, compared with 13,150 units throughout the whole of last year and 10,329 units over 2012.

Some developers have slashed prices to move remaining units in projects that are substantially sold.

At the freehold The Vermont at Cairnhill, developer Bukit Sembawang had 37 units unsold by the end of June but has managed to move more than 30 this month by cutting prices, according to real estate agents.

Prices per sq ft (psf) were reduced to just over $2,000 psf about two weeks ago, down from the previous average of around $2,400 psf, agents said, making a drop of up to 16 per cent.

Cape Royale in Sentosa had not moved any of its 302 apartments as at the end of June, making it the project with the highest number of completed but unsold units.

Developers IOI and Ho Bee decided to rent out units there instead of selling them.

CapitaLand's The Interlace in Alexandra was next with 180 units left, but that is just 17 per cent out of its 1,040 units in total.

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http://www.stproperty.sg/articles-pr...units/a/173940

'Steady increase' in number of unsold private units

The Straits Times - July 29, 2014


MANY private developments have been launched but remain unloved by buyers as home loan curbs continue to suppress demand.

The number of launched but unsold homes as at the end of June was higher than at the same time the previous year, according to official data last week.

There has been a "a steady increase in unsold units in launched private residential projects" since the middle of last year, when tough restrictions were imposed under a total debt servicing ratio (TDSR) framework, JLL Singapore research director Ong Teck Hui said.

TDSR forces home buyers to tighten their belts because it caps a borrower's monthly total debt repayments at 60 per cent of his gross monthly income.

Mr Ong noted that there were around 5,200 unsold units in launched private residential projects, as at the end of June last year. However, that jumped about 20 per cent to reach around 6,300 units, as at the end of last month, he said.

The Urban Redevelopment Authority does not give a breakdown of launched but unsold units by region.

However, the three projects with the highest number of such units were all in the suburbs, The Straits Times found.

The project with the biggest number of unsold private homes, as at June 30, was The Santorini in Tampines Street 86.

The 99-year leasehold project has launched all 597 units, but has moved only 113, leaving 484 units, or 81 per cent, unsold.

Sales were poor even though its developer, MCC Land, had engaged four real estate agencies to market the project when it was launched in March, a move deemed unusual at the time.

Consultants said prices are still holding buyers back, which is prompting developers like MCC Land to change how they market new launches.

In the past, developers would typically engage only one marketing agency, or two for projects with more than 800 units, but roping in more than two is now par for the course.

The launch of City Gate at Beach Road this month involved six agencies: ERA, PropNex, Knight Frank, Savills, Teakhwa Real Estate and SLP Scotia.

Consultants said that apart from enlisting more agents, developers could try to spend a longer period drumming up interest before the actual launch.

"Developers are likely to adjust the length of their marketing programme," said Mr Joseph Tan, executive director of residential at CBRE.

Developers have also lowered their selling prices below initial market expectations at recent launches, such as City Gate's.

The second-biggest number of launched but unsold units was found at Kingsford - Hillview Peak, in Bukit Batok. The 512-unit project by Chinese developer Kingsford Development has 352 unsold units, or 69 per cent of the total.

In third place was the 420-unit The Skywoods at Dairy Farm Heights by TA Corporation, with 319 launched but unsold units as at end-June.

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http://sbr.com.sg/residential-proper....u09qqlyT.dpuf
Published 29 July 2014

Private home supply glut hits 14-year high in Q2



7 out of 10 new units remain unoccupied.

A staggering number of brand-new private homes remain cold and empty across the island, as private home supply hit record levels in Q2 while new take-ups remained painfully lacklustre.

Statistics released by the URA revealed that net new supply reached 4,715 completed units in 2Q 2014. According to Colliers, the last time the net new supply exceeded the 4000-mark was in 2Q 2000.

“Downside pressures from the increase in new home completions continued to weigh on rents of private homes in 2Q 2014. The all private residential property rental index eased by another 0.6% QoQ following the 0.7% fall in 1Q 2014. This exceeded the corresponding net new take-up of 2,731 units by 72.6%. Consequently, the occupancy rate slipped to 92.9% in 2Q 2014 from 93.4% in 1Q 2014,” noted Colliers.

Here’s more from Colliers:

Over the next six months, the air of caution is expected to linger, as long as the punitive cooling measures and stringent loan curbs remain in place.

Developers, though likely to continue to push out their projects, are expected to be more selective with their launches and re-launches.

Prospective buyers and investors are expected to adopt a tentative stance in anticipation of further price declines on the back of various downside risks. Primary home sales which stood at 4,409 units at half-time, could come in at between 7,000 and 9,000 units for the whole of 2014.

Plagued by tepid demand, the lacklustre high-end/luxury segments could witness larger average price declines ranging from 10% to 15% for the whole year. This is following a 5.0% slide in 1H 2014.

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http://sbr.com.sg/residential-proper....W4cXOgEI.dpuf
Published 30 July 2014

Flat glut: Developers grapple with unsold flats as supply goes through the roof


Almost 175,000 units are expected in the next 3 years.

Both private condos and HDB flats are increasing at a staggering rate, with almost 175,000 new units expected to crowd the property market within the next 3 years. This in turn will only drag prices further.

According to PropertyGuru’s Outlook Report for H2 2014, a further 65,128 private condos are expected to be completed between this quarter and end 2016, while 108,000 HDB flats will come onstream from 2014 till 2017.

For private developers, the amount of vacant units up for sale is expected to be much larger than this as a result of spillovers from the year before.

“This cycle of remnant units will continue to have a domino effect on prices year- on-year in the long run, adding further pressure on developers to offer discounts and incentives to purchase their projects,” noted the report.

Meanwhile, the large supply of HDB flats market will influence the amount of resale flats in the market in the next 3-5 years.

“Current flat owners are more likely to set their sights on the resale HDB market rather than purchase another BTO. This is because second-time applicants must have a monthly household income of less than $12,000 to qualify for a BTO as well as the fact that they are not as favoured as compared to first-timers with families (70 to 95 percent of BTO flats are set aside for the latter). As such, the effect of higher BTO supply on resale demand is low – at least for the short term,” stated the report.

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Interest Rates of Banks and Finance Companies
PER CENT PER ANNUM


End of Period Banks Savings Deposits
2014 Jan 0.12
Feb 0.12
Mar 0.12
Apr 0.12
May 0.12
Jun 0.11
Jul 0.11
Aug 0.11
Sep 0.11

Note: Figures refer to average rates compiled from that quoted by 10 leading banks and finance companies.

https://secure.mas.gov.sg/msb/Intere...Companies.aspx

ingapore Inflation Continues to Slow in August




Singapore’s annual inflation rate eased to 0.9 percent in August of 2014 from 1.2 percent in July, mainly reflecting a sharper decline in private road transport cost and a more moderate increase in services fees.

In August of 2014, private road transport cost fell by 2.9 percent, following the 1.6 percent correction a month earlier, largely due to lower COE premiums in July. Petrol pump prices also rose at a slower pace of 0.7 percent, compared to 3.1 percent a month ago, on account of the recent weakness in global oil prices. Services inflation edged down to 2.1 percent in August from 2.5 percent in the preceding month, led by more modest increases in the costs of recreation & entertainment and holiday travel. Accommodation cost declined by 0.2 percent after coming in flat in July, given the soft housing rental market. Overall food inflation was slightly lower at 2.9 percent compared to 3.0 percent in July, as the increase in the prices of prepared meals eased. Non-cooked food prices, however, rose at a quicker pace of 3.4 percent compared to 2.8 percent in July, reflecting steeper price increases for seafood and vegetables.

MAS Core Inflation, which excludes the costs of accommodation and private road transport, eased slightly to 2.1 percent in August, from 2.2 percent a month ago, mainly due to the lower contribution from services costs. The government expects MAS core inflation to stay elevated between 2.0 percent to 3.0 percent in 2014.

On a month-on-month basis, the CPI accelerated 0.5 percent in August after a 0.3 percent decline in July mostly due to higher prices of food, largely for seafood, dairy products & eggs and fruits, and increasing costs of services, mainly tertiary tuition fees and household services.

[Arcachon]

http://www.tradingeconomics.com/singapore/inflation-cpi

Actual Previous Highest Lowest Dates Unit Frequency
0.90 1.20 34.00 -3.10 1962 - 2014 Percent Monthly
2009=100
In Singapore, the most important categories in the consumer price index are housing (25 percent of total weight) and food (22 percent). The index also includes: transport (16 percent), education (7 percent), health (6 percent), communication (5 percent) and clothing and footwear (3 percent). Recreation, alcoholic beverages, tobacco and others account for the remaining 16 percent of total weight. This page provides - Singapore Inflation Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news. Content for - Singapore Inflation Rate - was last refreshed on Thursday, October 2, 2014.

http://www.tradingeconomics.com/singapore/inflation-cpi

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http://www.todayonline.com/chinaindi...inas-bad-dream

China’s bad dream

TODAY - Published: 4:03 AM, August 5, 2014


Since his first address as China’s President last year, Mr Xi Jinping has been espousing the so-called Chinese Dream of national rejuvenation and individual self-improvement.

But the imperative of addressing the unprecedented amount of debt that China has accumulated in recent years is testing Mr Xi’s resolve — and his government is blinking.

The Chinese government’s uncertain ability — or willingness — to rein in debt is apparent in its contradictory commitment to implement major structural reforms while maintaining 7.5 per cent annual gross domestic product (GDP) growth.

Given that China owes much of its recent growth to debt-financed investment — often in projects such as infrastructure and housing, meant to support the Chinese Dream — any effort to get credit growth under control is likely to cause a hard landing.

This prospect is already prompting the authorities to delay critical reforms.

To be sure, China’s debt-to-GDP ratio, reaching 250 per cent this month, remains significantly lower than that of most developed economies. The problem is that China’s stock of private credit would normally be associated with a per capita GDP of around US$25,000 (S$31,200), almost four times the country’s current level.


LESSONS FROM THE JAPANESE EXPERIENCE

There are strong parallels between China’s current predicament and the investment boom that Japan experienced in the 1980s. Like China today, Japan had a high personal savings rate, which enabled investors to rely heavily on traditional, domestically-financed bank loans.

Moreover, deep financial linkages among sectors amplified the potential fallout of financial risk. And Japan’s external position was strong, just as China’s is now.

Another similarity is the accumulation of debt within the corporate sector. Corporate leverage in China rose from 2.4 times equity in 2007 to 3.5 times last year — well above American and European levels.

Nearly half of this debt matures within one year, even though much of it is being used to finance multi-year infrastructure projects.

Making matters worse, much of the new credit has originated in the shadow-banking sector at high interest rates, causing borrowers’ repayment capacity to become overstretched. One in five listed corporations carries gross leverage of more than eight times equity and earns less than two times interest coverage, weakening considerably these companies’ resilience to growth shocks.

To be sure, China’s situation is more extreme than Japan’s. At its peak, Japanese investment stood at 33 per cent of GDP, compared with 47 per cent in China.

This is a substantial difference, especially considering that China’s per capita GDP amounts to only 19 per cent of Japan’s at its highest level, and that its debt has already reached 60 per cent of Japan’s. Moreover, the accumulation of debt in China — 71 percentage points of GDP over the past five years — has been far sharper than in Japan, where the debt level grew by only 16 percentage points over the five-year period before its bust.

That is all the more reason to believe that Japan’s experience can provide important insight into the risks that China faces.

After Japan’s bubble burst, annual GDP growth, which averaged 5.8 per cent in the four years preceding the bust, plummeted to 0.9 per cent for the next four years.

With bad debt left to fester on banks’ balance sheets, growth vanished and deflation set in. While private debt as a share of GDP stabilised, public debt increased by 50 per cent in the five years after the bust.


LACK OF AUTOMATIC STABILISERS

The collapse of China’s credit bubble is likely to cause annual GDP growth to drop to 1 to 2 per cent, on average, for the subsequent four years, assuming a 2 per cent annual decline in capital expenditure and a still-respectable consumption-growth rate of 3 to 5 per cent. Consolidated public-sector debt would rise to 100 per cent of GDP.

This is a relatively modest prediction. Without automatic stabilisers or a strong financial-stability framework underpinned by deposit insurance, coping with the downside risks of the potentially destabilising financial reforms that the government is pursuing will be difficult enough; a credit shock could prove disastrous.

China’s debt tipping point is to be found in its massive real-estate bubble. The investment bank UBS said new urban housing supply has far exceeded marginal underlying demand from urban population growth. Indeed, almost half of the formal increase is not an increase at all, but merely recognition of rural workers who have been living and working in cities for some time.

The impact of a sharp decline in real-estate prices would be far-reaching. After all, property collateral is the bedrock of the Chinese financial system, with estimates of banks’ direct and indirect exposure to real estate ranging from 66 to 89 per cent of GDP.

Complicating matters further is the government’s lack of options for stabilising property markets.

In fact, a key part of the problem is that China’s response to cyclical weakness always entails more housing construction.

China’s lack of automatic stabilisers places the tension between reform objectives and growth imperatives in sharp relief.

The only way for the government to shore up growth in the short run is to pursue more debt-driven stimulus, as it did earlier this year.

But this will also cause China’s debt burden to continue to grow, with bad debt increasingly crowding out good credit.

If China’s leaders continue to choose debt-fuelled growth over reform, they will only delay, and possibly prolong, the inevitable slowdown. That would turn Mr Xi’s Chinese Dream into a more elusive prospect. PROJECT SYNDICATE

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http://sbr.com.sg/residential-proper....ZcrNMBrA.dpuf
Published 06 Aug 2014

Chart of the Day: Take a look at the rapidly mounting number of unsold houses in Singapore




Luxury projects are the hardest hit by the country’s property cooling measures, but mass market homes are also suffering from a sales dearth. Unsold inventory is building up for the country’s residential property developers, and real estate firms are grappling with the rising number of empty houses.

According to Barclays, 1260 private condominiums homes were completed in 2013 and 2014 and are still unsold.

Of these unsold units, 64% were from the Core Central Region (CCR), and mostly from the high-end to luxury projects. But though luxury developments are faring worse, mass market unsold inventory also building up.

“However, with developer sales slowing since 3Q13, there was also increasing unsold inventory at the mass market suburban projects. Of the 6,120 units that were uncompleted, launched and unsold as of 2Q14, 49% are from the Outside Central Region (OCR), a proxy for mass market private homes,” stated the report.

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http://www.todayonline.com/world/asi...-be-flood-debt

Asia’s next crisis could be a flood of debt

TODAY - Published: 4:03 AM, August 7, 2014


Asia is still traumatised by the great financial crisis of 1997, when Thailand’s devaluation of the baht set off a regionwide collapse in markets. Could it happen here again?

The mere question will strike many as odd, given Asia’s rapid growth and progress in strengthening financial systems, improving transparency and amassing trillions of dollars of currency reserves. But Asia now faces three risks that could quickly undo those gains: Federal Reserve tapering, a Chinese crash and an explosion of household debt.

The danger of the Fed pulling too much liquidity out of markets has been well documented. So have China’s rising vulnerabilities. Debt, though, deserves far more scrutiny. As economists survey the scene, Thailand once again tops the worry list. Debt there has risen rapidly, underwriting standards appear loose and non-performing loans are rising.

Thailand has plenty of company in Asia, Oxford Economics warns in a new report. Financially-conservative Singapore has seen credit growth in the past six years exceed that of the United States in the run-up to its 2008 subprime meltdown.

Several nations now have private-debt ratios of between 150 per cent and 200 per cent of gross domestic product. They include the higher-income set — Australia, Hong Kong, South Korea and Taiwan — as well as China, Malaysia, Thailand and Vietnam. Even where debt levels are lower, in Indonesia and the Philippines, the trajectory is troublesome.

“Debt surges of this kind often end badly,” said Mr Adam Slater, an economist with Oxford.


ASIA NOT AS HEALTHY AS IT SEEMS

Even more worrisome than the absolute levels of debt is the pace of increase, said Dr Frederic Neumann, Hong Kong-based co-head of Asian economic research at HSBC. For all its rapid growth and buoyant markets, Asia is not as healthy as it appears on the surface and might take on even more debt to support growth. As leverage exceeds the peak before the 1997 crash, is a sharp correction on the way?

“The optimists argue that’s unlikely to occur in Asia, where people tend to be more prudent and save more of their monthly income,” Dr Neumann said. “Well, not necessarily.”

All this fresh debt leaves Asia highly exposed to financial shocks and economic shifts. Any destabilising event — Fed chairman Janet Yellen over-tightening, renewed turmoil in Europe, a Chinese credit crunch, surging oil prices, trouble in Japan’s bond market — could push Asia back to the brink.

And it is not as though export markets are booming to provide a cushion.

What should governments be doing to avoid disaster? “It’s all about productivity growth,” Dr Neumann said. “If it slows, profits come under pressure and there’s a tendency to leverage up to maintain returns on equity, so anything that boosts productivity growth, really. For example, state-owned enterprise reform, infrastructure, less labour market rigidity and trade liberalisation.”

Few of these upgrades are afoot. Certainly not in Thailand, where the generals who seized power on May 22 are too busy consolidating power to restructure the economy. Ambitious talk of change in Hong Kong, South Korea, Malaysia and elsewhere has not been met with noticeable action. And the real worry, of course, is China. Last Friday, the central bank warned that credit and money supply are increasing too rapidly, months after Premier Li Keqiang pledged to tackle China’s lending bubble.

Beijing’s unprecedented stimulus binge after Wall Street’s 2008 reckoning supported growth throughout Asia. Beijing’s epic largess could come back to haunt the region if growth slows sharply or giant debt defaults slam world markets. The same goes for the Fed’s quantitative easing programme. Ultra-low US rates pulled tidal waves of capital Asia’s way, helping to facilitate a surge in private-debt ratios. But now Fed policies and China’s growth engine risk shifting into reverse.

Thailand’s implosion was only the most spectacular example of Asia’s propensity for boom-and-bust cycles since the late 1990s. Others include Hong Kong’s property slump in the early 2000s, mini-crises in unsecured debt in South Korea and Taiwan in the mid-2000s and Vietnam’s real-estate blow-up that began in 2010. This track record is a warning against downplaying the damage unsustainably high debt could inflict.

Granted, Asia is still among the world’s least ugly economic regions, with Greece and Portugal back in the news and Argentina defaulting anew. Also, stricter loan-to-income ratios and robust “macroprudential” policies such as taxes and regulations that limit money flows could save Asia from revisiting the depths of 1997.

But, Oxford Economics’ Mr Slater warned, the risks from the debt build-up look sufficient to call into question the much-touted trend of the rise of the Asian consumer. That would be bad news for everyone.

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http://sbr.com.sg/residential-proper....049byEt2.dpuf
Published 07 Aug 2014

Still going under: HDB resale prices hit 29-month low in July


Residential property prices continued their downward slide in July, as the overall HDB resale prices slipped 0.9% in July compared to June. The price drop was most evident in 3, 4, and 5-room flats which saw a decline of 1.0%, 1.8%, and 0.4% respectively.

According to the Singapore Real Estate Exchange, the SRX HDB Price Index shows that July prices marked a 29-month low since Feb 2012.

Compared to the peak in Apr 2013, prices have declined by 7.8%. Year-on-year, prices also dropped by 6.7% from July 2013. Since the beginning of this year, prices have declined 4.0%.

Meanwhile, resale volume picked up slightly month on month. . According to HDB resale data compiled by SRX, 1,341 HDB flats were sold in July's resale market, a 2% increase from June’s 1,315 transacted units.

But on a year-on-year basis, July's resale volume is 10.2% down compared with 1,494 units resold in the same month of last year. Comparing to the peak where 3,649 units were resold in May 2010, the volume is down by 63.2%.

[seletar]

http://www.channelnewsasia.com/news/...e/1306498.html

Private home resale prices fall to 21-month low: SRX

Channel News Asia
POSTED: 11 Aug 2014 10:07


SINGAPORE: The resale prices for non-landed private homes continued its downward trend in July, falling 1.3 per cent month-on-month, according to flash estimates from the Singapore Real Estate Exchange (SRX) on Monday (Aug 11).

The decline represented a 21-month low since October 2012, SRX said, and the fall in prices were felt in all three regions. Prices for the Core Central Region fell the most with 4 per cent, while Rest of Central Region and Outside Central Region dropped 1.1 per cent and 0.6 per cent, respectively.

The median Transaction Over X-value (TOX) for the majority of districts - 18 out of 24 - was negative in July. For districts with more than 10 resale transactions, districts 9 (Orchard, Cairnhill, River Valley), 15 (Katong, Joo Chiat, Amber Road) and 23 (Bukit Panjang, Choa Chu Kang) saw the most negative median TOX at -S$130,000, -S$40,000 and -S$30,000, respectively.

This means that majority of the non-landed private property buyers last month in these districts purchased their units below what other buyers who came before them paid for in similar units, SRX said.



In terms of resale volume, there were an estimated 431 transactions in July, compared with 427 in June. The volume dropped 20.5 per cent from the same month last year, SRX said.

RENTAL VOLUME UP, PRICES DOWN

As for rental transactions, the number of full units rented out in July was 3,360 - representing a 5.3 per cent on-month hike. Year-on-year, rental volume improved by 9 per cent from the 3,082 contracts signed in July 2013, according to the data.

Rental prices went down, though, slipping 0.8 per cent from the previous month. It is a 38-month low since May 2011, SRX added.

The decline was greatest in the Rest of Central Region at 1.4 per cent, while Core Central Region dipped 1.1 per cent. Prices for Outside Central Region improved slightly by 0.3 per cent.

[seletar]

http://sbr.com.sg/economy/in-focus/d....od7uFfj1.dpuf
Published 12 Aug 2014

Deteriorating household net worth could push Singapore into a credit meltdown: UBS


The current environment is "unsustainably benign".

Singapore’s economy looks rosy on the outside, with household net worth estimated to be four times the GDP and assets far surpassing liabilities. But probe a little deeper and an inconvenient truth comes to the surface: the country could well be headed to a disastrous economic meltdown.

A report by UBS warns that Singapore’s healthy household balance sheets are a source of risk rather than resilience. The report notes that high household net worth did little to prevent the US economic crisis of 2008, and Singapore is already experiencing a decline in resident property prices and household residential property wealth.

“We do not believe household balance sheets are a source of resilience. Instead we see them as the source of weakness. Even before the higher interest rates have become a reality, the maturing credit cycle is depressing the elevated value of assets on household balance sheets,” noted UBS economist Edward Teather.

Rising rates will likely provoke a shakeout in the labour market –via corporate indebtedness – further weakening households’ demand for risky assets and depressing prices.This will cause household net worth to deteriorate, which in turn will crimp domestic demand, raise concerns of a vicious cycle and provoke a policy response.

Singapore is already experiencing a slowdown in domestic credit growth, and the economy could well be trapped in a ‘vicious’ feedback loop between credit, employment, property prices, household net worth and domestic demand.

The domestic economy is also exposed to pockets of risk--the Monetary Authority of Singapore estimates that 5-10% of borrowers have a monthly debt servicing burden greater than 60% and that the percentage of overly-indebted households could increase to 10-15% should mortgage rates rise by 300 basis points.

“We think the current environment is unsustainably benign. We are not saying Singapore’s housing market looks like that of the US in 2007, just that pockets of risk matter. The point we are making is that this will hurt household balance sheets – which have been bloated by high house prices and leverage. Moreover, that deterioration will in turn lead to a depressing effect on the credit cycle, employment and domestic spending. Household balance sheets are a source of economic risk, not resilience.” added Teather.

[seletar]

http://sbr.com.sg/financial-services....6OkRatgw.dpuf
Published 13 Aug 2014

Disaster in the making: 4 out of 5 young Singaporeans have no savings


Most Singaporeans aged 20-35 years old are just one missed payment away from a financial disaster. Figures released today by a Singapore based financial website point to a shocking lack of financial planning by younger people, as 4 out of 5 respondents have no savings at all.

According to a survey by EnjoyCompare.com, majority of people in the said age bracket could lose their homes within three months if they became unemployed because they have no savings to fall back on in an emergency.

Figures obtained by EnjoyCompare.com show that a quarter of young people have savings of less than $6000, while 36% have no savings at all. This compares with the average savings of $60,000 for people in their parents' age range.

Four-fifths of people surveyed said they had spent money they should have been putting aside for a mortgage deposit. Only a third of people plan to buy a home rather than rent.

Here’s more from EnjoyCompare.com:

"These are shocking figures," said EnjoyCompare.com ‘s Mark Hall, "The current generation are seemingly living for the day and spending their money rather than putting some aside for when it might be needed.

"This is endemic of what's rapidly becoming known as the 'renting generation', who would rather not save money for a mortgage, pension or even for emergencies.

"In fact, we've seen surveys that show people spending money they admit they ought to be saving. Where's the sense in that?" he added.

“It’s shocking but the average Singaporean graduate spends 40% of their salary on rent, while another 9% is spent on student loan repayments.

"There's so little money going into investment or savings that some people are finding themselves rapidly up to their necks when they hit troubled times," said Hall, "Some people are just one missed payment from disaster."

[seletar]

http://www.stproperty.sg/articles-pr...in-q2/a/176767

One in eight EC units left vacant in Q2

The Straits Times - August 18, 2014


ABOUT one in every eight executive condominium (EC) units was left vacant in the second quarter this year, markedly more than before, official figures show.

However, consultants said this was probably not because more people were buying EC units that they do not plan to live in.

Some people may have bought EC units ahead of their needs, but those buyers are likely only a minority, they said.

Instead, more EC units have been left vacant possibly because their owners have not moved in yet because they are under renovation or other factors, they said.

Consultants added that the growing pile of unsold as yet unbuilt EC units could raise vacancy rates further in future.

ECs are a public-private housing hybrid meant to cater to a "sandwiched class" of buyers not qualifying for public housing but unable to afford private property.

The proportion of vacant EC units shot up from 6 per cent in the first quarter to 12.2 per cent in the second, according to Urban Redevelopment Authority (URA) figures released last month.

The 12.2 per cent vacancy rate translates to an estimated 1,634 unoccupied units out of 13,448 completed EC homes in total as at the end of June - more than twice the estimated 726 vacant units in the first three months this year.

Consultants said that there could have been some people who bought EC homes even though they did not actually need them.

"There may be a minority of people who buy an EC (unit) not because they need a roof above their head but because they want to make use of housing grants," said SLP International research head Nicholas Mak.

He said such buyers may opt to live elsewhere as EC projects are on the outskirts. They may rent the unit out after the five-year minimum occupation period ends.

However, consultants said this type of buyer was rare, and the higher vacancy rate in the second quarter was most probably owing to a surge in the supply of newly completed EC projects in the second quarter. "For new EC completions, the owners are in no hurry to move into the newly completed flat," sad R'ST Research director Ong Kah Seng.

ECs completed since the middle of last year include Esparina Residences in Sengkang, Belysa in Pasir Ris and Punggol's Riverparc Residence.

Another major factor could be the weak Housing Board (HDB) flat resale market.

"It could be that some upgraders have not sold their HDB flat yet to move into their EC (flat)," said CBRE research head Desmond Sim. Upgraders are usually given six months to sell their HDB flat. Mr Sim said the growing number of ECs under construction that are still unsold would "put pressure" on vacancy rates.

As at the end of the second quarter, 739 units had not found any takers, which is equivalent to 6 per cent of the total number of uncompleted EC units.

The URA typically calculates the vacancy rate by looking at a smaller sample of EC units rather than every single unit islandwide. The vacancy figure includes both sold and unsold EC units that are already completed. There were no unsold completed EC units at the end of June.

[seletar]

http://sbr.com.sg/commercial-propert....9tigK1JT.dpuf
Published 18 Aug 2014

Chart of the Day: See how July’s developer sales slid down 53% from last year



Poor performance to go on beyond Hungry Ghost month.

July’s developer sales stayed flat as sales from previous months’ launches continued to slow significantly, and take-up at the four new launches was subdued at best.

In a report by Barclays, year-to-July sales was 4,893 units, down from 10,432 units in July last year.

Barclays says that the weak trend will continue beyond August, as the traditionally quiet Hungry Ghost Festival month kicked in from 27 July. The bank sees rising risk of unsold inventory, across both high- and low-end segments.

[seletar]

http://www.stproperty.sg/articles-pr...-2014/a/176933

HDB rents 'to stay depressed for rest of 2014'

Sluggish demand, rising supply will weigh on rates, analysts say

The Straits Times - August 19, 2014


LEAN times are here to stay for Housing Board landlords, with rentals likely to stay depressed for the rest of the year.

Sluggish demand, arising from foreign labour curbs that have shrunk the pool of tenants, combined with a rising supply of HDB flats, will weigh on rental rates, said property analysts.

Already, Singapore Real Estate Exchange data shows the HDB rental index has fallen 2.3 per cent since the start of the year, hitting a three-year low last month. The median rent was $2,300.

This is only the beginning of a continued slowdown, said property analysts.

ERA Realty key executive officer Eugene Lim expects a further 5 per cent to 6 per cent drop by the year end. R'ST Research director Ong Kah Seng predicts a full-year fall of 5 per cent to 7 per cent, and SLP International Property Consultants research head Nicholas Mak, one of 4 per cent to 6 per cent.

For the longer term, OrangeTee research head Christine Li sees a decline of about 10 per cent by the end of next year.

Property agents said the problem is simply a lack of demand due to a shortage of tenants.

"Landlords are realistic as the market is not doing very well," said ERA Realty agent Noel Lu.

Many have been adjusting their rentals downwards, said agents.

The worst-affected areas are those without easy access to amenities such as public transport.

However, demand in mature estates and those near MRT lines is continuing to hold up, said ERA agent Zola Tan.

Tenants for units in such areas can be found within a month, as opposed to two to three months for less popular areas, he added.

For instance, PropNex Realty agent Michelle Lai, who focuses on Woodlands, noted that demand is "still quite strong". But although tenants can be found, rents have been falling, she said. An executive apartment used to go for $2,700 or $2,800 a month; now, the rate is $2,500.

The one bright spot is that falling rents have boosted activity in the market so far this year.

There have been more rental deals in general, with 8,485 in the January to March period and 8,455 in the March to June period.

This is up from an average of 7,580 a quarter last year and 6,780 a quarter in 2012.

Woodlands, Jurong West and Tampines have seen the most rental transactions in the past month, based on an STProperty "heat map" using HDB data.

One reason for the flurry of activity is that low rents have attracted more tenants, said R'ST Research's Mr Ong.

Landlords have had to offer low rents to compete for tenants, whose numbers have been affected by foreign labour curbs. The surfeit of flats for rent also means tenants can pick and choose.

"Nowadays, tenants can be fussy," said a 32-year-old safety officer who wanted to be known only as Mr Chandran. He has been trying to rent out his four-room flat near Ang Mo Kio MRT station, but has received just one call in the past fortnight.

With more suburban condominiums due to be completed next year, competition will only rise, said Mr Ong.

He noted: "(Current upgraders) have to quickly secure a tenant for their flat in case there are more flats put up for subletting."

Falling rents in the private market are also putting pressure on HDB rents. Last month, non-landed private residential rents hit a 38-month low.

"Suburban condos both new and old are competing for tenants, with budgets of around $3,000," said ERA's Mr Lim.

[seletar]

http://sbr.com.sg/residential-proper....4oIZo1G7.dpuf
Published 25 Aug 2014

Chart of the Day: Take a look at the country’s surging private home vacancy rate




Newly-completed private homes remain cold and empty across the island, as developers struggle to move inventory while stingy customers continue shy away from domestic real estate investment.

According to a report by Savills, there were 297,998 available private homes across the island, an increase of 1.6% from the 293,283 units at the end of March.

“Despite the strong leasing demand in Q2/2014, the vacancy rate of private residential units climbed to 7.1% from 6.6% in the previous quarter. This reflected a total of 21,268 vacant private homes island-wide, a significant jump of 10.3% QoQ from 19,284 units in Q1/2014,” noted the report.

Here’s more from Savills:

The major projects completed in the reviewed quarter are mostly located in the suburban areas, such as The Lakefront Residences on Lakeside Drive (629 units), Foresque Residences on Petir Road (496 units), Waterfront Gold on Bedok Reservoir Road (361 units) and The Greenwich on Seletar Road (319 units).

The central areas saw the completion of Silversea on Marine Parade Road (383 units), Sophia Residences on Sophia Road (272 units) and Cyan on Keng Chin Road (278 units).

[seletar]

http://sbr.com.sg/economy/news/singa....EEK0vlpn.dpuf
Published 28 Aug 2014

Singapore threatened with unprecedented 500% increase in household credit: report


Record-low interest rates cannot last forever.

The entire South East Asian region is awash with capital, thanks to record-low interest rates and a loosening of credit underwriting standards. But economists now warn against the rapid fivefold increase in Singapore’s household debt, which has expanded at a staggering rate in just a decade.

According to a report by ICAEW, the fast increasing rate of household lending has already caused concern in other Southeast Asian countries such as Thailand and Malaysia. A key risk of a rising-consumption economy is a thirst for yield, where in speculators tempted by high returns bet on property prices rising, increasing the risk of a property bubble building up.

The skyrocketing amount of household debt has prompted the Singapore government to intervene by introducing several rounds of property cooling measures, which will slow consumer spending and provide a gentle drag on growth in the short term.

“In moderation, household debt is useful in allowing people to stay afloat between jobs, or to spread a large purchase across several months’ income. It also encourages the region to move from traditional export-driven growth typically seen in emerging economies towards a consumption-driven growth model, something already evident in Singapore’s move towards high value-added services,” noted the report.

But according to Mark Billington, Regional Director, ICAEW South East Asia, “It is important that economies with already high consumption rates take care to avoid artificially raising the standard of living. Allowing credit growth to offset weak wage growth in lower earnings groups may ultimately raise the number of non-performing loans. That, in turn, could result in increased risks of another financial crisis.”

ICAEW Economic Advisor and Cebr Director Charles Davis also noted that many banks got their fingers burnt by a sharp increase in non-performing business in the 1997 Asian Financial Crisis.

“Although reforms have been put in place – including the transformation of economic and financial legislation, bank consolidation and increased capital ratio requirements –post-crisis, many banks have ramped up their consumer lending. Given this, South East Asian economies need to maintain vigilance over lending standards so that they heed the lessons from the late 2000s financial crisis in the US and Europe,” he cautioned.

[seletar]

http://www.reuters.com/article/2014/...0GS2M120140828

Lights off on Singapore's billionaire row as luxury house prices plunge


A man sits by the pool in the largely vacant Cape Royale condominium estate in Sentosa Cove on Singapore's Sentosa island August 19, 2014

REUTERS
SINGAPORE Thu Aug 28, 2014 5:19pm EDT


(Reuters) - There's an eerie silence at night in Sentosa Cove, the man-made island resort billed as Singapore's answer to Monte Carlo and the only place in the country where foreigners can buy landed property.

Dozens of houses - complete with their own private yacht berths and multiple swimming pools - sit empty while few lights are on in the apartment blocks overlooking the marina, a few kilometres away from Sentosa's giant casino.

Prices in the gated community, where Australian mining tycoons Gina Rinehart and Nathan Tinkler bought properties, fell around 20 percent in the past year as lending restrictions and taxes on foreign buyers burst a bubble in the Southeast Asian financial hub's luxury real estate market.

Investors could see the value of their assets fall even further with developers and investors still struggling to sell even after the recent price falls. Real estate websites list hundreds of flats and bungalows for sale, yet just 12 apartments and one house have changed hands all year on Sentosa, according to data from the Urban Redevelopment Authority (URA).

"The way prices have fallen in Sentosa, it's as if there is a global financial crisis," said Alan Cheong, head of Singapore research at property firm Savills.

That could mean a tough 2015 for the city state's banks unless policy restrictions are eased soon. But that looks unlikely because government-imposed curbs are having the desired affect of keeping the broader market in check after private house prices rose more than 60 percent between 2009 and 2013.

New mortgage business at the country's lenders is up to 40 percent below 2013 levels, although the downturn is unlikely to show up in their balance sheets until next year as loans are typically agreed a year ahead of them starting to be drawn down.

Compounding the problem for property investors are cutbacks in housing allowances for expatriate workers - meaning rents have fallen - and a drop in the number of high-net-worth foreigners being granted permanent residency.

Estate agent Knight Frank's analysis of property prices in 32 cities around the world found Singapore's prime residential market, defined as the priciest 5 percent of properties, performed the worst in the first half of 2014, with prices falling 7.3 percent.

For the luxury sector, the government measures have led to a sharp drop in foreign buyers, who accounted for over half of Sentosa sales between 2010 and 2014.

That means the number of distressed investors is expected to rise.

"Some of the earlier buyers are likely to have bought at prices 20 to 30 percent above current prices," said Christine Li, head of research at property consultancy OrangeTee.

"The rental can't even cover the mortgage for these high-end investments - they want to offload but there are no takers."


DISTRESS SIGNALS

United Overseas Bank, Singapore's third-biggest lender, last month reported a doubling in its bad debt charges for the second quarter, saying a group of investors was struggling to service high-end property loans.

The number of residential properties being put up for sale at auction by banks after buyers defaulted on mortgages, known as mortgagee sales, quadrupled to 64 in the first half of this year from 16 in the second half of 2013, according to real estate agency Colliers.

"This is different from previous years, when owners' sales dominated auctions," said Joy Tan, head of auctions at DTZ.

"The tables have turned and we expect more mortgagee sales on the way."

In July, a four-bedroom apartment in Sentosa's Turquoise condo sold at auction for S$3.88 million ($3.11 million) in a mortgagee sale, or about S$1,400 per square foot. In 2012, a flat in the same block sold for S$2,450 per square foot and in 2007 for as much as S$2,800.

The only house that has sold on Sentosa all year - a six-bedroom pad on "Treasure Island" - went for S$17 million in February, having been bought for S$20.2 million in June 2012.

Some in the luxury property industry fear foreign buyers have gone for good.

City Developments Ltd, Southeast Asia's second-largest residential property developer, said in its latest results statement that foreign buyers have "shifted and are still shifting their investments to markets outside Singapore".


TIMES HAVE CHANGED

Sentosa Cove was developed in the early 2000s at a time when Singapore was actively courting the world's wealthy to its shores. It sprang up along with other luxury developments near Singapore's glitzy Orchard Road shopping district.

In 2004 the country's central bank launched the Financial Investor Scheme (FIS) that allowed foreigners with a global net worth of S$20 million ($15.99 million) to become permanent residents if they parked S$5 million (raised to S$10 million in 2010) in Singapore, S$2 million of which could be put into property.

That scheme, a favourite tool of Singapore private bankers to win clients, was quietly scrapped in 2012 as the government grappled with growing public discontent over immigration, rising inequality and a spike in property prices, adding to the drop in wealthy foreign property buyers.

While Singapore is trying to tone down its image as a place where residency is "for sale", Australia is embracing a similar scheme, luring away some of the high-net-worth buyers.

That, combined with the end of the "easy money" seen before the 2008 financial crisis, may mean the quiet on Sentosa Cove's streets is here to stay.

"Sentosa happens to be a development targeted at a time when the world was leveraging up but now that we have deleveraged, there is a much smaller pool of people who can afford it," Savills' Cheong said.

[seletar]

http://sbr.com.sg/economy/in-focus/c....AP9gRQxl.dpuf
Published 29 Aug 2014

Crisis in the making: Economists raise the alarm over Singapore’s skyrocketing household debt


Consumer credit is now 75% of the GDP.

Singaporean households are clearly biting off more than they can chew when it comes to borrowing. The country’s ballooning household debt is becoming a steady source of concern for economists in the region, with most raising the alarm over the unsustainable and unprecedented rise in household credit.

For instance, a report by UBS warns that debt levels are now high relative to history while traditional measures of banking system liquidity are looking increasingly stretched.

“An often quoted MAS estimate is that about 5-10% of borrowers have a monthly debt servicing burden greater than 60% and that the percentage of over-leveraged households could increase to 10-15% should mortgage rates rise by 300bps. That might sound like a modest share of households, but consider that, according to Mortgage Bankers Association surveys, at the height of the US housing crisis in August 2008 only 9.2% of all US mortgages were estimated to be delinquent or in foreclosure and this rose to just 14.4% in September 2009,” noted UBS.

Meanwhile, ICAEW warns that there has been a fivefold increase in Singaporean household debt over the past decade, and that lending is going to consumers on a scale previously unseen in South East Asian nations.

“A number of factors make high consumer lending potentially destabilising for an economy. High leverage itself is dangerous in a system: when wage growth slows and households start to struggle with repayments, the businesses owed money struggle with wage bills. This is because they base decisions on future income streams being ever-larger,” stated the ICAEW’s Economic Insight South East Asia.

Fitch Ratings also notes that Singapore’s consumer credit grown at a fairly high pace, averaging 14%-15% annually since the 2008-2009 recession, aided by economic growth and a favourable interest rate environment.

“As a result, Singapore’s household debt has grown from about 66% of GDP at end-2010 to 75% of GDP at end-2013, compared with Hong Kong’s more moderate increase from about 59% to 65% over that period.

Rising household debt remains a focus for the MAS. Macro-prudential measures aimed at curbing excessive borrowing by households since 2009 appear to be gradually taking effect, with household lending growth slowing since late 2013,” Fitch warns.

[seletar]

http://sbr.com.sg/economy/news/housi....hUZuP9sH.dpuf
Published 29 Aug 2014

Housing and bridging loans up 7.0% in July: MAS


Total bank lending rose 10.8% year-on-year.

Local banks released more housing and bridging loans in July this year, as total bank lending rose 10.8% year-on-year.

Data released today by the Monetary Authority of Singapore revealed that total loans of Domestic Banking Units reached $597.4 billion last month, compared to $539 billion in July last year.

Housing and bridging loans grew to $172.6 billion, up 7% from $161.2 billion in July last year.

Lending to non-bank customers rose across the board year-on-year, except for manufacturing loans and car loans.

[seletar]

http://sbr.com.sg/residential-proper....6FhJRW5x.dpuf
Published 02 Sep 2014

Total private home transactions plunge 57% from January to July: report


HDB resale applications also fell by 15%.

Residential property prices are steadily heading south, thanks to the government’s different cooling measures. Due to the increasing completions of new homes, private and public housing prices have started retracing from their highs.

According to CIMB, The price drop was accompanied by a 57% yoy drop in total private home transactions, including ECs, to 5,365 units from Jan to July of this year as buyers hold back on their buying decisions or evaluate their affordability status.

Within the public housing market, meanwhile, HDB resale applications for the first two quarters of 2014 have also dropped by 15% yoy.

“The URA property price index has declined 3.2% since the high in 3Q13 and is 18% above the previous peak in 1Q08. The high end market segment in the Core Central Region (CCR) continued to see the highest slippage of 2.5% from end 2013 while those in the city fringe areas (Rest of Central Region, RCR) experienced a smaller 2.4% dip. Prices in the suburban localities (Outside Central Region, OCR) only saw a marginal 1% retracement. HDB resale prices have retraced 5.3% from the high in 2Q13,” noted the report.

[seletar]

http://business.asiaone.com/news/sub....QiOLIcjU.dpuf

Suburban shoebox units: Bottom falling out of sector?


The URA projected in September 2012 that there were about 2,400 completed shoebox units as at 2011, with the figure rising to 11,000 by the end of next year.

The Straits Times
Thursday, Sep 04, 2014


Shoebox apartments outside the city centre could lose their cachet once the flood of new homes hits the market next year.

Experts note that tenants are enjoying greater choice, and that will only get better as the pool of available real estate deepens.

That trend spells bad news for suburban shoebox homes, which have a limited appeal given their location and relatively cramped living space.

Of the 53,900 new condo units expected to come on the market in the next 30 months, the experts point out, most will be small or shoebox apartments - with a floor area of up to 506 sq ft.

Landlords of such flats in less accessible locations will likely find it "challenging" to let out their units.

Since 2009, when shoebox units became popular, the bulk of transactions in this category has been outside the city centre, noted Ms Lee Lay Keng, regional head of research at DTZ.

Of the 12,097 shoebox units sold since 2009, about 47 per cent were in city fringe areas and around 37 per cent in the suburbs.

"Owners of such units for investment would not be as successful at getting the kind of rentals they want going forward.

"There will be pressure on vacancies, as they will be facing competition from the broader market too," said CBRE research head Desmond Sim

There are no official figures on the number of shoebox units on the market, but the Urban Redevelopment Authority (URA) in September 2012 projected that there were about 2,400 completed units as at 2011, with the figure rising to 11,000 by the end of next year..

These small homes featured heavily at newly launched projects from 2009 to 2012, including the 293-unit Alexis in Alexandra Road, the 138-home Parc Imperial in Pasir Panjang Road and the 72-unit Suites@Guillemard in Lim Ah Woo Road.

[seletar]

http://sbr.com.sg/residential-proper....VKjiwqZT.dpuf
Published 04 September 2014

Yet another pullback: HDB resale prices hit 31-month low in August


HDB resale prices dropped for the seventh consecutive month in August, posting a 1.1% month-on-month decline.

According to the Singapore Real Estate Exchange, 3 and 4 -room flats drove the overall index down with declines of 2.0% and 0.9%, respectively, while 5 - Room and Executive prices increased 0.8% and 1.5%, respectively.

Year-on-year, prices have dropped 7.1% from August 2013 marking a new 31-month low since January 2012. Prices have declined 8.6% since the peak in April 2013, August 2014 prices.

According to HDB resale data compiled by SRX Property, 1,327 HDB resale flats were sold in August, a 1.1% decrease from 1,342 transacted units in July.

Year-on-year, resale volume dropped 3.3% down compared with 1,372 units resold in August 2013. Compared to its peak of 3,649 units in May 2010, resale volume is down 63.6% compared.

[Arcachon]

Yes Singapore having a down pour.

[seletar]

http://www.stproperty.sg/articles-pr...eller/a/179571

Return to seller

Exec condos form 30% of units given up in first 7 months of this year

The Straits Times - September 6, 2014


BUYERS of executive condominiums (ECs) are backing out of their purchases more than buyers of private properties, new data analysis shows.

Only a handful of ECs are on the market, compared with scores of private condos.

But units from just eight EC projects made up about 30 per cent of the 277 units returned to developers in the first seven months of the year.

The figures are based on an analysis of monthly data from property portal Square Foot Research.

ECs are a hybrid of public and private housing, sold with Housing Board restrictions.

At Skypark Residences, an EC in Sembawang, for instance, 22 units were returned - the highest number among the projects.

Forestville in Woodlands was next with 18. In Punggol, 14 units were given up at Ecopolitan while Waterwoods had 12 units returned. The Sea Horizon EC project in Pasir Ris had 10 units returned.

Consultants suggested that one reason could be that prices of ECs have risen to record levels, and that a lower mortgage servicing ratio (MSR) introduced last year limited the monthly housing payments at 30 per cent of the buyer's gross monthly income.

"The substantial (number of) units returned could be due to impulse buying, and buyers finding that they cannot secure a sufficient loan under the new MSR cap, or that the prices worked out to be in excess of their affordability," said Mr Ong Kah Seng, director of R'ST Research.

Weak market sentiment could also mean buyers expect property prices to correct further, and some might have decided to give up their units for other opportunities, said Mr Ong.

Another possibility is that some buyers did not meet the eligibility criteria set by HDB. For instance, EC buyers cannot have a combined gross monthly income of more than $12,000, and must have lived in their HDB flat for at least five years, if they are not first-time buyers.

But some returns could simply be because of cancelled marriage plans, since buyers must form a family unit to buy an EC unit, said Mr Nicholas Mak, research head at SLP International.

The penalty for returning a unit to developers who bought EC land after Dec 9 is 5 per cent of the property's price, after the sales agreement has been exercised. For all other EC projects, the penalty is 20 per cent of the unit's price tag. If the sales agreement has not been exercised, the penalty is typically about 1.25 per cent of the purchase price.

[seletar]

http://sbr.com.sg/residential-proper....4fn7qvyC.dpuf
Published 08 September 2014

Non-landed private residential rental prices down 6.6% in August: SRX


Rental prices of private condominiums continued to fall in August, posting a 6.6% year-on-year decline and a 0.6% month-on-month slide.

According to the Singapore Real Estate Exchange, this marks the 7th consecutive decline in prices. Non-landed Private Residential units in CCR and OCR saw rent decreases of 2.0% and 1.1% respectively, while units in RCR posted an increase in rent of 0.4%.

[seletar]

http://www.todayonline.com/business/...ucturing-curbs

Home prices ‘to fall 20% by 2016 on restructuring, curbs’

TODAY
Published: 4:02 AM, September 10, 2014


SINGAPORE — Home prices in Singapore will decline at a steeper pace, falling by 20 per cent between this year and 2016, as economic restructuring as well as property and loan curbs continue to weigh on the housing market, Bank of America Merrill Lynch (BAML) said in its research report released yesterday.

“Overly tight population policies will imply the dominance of ageing-resident demographics over the influx of younger non-resident workforce. Delays in relaxing property measures would imply a greater negative impact from rising mortgage rates,” said BAML economist Chua Hak Bin.

Under the ongoing economic restructuring that the Government has said is a long-term undertaking, it will slow the flow of foreign workers into Singapore while rolling out incentives for companies to raise productivity.

“Restructuring and stricter foreign worker and immigration policies are lowering potential growth and impacting the property market,” Dr Chua said.

“Foreign labour growth is fast slowing, while permanent resident growth has turned negative … We believe total job creation is likely to slow to about 100,000 this year versus 136,000 in 2013,” he added.

Private home prices fell for a third straight quarter in the three months ended June as cooling measures such as the Additional Buyer’s Stamp Duty and loan restrictions such as the Total Debt Servicing Ratio (TDSR) framework curbed demand. From the beginning of the year, prices had fallen by 2.3 per cent by the end of the second quarter, the Urban Redevelopment Authority’s index showed in July.

On the public housing front, Housing and Development Board (HDB) resale prices shed 3 per cent by the end of the second quarter from the beginning of the year, hit by a reduction in the Mortgage Servicing Ratio cap and the maximum loan term, as well as a three-year wait for new permanent residents before they can enter the market.

Mr Ku Swee Yong, chief executive of property agency Century 21, said more downward pressure will be exerted on private residential prices from current vacancies and new supply. He noted that more than 21,000 private homes remained unoccupied in the second quarter, translating to a vacancy rate of 7.1 per cent, while another 29,000 new units will come on the market in the next two years.

Meanwhile, the decline in HDB resale prices will directly affect the mass market private housing segment, as the pool of upgraders becomes smaller.

Dr Chua said the fate of the property market largely depends on how the Government tweaks its policies, particularly on restructuring, immigration and foreign workers, as well as the timing of the relaxation of property measures.

“Singapore’s transition to a productivity-driven growth model is still ongoing and has produced mixed results so far … Labour productivity has not improved and not compensated for weaker foreign labour growth,” he added.

“We do not see the Government reversing course, but a pause may be in order. Scheduled foreign labour tightening is not over. Levies will be further raised and dependency ratio ceilings tightened next year. The intensity of such tightening will probably reach a crescendo in 2015, unless the Government chooses to further tighten in the Budget, to be announced in February.

“We think a pause in the restructuring is likely and in order, as companies, particularly small and medium enterprises, are having trouble adjusting to the speed of the tightening,” he said.

Dr Chua expects the Government to begin unwinding property measures only from the second half of next year, when the benchmark United States federal funds rate is forecast to begin to rise, with Singapore mortgage rates moving in tandem. He said the structural measures, such as the TDSR and loan tenure curbs, are not likely to be changed. However, cyclical measures such as loan-to-value limits and stamp duties can be calibrated based on market conditions.

“Residential property prices would have probably declined by more than 10 per cent by the middle of 2015 and highly leveraged households would have de-geared sufficiently,” he said.

[seletar]

http://www.businesstimes.com.sg/prem...-loss-20140915
Business Times
Published September 15, 2014

More owners of luxury condos selling at a loss

Yields also under pressure; low rentals leave more people struggling to pay mortgages


[SINGAPORE] A larger percentage of high-end luxury condo homes on the resale market are selling at a loss and a smaller percentage at a profit, as the tide of the once-rosy property market recedes and reveals those who have been "swimming naked" - that is, those without adequate holding power for their extravagant purchases.

According to data compiled by STProperty.sg from URA Realis, 7 per cent of transacted units in the prime districts 9, 10 and 11 sold at a loss in the first eight months of this year, up from 5.5 per cent over the same year-ago period.

Fewer people are profiting from their resales too: only 62.2 per cent enjoyed any capital gains - a steep drop from 83.5 per cent a year ago. And 4.5 per cent sold without making a profit or a loss (versus 0.4 per cent a year ago).

Yields are also under pressure. The low-rental environment is leaving more owners struggling to repay their mortgages. Assuming a S$1.6 million loan (equivalent to an 80 per cent loan limit for a S$2 million property) is taken out at an annual 1.5 per cent interest rate over a 30-year tenure, this would amount to a monthly mortgage of S$5,500. Rentals would therefore have to be in excess of this to cover mortgage payments.

"In some cases, the monthly rental cannot cover the mortgage. Take a S$5 million Sentosa Cove condo: it would take a monthly rent of S$13,800 to cover your loan," said Christine Li, head of research and consultancy at OrangeTee.

"That said, it's quite common that rents cannot cover monthly instalments, especially for bigger units. But those who don't have holding power would have to let go of their units. Others may be forced to do mortgagee sales," she added.

But not all the sellers who were willing to stomach losses were over-leveraged. Some could simply want to exit the market because they don't see the cooling measures ending anytime soon (meaning, they expect that price recovery is still far off), or just as a way of rebalancing their overall portfolio.

"A large proportion of purchases in the prime districts are by foreigners; perhaps they are just pulling out of Singapore. But the fall in demand for private homes makes it harder for sellers to find buyers. So if they really need to sell, they will have to lower their prices significantly," said Lee Lay Keng, DTZ's Southeast Asia regional head of research.

Meanwhile, loan curbs and price cutting by developers at new condo launches also continue to sap strength from the resale market.

Condo homes in the prime districts 9 (Orchard Road, River Valley), 10 (Bukit Timah, Holland, Balmoral) and 11 (Novena, Newton, Thomson) have traditionally been purchased as investment homes for capital gains and rental yields.

Buyers bank on demand from expatriate lessees, most of whom enjoy staying near the city. But with corporate housing budgets having shrunk post-financial crisis, these foreign workers are moving instead to the city fringes and suburbs, with some even renting HDB flats.

Losses made in resale transactions from January to August 2014 range from S$9,300 for a unit at The Hillier in Bukit Timah, to S$2.06 million for a unit at St Regis Residences in Tanglin. The latter was purchased at S$6.8 million in 2007, and sold for S$4.7 million in April this year.

Four units at The Promont (at Cairnhill), St Thomas Suites (near River Valley), Tanglin View and Waterscape At Cavenagh also resold at considerable losses of S$800,000 to S$1.2 million each (see table).

Notably, there were also four units at Robinson Suites on Shenton Way which resold at losses of about S$300,000.

Many of the loss-making resale transactions from the first eight months of this year were from sellers who bought their units in 2007, in the run-up to the previous peak in property prices and just when the financial crisis was starting.

Prices of these prime-location condos have recovered since, but dipped back down slightly from 2012 due to cooling measures. As at Q2 2014, prices were roughly on a par with the previous peak in 2008.

This means that not only would buyers who picked up condo units fresh at launch in 2007 not enjoy much capital gains, they may also suffer a loss if they sell now.