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Thread: Who said property cooling measures may never be lifted?

  1. #1
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    Default Who said property cooling measures may never be lifted?

    https://propertysoul.com/2016/07/04/...ver-be-lifted/

    Who said property cooling measures may never be lifted?

    July 4, 2016



    I read with bewilderment the article from Singapore Property Review titled “An inconvenient truth: Property curbs may never be lifted, analysts warn”.

    “The report argued that unless property prices plunge suddenly and dramatically, buying curbs may not be lifted in order to substantially reduce Singapore’s unhealthy fixation with real estate.”

    This remark from the Maybank Kim Eng property report leaves me scratching my head. While I try to digest what it really means, I notice that there are some important points that the analyst may have missed in the arguments.

    There are at least four things that I hold a different view from what the brokerage firm says.


    1. No one can influence the Singapore government’s housing decisions.

    The efforts of industry stakeholders and market analysts to predict or speculate whether and when the government will lift the property cooling measures have proved in vain time and again. And now, someone is trying to make a wild guess that “what if buying curbs become permanent”.

    Frankly, I don’t think the report has “posed a previously unthinkable question”. It sounds more like making an unfounded hypothesis on the market situation.

    The ministers and relevant authorities have repeated at least nine times from February 2014 to April 2016 that they won’t be relaxing any property buying restrictions, unless prices have corrected to a meaningful level. It never says anything like property curbs are here to stay, permanently.

    Isn’t the government clear enough on its policies regarding cooling measures? Why some people still don’t get it?

    It is not “Property curbs may never be lifted”. It is “Whether property curbs will be lifted may never be influenced by any party”.


    Please stop unfruitful second-guessing what the government is planning. When in doubt, ask the government.


    2. It’s dangerous betting on cooling measures to attract property buyers.


    A developer told the media that the government will be smart to know that it’s time we lifted property curbs in Singapore. In other words, get ready to buy soon.

    The media said that Additional Buyer Stamp Duties (ABSD) and Total Debt Servicing Ratio (TDSR) are very likely to be relaxed after the government loosens car financing. So it’s time to buy again.

    Now the property agent may probably say that they know the government will never change the buyer and seller stamp duties. We can’t avoid paying 7 to 15 percent more ABSD whether we choose to buy it now or later. So no need to wait. Just get used to it. Take it as a fact of life and buy now.

    We helpless buyers in the market are bombarded with messages from the media advising us to load it, cock it, aim and shoot. Then get ready to load, aim and shoot again.

    Do they know that most of us have limited bullets? What if the market doesn’t recover after we have shot all our bullets? Is the advice from the industry players bullet-proof? Who are going to save us if we get shot?

    In less than a week after the British voted for Brexit, UOB suspended overseas loans for London properties. A year ago we were invited to a high-class restaurant for an UOB overseas property investment seminar where a UK conveyancing lawyer talked about the attractiveness of investing in London properties.

    Banks lend us the most when we need them the least. The reverse is also true. Remember what the main character said in Hanzawa Naoki (半沢直樹), a 2013 Japanese television drama?

    “Banks will lend you umbrellas on a sunny day, but they will take them back when it is pouring.”


    It is not uncommon for banks to tighten financing and ask borrowers to repay housing debts when they perceive a forthcoming crisis. Lesson learned: Make sure you have a Plan B before you fire.


    3. Property investment is not economically non-productive. Property speculation is.


    This is the argument that I disagree with in the report:

    “Singapore households have SGD840b of capital or 209% of GDP tied up in residential property. This has resulted in lower disposable income which has impeded consumer spending and muzzled entrepreneurship. Another less obvious implication of property ‘overinvestment’ is that home-price appreciation fuels wage inflation, reducing Singapore’s cost competitiveness.”


    It is true that Singapore has an unusually high home ownership rate of 90.8 percent among residents. Thanks to the Housing Development Board which provides affordable public housing for over 80 percent of Singapore’s resident population.

    If most households are paying their housing loans with their CPF money for their highly-subsidized flats (rather than using hard cash to pay market rate for rent or mortgage), it is wrong and unfair to say that this “has impeded consumer spending” and “fuels wage inflation”.

    The report also blames Singapore households for sitting on a cash pile of S$374b which the analyst assumes is set aside for to buy investment properties when prices are right, thus making the idle capital “economically non-productive”.

    Asians, especially Chinese, are well known for their virtue of saving rather than spending. But that doesn’t mean that the S$374b will all be spent on properties. What’s wrong with saving money for a rainy day?

    “Singaporeans need to be weaned from their age-old aspirations of being landlords earning passive rental income. Investors also need to shed their deeply entrenched belief that investment properties are the best asset class to hold.”

    There is nothing wrong with buying the right property at the right time and at the right price, either for passive income or for long-term appreciation. The only problem is buying any property in any market at any price, hoping that prices will go up in the near future. The latter is called property speculation rather than property investment. Only too much speculation in properties is “economically non-productive”.

    All investments carry risk. But that doesn’t mean that we should avoid it altogether. We don’t have to give up on love just because there is a chance of heartbreak or divorce. Instead we should learn as soon as possible and as much as possible how to avoid failures. And we spend a lifetime continue to practice what we learn in order to be successful.


    4. Entrepreneurship is not less risky than property investment.

    The Maybank Kim Eng report advises the government not to remove the cooling measures for the sake of Singapore’s long-term survival.

    “If part of the monies that has been locked away in anticipation of a bottoming of the property cycle flows towards productive assets or even consumption, we believe entrepreneurship can be enhanced and thrive.”


    Is Singapore’s traditional culture or our education system encouraging entrepreneurship? Are Singapore’s cost of living, banking practices, foreign labor policy, etc. favorable for SMEs? What will happen if one day we tell our parents or our partners that we are going to give up our stable job and our HDB flat to be an entrepreneur?


    Last month Switzerland had a vote on an unconditional basic monthly income of 2,500 Swiss francs (S$3,460) for every adult, so that everybody can now pursue what they really want to do in life rather than being confined by the salary of a stable job.

    The success of Singapore’s economy is based on the provision of a skilled workforce to attract foreign investment from over 3,000 multinational corporations. Can you imagine Singaporeans quitting their jobs in droves to follow the “Swiss dream”?


    Who just said property cooling measures may never be lifted?

  2. #2
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    The CMs were implemented to curb speculations and not property investments. To lift or not only depend on govt which think or feel deem fit. Not so much on prices alone. There is no one size fit all property investments. Whether jurong or orchard. Year 2000 or 2016. Very individual.

  3. #3
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    Actually I feel that the cooling measure remain is better for the mkt,
    shows that the buyers are really power de

  4. #4
    teddybear's Avatar
    teddybear is offline Global recession is coming....
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    Don't think the property cooling measures should be lifted (so that we can buy CCR cheap cheap, still waiting for more to auction off at cheaper price (since the trend is down)...........)

    And it is good for OCR properties to remain at their historical PEAK price (since that is what some voiced out vocally here)...... (though I honestly think such OCR PEAK price will crash badly in future, but who cares - since we have no authority to change policy to do anything while those who can are not doing anything right?)


    Quote Originally Posted by vip View Post
    https://propertysoul.com/2016/07/04/...ver-be-lifted/

    Who said property cooling measures may never be lifted?

    July 4, 2016



    I read with bewilderment the article from Singapore Property Review titled “An inconvenient truth: Property curbs may never be lifted, analysts warn”.

    “The report argued that unless property prices plunge suddenly and dramatically, buying curbs may not be lifted in order to substantially reduce Singapore’s unhealthy fixation with real estate.”

    This remark from the Maybank Kim Eng property report leaves me scratching my head. While I try to digest what it really means, I notice that there are some important points that the analyst may have missed in the arguments.

    There are at least four things that I hold a different view from what the brokerage firm says.


    1. No one can influence the Singapore government’s housing decisions.

    The efforts of industry stakeholders and market analysts to predict or speculate whether and when the government will lift the property cooling measures have proved in vain time and again. And now, someone is trying to make a wild guess that “what if buying curbs become permanent”.

    Frankly, I don’t think the report has “posed a previously unthinkable question”. It sounds more like making an unfounded hypothesis on the market situation.

    The ministers and relevant authorities have repeated at least nine times from February 2014 to April 2016 that they won’t be relaxing any property buying restrictions, unless prices have corrected to a meaningful level. It never says anything like property curbs are here to stay, permanently.

    Isn’t the government clear enough on its policies regarding cooling measures? Why some people still don’t get it?

    It is not “Property curbs may never be lifted”. It is “Whether property curbs will be lifted may never be influenced by any party”.


    Please stop unfruitful second-guessing what the government is planning. When in doubt, ask the government.


    2. It’s dangerous betting on cooling measures to attract property buyers.


    A developer told the media that the government will be smart to know that it’s time we lifted property curbs in Singapore. In other words, get ready to buy soon.

    The media said that Additional Buyer Stamp Duties (ABSD) and Total Debt Servicing Ratio (TDSR) are very likely to be relaxed after the government loosens car financing. So it’s time to buy again.

    Now the property agent may probably say that they know the government will never change the buyer and seller stamp duties. We can’t avoid paying 7 to 15 percent more ABSD whether we choose to buy it now or later. So no need to wait. Just get used to it. Take it as a fact of life and buy now.

    We helpless buyers in the market are bombarded with messages from the media advising us to load it, cock it, aim and shoot. Then get ready to load, aim and shoot again.

    Do they know that most of us have limited bullets? What if the market doesn’t recover after we have shot all our bullets? Is the advice from the industry players bullet-proof? Who are going to save us if we get shot?

    In less than a week after the British voted for Brexit, UOB suspended overseas loans for London properties. A year ago we were invited to a high-class restaurant for an UOB overseas property investment seminar where a UK conveyancing lawyer talked about the attractiveness of investing in London properties.

    Banks lend us the most when we need them the least. The reverse is also true. Remember what the main character said in Hanzawa Naoki (半沢直樹), a 2013 Japanese television drama?

    “Banks will lend you umbrellas on a sunny day, but they will take them back when it is pouring.”


    It is not uncommon for banks to tighten financing and ask borrowers to repay housing debts when they perceive a forthcoming crisis. Lesson learned: Make sure you have a Plan B before you fire.


    3. Property investment is not economically non-productive. Property speculation is.


    This is the argument that I disagree with in the report:

    “Singapore households have SGD840b of capital or 209% of GDP tied up in residential property. This has resulted in lower disposable income which has impeded consumer spending and muzzled entrepreneurship. Another less obvious implication of property ‘overinvestment’ is that home-price appreciation fuels wage inflation, reducing Singapore’s cost competitiveness.”


    It is true that Singapore has an unusually high home ownership rate of 90.8 percent among residents. Thanks to the Housing Development Board which provides affordable public housing for over 80 percent of Singapore’s resident population.

    If most households are paying their housing loans with their CPF money for their highly-subsidized flats (rather than using hard cash to pay market rate for rent or mortgage), it is wrong and unfair to say that this “has impeded consumer spending” and “fuels wage inflation”.

    The report also blames Singapore households for sitting on a cash pile of S$374b which the analyst assumes is set aside for to buy investment properties when prices are right, thus making the idle capital “economically non-productive”.

    Asians, especially Chinese, are well known for their virtue of saving rather than spending. But that doesn’t mean that the S$374b will all be spent on properties. What’s wrong with saving money for a rainy day?

    “Singaporeans need to be weaned from their age-old aspirations of being landlords earning passive rental income. Investors also need to shed their deeply entrenched belief that investment properties are the best asset class to hold.”

    There is nothing wrong with buying the right property at the right time and at the right price, either for passive income or for long-term appreciation. The only problem is buying any property in any market at any price, hoping that prices will go up in the near future. The latter is called property speculation rather than property investment. Only too much speculation in properties is “economically non-productive”.

    All investments carry risk. But that doesn’t mean that we should avoid it altogether. We don’t have to give up on love just because there is a chance of heartbreak or divorce. Instead we should learn as soon as possible and as much as possible how to avoid failures. And we spend a lifetime continue to practice what we learn in order to be successful.


    4. Entrepreneurship is not less risky than property investment.

    The Maybank Kim Eng report advises the government not to remove the cooling measures for the sake of Singapore’s long-term survival.

    “If part of the monies that has been locked away in anticipation of a bottoming of the property cycle flows towards productive assets or even consumption, we believe entrepreneurship can be enhanced and thrive.”


    Is Singapore’s traditional culture or our education system encouraging entrepreneurship? Are Singapore’s cost of living, banking practices, foreign labor policy, etc. favorable for SMEs? What will happen if one day we tell our parents or our partners that we are going to give up our stable job and our HDB flat to be an entrepreneur?


    Last month Switzerland had a vote on an unconditional basic monthly income of 2,500 Swiss francs (S$3,460) for every adult, so that everybody can now pursue what they really want to do in life rather than being confined by the salary of a stable job.

    The success of Singapore’s economy is based on the provision of a skilled workforce to attract foreign investment from over 3,000 multinational corporations. Can you imagine Singaporeans quitting their jobs in droves to follow the “Swiss dream”?


    Who just said property cooling measures may never be lifted?

  5. #5
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    I agree with some of the clear logic displayed except the following:

    http://mypaper.sg/top-stories/5-prop...ofits-20140709

    - Disposing 4 properties from 2010 to 2011 can hardly qualify one as a "helpless buyer". What about the 80 to 120% profits churned?

    - The strategy to buy at presumed trough and sell at presumed peak is classified as speculation based on Govt's preference no matter what VIP says. Only housing used for residence is given exemption from stamp duties or remission.

    Here's why I believe CMs for housing will hardly be tweaked.

    1. SG Govt is worried about private debt spiking affecting debt ratings of SG, even though the public debt is not real. Relaxing car loans releases low quantum, high interest liquidity to help banks but the same cannot be said for properties, which are high quantum, much lower interest rates.

    2. The CMs are supported by easily 80% of the population of HDB owners and upgraders, as well as private property owners looking to buy more and aware of implications if CMs were loosened. A 20% rise in parking charges on the other hand, has met with rotten eggs all around. Hardly will you find another type of tax for Government coffers (not GST, not sin tax, nor petrol tax, nor COEs nor ERPs nor parking) that is supported by 80% of population! Such a fruitful endeavour, what is the motivation for Govt to remove?

    3. The CMs target only multiple property owners mainly and taxes the affluent in an obviously progressive, equitable and even voluntary manner.

    4. The benchmark 2009 PPI is way lower than the normal progression of the PPI in history. Why do the MND not benchmark to 2010 levels instead, which means current levels are already too close to target loosening level?

    Unless something as bad as Lehman causes SG to be directly affected (Pinnacle notes etc), it is unlikely to see those levels ever, just like the below 20K COEs we saw in 2008-2009. Brexit will be just a storm in a tea cup. In the meantime, be prepared for more QEs on the way cum low interest rates to persist.

    Good luck, and thanks for sharing.

    Quote Originally Posted by vip View Post

    We helpless buyers in the market are bombarded with messages from the media advising us to load it, cock it, aim and shoot. Then get ready to load, aim and shoot again.

    “Singaporeans need to be weaned from their age-old aspirations of being landlords earning passive rental income. Investors also need to shed their deeply entrenched belief that investment properties are the best asset class to hold.”

    There is nothing wrong with buying the right property at the right time and at the right price, either for passive income or for long-term appreciation. The only problem is buying any property in any market at any price, hoping that prices will go up in the near future. The latter is called property speculation rather than property investment. Only too much speculation in properties is “economically non-productive”.
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

  6. #6
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    Agree with Kim Eng article. Too many people waiting at the sideline. Cooling measures better not be lifted.

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    Quote Originally Posted by august View Post
    Agree with Kim Eng article. Too many people waiting at the sideline. Cooling measures better not be lifted.

    If more and more WAIT ... wouldn't it EXPLODE when the first sign of recovery emerges?

    Just like Mah B T kept denying that there was a shortage of HDB ...

    in the end ... the HDB mkt chiong like never before ?

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    teddybear is offline Global recession is coming....
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    Trust me, based on my experience, the "too many people waiting at the sideline" will mostly disappear when the OCR property price crash.............

    Just like CCR property prices had already CRASHED - but are you seeing many people buying now?
    There are supposed to be many people waiting at the sideline since the usual family units (not the big size ones) in CCR are now transacting almost same price as OCR property prices!
    Can't be you have many people waiting at the sideline willing to pay $1.5M for OCR private properties and yet not willing to spend the same amount on CCR private properties (which is more conveniently located and more atas) right?

    Quote Originally Posted by august View Post
    Agree with Kim Eng article. Too many people waiting at the sideline. Cooling measures better not be lifted.

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    Quote Originally Posted by teddybear View Post
    Trust me, based on my experience, the "too many people waiting at the sideline" will mostly disappear when the OCR property price crash.............

    Just like CCR property prices had already CRASHED - but are you seeing many people buying now?
    There are supposed to be many people waiting at the sideline since the usual family units (not the big size ones) in CCR are now transacting almost same price as OCR property prices!
    Can't be you have many people waiting at the sideline willing to pay $1.5M for OCR private properties and yet not willing to spend the same amount on CCR private properties (which is more conveniently located and more atas) right?
    Yes can't agreed more , during 2009 on feb I witnessed quartz selling @500 plus PSF , kovan res selling 680 PSF hardly local people buy. Kovan took few year to clear their stock where as kovan regency sold most @1200 plus PSF n few days during or before 2012. More on sentiment and economy factors than price.

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