Tuesday, 11 March, 2014 RESIDENTIAL MARKET Non-landed resale homes market remains soft in Feb Cooling measures and the Total Debt Servicing Ratio framework continued to send non-landed private home resale volume on a controlled descent to a level not seen since December 2008 during the global financial crisis. Flash figures released yesterday by the Singapore Real Estate Exchange (SRX) showed resale transactions down 18.5 per cent month-on-month to an estimated 242 transactions last month. The drop was a more pronounced 22.2 per cent on a year-on-year basis, from 311 resale deals closed in February 2013. Meanwhile, resale prices reversed consecutive price gains in December and January to dip 2 per cent, which consultants say shows a natural pullback from unsustainable price increases in the previous two months. Prices in the CCR fell 3.9 per cent month-on-month in February, after climbing 1.8 per cent in January, while those in the OCR fell 1.8 per cent, after climbing 2.6 per cent the month prior. Sam Baker, co-founder and CEO of SRX also noted that for the last 15 months, the price indices for non-landed resale homes have been bouncing between the 170 and 180 bands. Prices have been unable to break through the 180 ceiling, yet at the same time, prices are resisting the pressure from the cooling measures to fall below the 170 support level, he said. Consultants BT spoke to expect prices to drop by 4 to 10 per cent in the private resale market for the whole of 2014 amid weak demand, with the greatest signs of distress in the CCR, which may see prices fall by 10 to 12 per cent. This is due to companies cutting back on expats housing allowance, as well as the deterrence of the hefty additional stamp duty buyers have to pay, since most already own a residential property. Leasing activity also stayed weak in February, with rental prices falling one per cent islandwide despite a temporary rebound in January. All three regions saw rental prices decline in February. Rents in the RCR fell the most, down 1.9 per cent, while rents in the CCR and OCR fell by 0.6 per cent and 1.3 per cent, respectively. Some 2,442 rental contracts were signed in February, 6.6 per cent fewer than in January. Source: Business Times – 11 March 2014 HDB overhauls system for resale transactions The Housing Development Board (HDB) is overhauling the procedure for resale HDB transactions in a bid to shift the focus from cash-over-valuation (COV) to market prices when negotiating resale prices. It is requiring buyers to first obtain the option to purchase (OTP) before asking for a valuation through HDB - and it will not accept valuation requests from sellers. This pushes buyers and sellers into negotiating resale prices based on the latest transacted prices, instead of haggling over the COV as is done now. Minister for National Development (MND) Khaw Boon Wan said in Parliament yesterday: The HDB will rationalise the process of price negotiations and restore the original intention of valuation - which is to help buyers obtain a housing loan. Negotiating resale prices based on COV was an anomaly unique to the HDB resale market; doing so based on price instead will take some getting used to, but is a useful move for the sake of long-term market stability, he said. With the change, buyers who are granted the OTP will have 21 calendar days - up from 14 - to exercise the OTP. At the same time, HDB will start posting daily prices of resale transactions on HDB InfoWEB as soon as they are registered, instead of fortnightly. Since 2007, HDB has been publishing the COVs as a service to people shopping for flats with lower COVs, but sellers started using the published COVs as benchmarks to bargain for even higher COVs. Sellers or their sales agents had been typically requesting HDB valuations and then negotiating resale prices with prospective buyers of their flats based on COV, which is the cash premium that buyers would pay in excess of the valuation. Changing the resale procedure will bring the practice in the HDB resale market in line with the private housing market, as some Members of Parliament have lobbied for in the past. A HDB spokeswoman said that the board will still publish COV data by town every quarter on the HDB InfoWEB, but it will monitor reactions to the new measures and assess whether it remains meaningful to do this. Property consultants noted that the present low COVs provide a good opportunity for the new resale process to be introduced without major protests from sellers. On the likelihood that there may be sellers who may still fish for valuation reports through the HDB, the board said that it will monitor the new resale procedures. The HDB spokeswoman said: If there are salespersons who try to game the system to obtain valuations, we will carry out relevant investigations, together with the Council for Estate Agencies (CEA). ERA Realty key executive Eugene Lim said that the new procedure was unlikely to be abused, given that the name of the buyer seeking a valuation report has to be the same as the one on the OTP. Referring to the measures to cool the property market, Mr Khaw told Parliament that there were signs that the market was turning the corner, but that it was still premature to withdraw the measures. The government is moderating both the Build-to-Order (BTO) programme and Government Land Sales. More than 77,000 BTO flats have been launched in the past three years, of which 14,000 units were completed last year; 28,000 units will be handed over this year. The tightening of the property market here has already led some Singaporeans to look for foreign properties. Mr Khaw counselled caution, as there are added risks and complexities arising from different legal and regulatory frameworks operating outside Singapore. The CEA will launch an online guide for those thinking of buying a foreign property. It will also step up its effort to regulate estate agents marketing overseas property developments here. Source: Business Times – 11 March 2014 Govt takes another look at reverse mortgage scheme The government will revisit reverse mortgage as an option for the elderly to monetise their HDB flats, and extend the Lease Buyback scheme to larger flat types. Minister for National Development Khaw Boon Wan told Parliament yesterday that reverse mortgage as an option came up during dialogues with the elderly when the low take-up for the Lease Buyback scheme was discussed. Reverse mortgages are loans taken out by the owner using his property as collateral and repaid with interest upon termination or death, typically from the sales proceeds. Like lease buyback, reverse mortgage is a form of equity release that enables the property owner to age-in-place while unlocking some equity. MND has begun a serious study of this option, said Mr Khaw. The reverse mortgage option was offered between 2006 and 2008 by NTUC Income to flat owners but only 24 households took up the scheme. A HDB spokeswoman told BT that the low take-up rate could be due to the fact that the elderly were not familiar with the scheme then. The payouts determined by the provider, based on its evaluation of the costs and financial risks involved, may not have been sufficiently attractive to the elderly, the spokeswoman said. There could also have been fear of outliving the fixed tenure of the loan, in which case the owner would have to sell the property to repay the loan. HDB subsequently launched the Lease Buyback scheme in 2009, which lets homeowners sell part of their lease back to the government. But the elderlys preference for ageing-in-place and retaining an asset which they can bequeath also stood in the way of the schemes take-off. Some 240 seniors signed up for HDBs Lease Buyback scheme last year, after rules were relaxed so more flat owners aged 63 and above could qualify. That is up from a total of 471 households in the preceding four years. Property consultants note that educating the elderly on the Lease Buyback scheme has been a challenging exercise and there are concerns of outliving the remaining lease of their flats. Yesterday, Member of Parliament Foo Mee Har asked if the pent-up demand at the private project The Hillford - touted as Singapores first retirement resort - was indicative of unfulfilled need for retirement villages in Singapore. She also asked if the government should set aside more land for this purpose. Mr Khaw felt that the jury is still out as the success of this development can only be gauged several years later when it is completed and residents have moved in. As such, the Urban Redevelopment Authority is in no hurry to push out other sites until it is clear about the outcome, Mr Khaw said. We shall leave the market to cater to the high income segment of our population. MND is also studying ways to better support public rental tenants in progressing to homeownership and better provide for the housing needs of vulnerable groups, including divorcees with children. Source: Business Times – 11 March 2014 Three adjoining Bukit Timah freehold properties up for sale Three adjoining freehold properties along Queens Road and Dukes Road are up for tender, with the seller expecting offers above $45 million. The residential site in Bukit Timah has a combined land area of 25,425 square feet. With a plot ratio of 1.4, it can yield a maximum permissible gross floor area of 35,595 square feet. The District 10 site offers double frontages of 42 metres width onto both Queens Road and Dukes Road. The site is nestled in the school belt comprising Hwa Chong Institution, National Junior College, Nanyang Girls High School and St Margarets Secondary School. Separately, two adjoining ground-floor shops in Thomson Plaza with total strata retail space of about 14,000 sq ft are also marketed. Guide prices range from $3,500 to $3,600 per sq ft. Sale of the shops will be via Expression of Interest and is subject to the existing restaurant and lifestyle store tenants. The three-storey mall serves private estates such as Thomson Park and The Windsor, and public estates such as Ang Mo Kio and Shunfu. The Expression of Interest for the Thomson Plaza retail space closes at 3pm on April 8, and the tender for the Bukit Timah properties at 3pm on April 9. Source: Business Times – 11 March 2014 Record high collection in stamp duties A record amount in stamp duty poured into the nations coffers last year. This was achieved even though new home loan restrictions introduced in June put a damper on the taxmans collection of additional buyers stamp duty (ABSD) on property purchases. Total stamp duty assessed from January to December last year totalled $4.5 billion, the Inland Revenue Authority of Singapore (Iras) told The Straits Times. This was higher than the $4.3 billion in total stamp duty assessed from January to December 2012, according to Department of Statistics data. The increase is partly due to a higher amount of ABSD netted last year. Home buyers incur up to 15 per cent in ABSD on their purchases depending on their citizenship and the number of homes they have already bought. The total ABSD assessed in the first six months of the year was $829.6 million, Iras said. This was higher than the $762.2 million in ABSD the taxman netted from January to December 2012. ABSD was introduced in December 2011, and the sum collected that month was $3.1 million. But ABSD assessed fell in the second half of last year in tandem with private home sales, though not as sharply. It dropped to $703.9 million for July till December, around 15 per cent lower than that in the first half. This was after the Government capped borrowers monthly debt repayments at 60 per cent of gross monthly income under a total debt servicing ratio (TDSR) system that took effect on June 29. Still, private home sales fell more steeply from the first half to the second, which analysts said may have been caused by TDSR effectively slashing buyer demand at the lower end of the private home market. The volume of new private home sales halved from 10,182 units in the first half to 5,118 units in the second half, according to Urban Redevelopment Authority (URA) data. This figure excludes executive condominiums (ECs), a public-private housing hybrid. The resale of private homes excluding ECs tumbled from 4,078 units in the first half to 2,530 units in the second. Subsales, which are resales before completion, also fell from 727 units in the first half to 345 units in the second, URA figures show. Analysts said the percentage drop in ABSD collected was milder than that of private home sales probably because TDSR had a smaller impact on buyers with deeper pockets.
Posted on: Tue, 11 Mar 2014 10:40:35 +0000
Trending Topics
© 2015