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Thread: Warning over private housing glut in Johor

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    Default Warning over private housing glut in Johor

    [url]http://www.straitstimes.com/archive/tuesday/premium/top-the-news/story/warning-over-private-housing-glut-johor-20150512[/url]

    [B][SIZE=5]Warning over private housing glut in Johor[/SIZE][/B]

    [B]S'porean investors could be hit if property prices fall: Lawrence Wong[/B]

    Published on May 12, 2015 1:44 AM

    By Charissa Yong


    THE nearly 336,000 private residential properties in the pipeline in Johor state are more than all the private homes currently standing in Singapore.

    Monetary Authority of Singapore (MAS) board member Lawrence Wong gave this perspective in Parliament yesterday when he warned that a glut of private residences in Johor could cause a fall in property values.

    Most of these residences are in the Iskandar development zone of southern Johor where many Singaporeans have invested in such properties.

    In contrast, latest official figures show Singapore has 327,811 private homes. There are another 83,642 in the pipeline, including executive condominiums.

    But some Singaporeans are becoming more cautious, said Mr Wong, who is also Minister for Culture, Community and Youth.

    The number of Malaysian properties bought through real estate agencies in Singapore fell from 2,609 in 2013 to 838 last year.

    But not everyone recognises the risks of buying property abroad, said Mr Wong, who was speaking on behalf of Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam, the minister in charge of MAS.

    Mr Wong said MAS and the Council for Estate Agencies (CEA) will step up efforts to help investors better understand risks in investing in overseas propertyand how to do due diligence.

    For example, CEA has issued guidelines on what these investors should look out for. These include rules or restrictions on purchases and ownership of foreign property, and dispute-resolution avenues available.

    Prompted by the recent flurry of advertisements on foreign property, the Advertising Standards Authority of Singapore said last week that it would implement new guidelines for property investment ads by the year end.

    On the same day, the Consumers Association of Singapore warned local buyers of the risk in buying foreign properties.

    In Parliament yesterday, Ms Lee Bee Wah (Nee Soon GRC) asked about the number of Singaporeans who invested in Iskandar properties and the ways that Singapore's banks safeguard themselves against major defaults in property loans by these buyers.

    Mr Wong replied that Singa- pore's banking system does not have a large exposure to such property loans. Overseas property loans form only 2 per cent of the housing loan portfolios of key mortgage lenders in Singapore.

    Under the tighter loan rules known as the Total Debt Servicing Ratio framework, lenders must also assess customers' ability to repay their debts when they apply for new property loans.

    This applies whether the property is in Singapore or overseas. The assessment must take into account all existing debt, including that for the overseas property.

    Mr Wong said: "MAS' stress tests on banks' housing loan portfolios indicate the banks will remain sound even under stressed conditions."

    Ms Lee asked if the additional buyer's stamp duty on property purchases in Singapore would be lifted, adding that it has led Singaporeans to put money in overseas properties.

    Mr Wong said Singapore's property cooling measures should be looked at separately.

    They were introduced to prevent a property bubble emerging amid global conditions such as low interest rates and high liquidity.

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    Default Future housing glut in Iskandar could 'lower value of homes there'

    [url]http://www.businesstimes.com.sg/government-economy/future-housing-glut-in-iskandar-could-lower-value-of-homes-there[/url]

    [B][SIZE=5]Future housing glut in Iskandar could 'lower value of homes there'[/SIZE][/B]

    By Lee U-Wen

    [email][email protected][/email]@LeeUwenBT

    May 12, 2015


    THERE is a "real concern" about a future oversupply of properties in Iskandar Malaysia, which could mean a potential decline in the value of homes there, said Monetary Authority of Singapore (MAS) board member Lawrence Wong.

    According to latest data from Malaysia's National Property Information Centre, there are nearly 336,000 new private residential units in the pipeline in Iskandar.

    Mr Wong, putting this figure into context, said that it is greater than the total number of private homes in Singapore; he added that the figure does not include another 1,400 hectares of reclaimed land near the Tuas Second Link that will come onstream from 2020.

    Speaking in parliament on behalf of Deputy Prime Minister, Finance Minister and MAS chairman Tharman Shanmugaratnam, Mr Wong was responding to Nee Soon GRC Member of Parliament Lee Bee Wah, who wanted to know the number of Singaporeans who had bought properties in Iskandar, and how Singapore banks were safeguarded against major defaults in property loans to these buyers.

    "There are many risks involved in overseas property purchases, especially in markets where there is uncertainty of supply or no effective regulation of supply," said Mr Wong, who is also the Culture, Community and Youth Minister.

    "If there is an oversupply of properties, investments can lose their value, and it will also be difficult to find tenants for an investment property," he warned.

    He noted that some reports on Iskandar and Johor have highlighted "aggressive land banking" by property developers.

    Given these indications, buyers are becoming more cautious. The Johor housing market is slowing down, with official data from Malaysia showing that the value of residential property transactions fell by 42 per cent quarter on quarter in the fourth quarter of 2014. Surveys of real estate agencies in Singapore have found that the number of Malaysian properties bought through these agencies fell from 2,609 in 2013 to 838 in 2014.

    While this might indicate that more Singaporean buyers are becoming wary, Mr Wong said that not all buyers recognise the risks involved in making overseas property purchases.

    To address this, MAS and the Council of Estate Agents (CEA) will continue to step up their efforts to raise awareness of these risks.

    On its part, the CEA has issued guidelines on what investors in overseas properties should look out for, such as finding out about rules or restrictions on foreign property purchases and ownership, the taxes payable and the dispute resolution avenues available in the foreign market.

    As far as financial institutions are concerned, Mr Wong explained that they do not have large exposures to loans for the purchase of overseas properties; such loans make up just 2 per cent of the housing loan portfolios of the key mortgage lenders in Singapore.

    The total debt-servicing ratio framework, which the MAS introduced in June 2013, requires lenders to assess the debt-servicing ability of their customers for all new property loans, whether these properties are in Singapore or overseas.

    "All existing debt obligations, including those for overseas property purchases, must be included for such assessments," said Mr Wong. "MAS stress tests on banks' housing loan portfolios indicate that the banks will remain sound even under stressed conditions."

    This month, the Consumers Association of Singapore warned Singaporeans about the risks involved in buying overseas properties after having received some complaints. The move was prompted by the recent spate of advertisements in Singapore on investing in overseas property.

    Meanwhile, the Advertising Standards Authority has already said that it would implement guidelines for advertisements pertaining to investments in financial instruments and property, including foreign properties, by the end of the year.

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