Are the Aug 30 property-related measures appropriate or do they need to be fine-tuned? Will they be sufficient to cool the property market and alleviate speculative pressure, or would other measures be needed?
Lim Soon Hock
Managing Director
Plan-B Icag Pte Ltd
I THINK the newly introduced property-related measures to cool the property market and to alleviate speculative pressure are appropriate and sufficient. They are timely, as they will be rendered more effective by two other important underlying factors.
One, according to industry experts, the prices which we have seen thus far, will not peak for another seven years. Two, there is the apprehension that there will be a double-dip recession. The measures that have been introduced will only compel buyers, both genuine and speculative, to dig deeper into the ground to wait and see.
Given this scenario, I would expect investors to unload properties to take as much profits as they can and wait for a property downturn to happen, before they go into the market again. It may turn out to be a win-win for both buyers and sellers, as prices are now likely to trend below the peaks.
Laura Deal
Executive Director
The American Chamber of Commerce in Singapore
GIVEN that the top source of dissatisfaction for US companies with Singapore is the soaring cost of housing, the American Chamber of Commerce welcomes the government’s moves to cool the property market.
According to the 2010 AmCham Asean Business Outlook Survey, 89 per cent of respondents expect an increase in housing costs this year as compared to last year. This survey was conducted for nine years and each year, housing has been of increasing concern and is now being the highest ranked concern, with 78 per cent either being dissatisfied or extremely dissatisfied.
Moreover, the survey showed that 43 per cent of companies are dissatisfied with office lease costs. Our members find that the fluctuation of the office lease costs challenging for business planning, in particular for SMEs.
While Singapore has rated high on our survey compared to other Asean countries on most other issues such as infrastructure, transparency, political stability, and ease of doing business, it is important that the government addresses the property market issue to maintain Singapore’s competitive edge.
Ajay Kanwal
Regional Head of Consumer Banking, Singapore and
South-east Asia
Standard Chartered Bank
AGAINST the backdrop of a robust economic performance in the first half of 2010, the outlook remains cautiously optimistic. We expect a more subdued economic momentum in the second half. Nonetheless, the Singapore government’s move to increase its GDP growth forecast to 13-15 per cent indicates a continued upward trend in economic recovery. Overall, we see confidence at an industry and consumer levels improving.
The recovery in confidence is evident in regulators drawing the experiences from the financial crisis, at the same time, taking swift and active steps to strengthen governance framework and policies to ensure a sustainable future ahead. We believe companies, banks and the governments will continue to work with greater coordination and appreciation to ensure a sustainable economy ahead.
In this regard, at Standard Chartered, we welcome the new measures announced by the government as, for many Singaporeans, property is their single largest investment. We believe that these new measures will curb speculation in the property market, create greater home ownership opportunities, and build a more sustainable property market and economy in the long term.
Mohamed Ismail
CEO
PropNex Realty
FROM a macroscopic perspective, the new measures that aim to ensure the affordability of HDB resale flats and mass market projects over the long term are to be commended. The non-introduction of a capital gains tax means that the high-end properties in the Core Central Region are not affected and are still open to investment by high net worth investors, both local and foreign alike.
In the short term, the revised five-year minimum occupation period and the lowered loan-to-value ratio (LTV) of 70 per cent for the bank loans will have significant ramifications on the HDB resale and mass market condominium prices, which should soften by about 10 per cent over the next two quarters.
I feel there are a couple of measures, however, that could be fine-tuned and I urge the authorities to seriously look into them because of the people that they will impact.
Firstly, genuine upgraders from HDB flats to executive condominiums or new launches will be most affected by the “70 per cent LTV on the second mortgage” ruling. Thirty per cent of the price for a reasonably-sized Outside Central Region condominium, with stamp duty, would easily require the upgrader to raise over a quarter of a million dollars in cash and CPF money.
This would hamper the aspirations of many middle-class citizens whose only option for qualifying for a 80 per cent bank loan on their new property would be to sell their existing flat, forcing them to rent alternative accommodation for the 2-3 years that their new home will take to be completed.
An alternative to this policy could be to grant these genuine upgraders an 80 per cent bank loan, on the condition that they sell their existing flat within six months of their new property’s TOP.
Secondly, there will be many genuine HDB upgraders who are moving to another HDB flat. They will face the same problem in getting an 80 per cent bank loan for their new flat. If they want to have an 80 per cent bank loan, they would have to obtain a copy of the letter of approval from the HDB on the sale of their existing flat, as well as a document from their first mortgagee that certifies their existing mortgage will be discharged upon completion.
However, that leaves them with a mere six weeks before they have to vacate their current flat; their new flat’s purchase would not yet have been completed. Finding interim accommodation for three months as well as moving their household items twice will be both time-consuming and costly.
An alternative would be to allow the exercise of the option on their flat to apply for a new bank loan at 80 per cent, on the condition that they sell their existing flat within six months of their new flat’s sales purchase.
Finally, with the continued drive to attract and retain foreign talent, one policy worth considering to fine-tune would be PRs having to sell their overseas properties within six months of buying an HDB flat. There are more than a few instances where this would not be practical, especially if the PRs are from Asian countries.
Many of them who do own property in their native countries usually have their families, parents or siblings living in it. Or they may have inherited property such as farmland, but they co-own this property with their siblings. Such land may have little value and be difficult to dispose of because of the multi-ownership and low valuation. Also, PRs owning property overseas do not contribute to the speculative purchases of resale flats. It would not be entirely fair to apply the same rules of non-subsidised flats to PRs since they already do not qualify for any subsidies and can only take a bank loan.
The new measures, while effective in curbing speculation and reining in runaway prices, should also not impede the natural aspirations and advancement of genuine upgraders and permanent residents who would call Singapore home.
Tan Tiong Cheng
Chairman
Knight Frank Pte Ltd
THE government’s latest set of property cooling measures cuts across a broad spectrum with implications for investors, upgraders, downgraders and first-time buyers alike.
Whilst the intent is to curb property speculation, the measures have other unintended effects: not all buyers and sellers are speculators, and not all are investors. People buy and sell properties for a myriad of reasons. Some downgrade to an HDB flat to prepare for retirement, others upgrade to accommodate an expanding family, and yet others simply want a more appropriate property. While the new policies benefit some people, they also affect many others adversely.
Obviously time will tell whether these measures are well calibrated or excessive. The authorities are equally anxious to measure their impact and may well adjust or ease back if they hurt more widely and deeply than intended. It’s to no one’s benefit if the residential market is badly de-stabilised.
Property has been ingrained as a valuable investment option for Singaporeans and not just a roof over their heads. The present conundrum reminds me of a Chinese proverb: “both the front and the back of your palm are also flesh, choosing one puts you in a dilemma”.
Michael Zink
Country Head and Citi Country Officer for Singapore
Citi Group
THE latest measures are indeed a proactive and precautionary move by the government to prevent any potential bubble from forming in the booming property market. Like all measures, they will have a differentiated effect on buyers.
Generally, it seems to be having the desired immediate impact of stabilising property prices without penalising genuine home buyers. In particular, it has sent a strong signal that the government is prepared to step in to ensure that the mass-market and HDB properties remain affordable, especially to first-time buyers and upgraders. The move is distinctive of the way the government seeks to stabilise the marketplaces and is in line with expectations.
Andrea Ross
Managing Director (Singapore)
Robert Walters Singapore
SINGAPORE is becoming a destination of choice and a number of foreigners are making Singapore their home and therefore investing in buying flats and condominiums, with some even becoming permanent residents to allow them to buy landed property.
Property is a significant topic in Singapore – affecting almost everyone from the lower to middle income, to those who make property purchases for the purpose of investment. It is therefore welcomed that the government is putting adjustments in place to curb speculative activity to protect those individuals who are genuine home buyers.
With the economy picking up and the return of market confidence, lowering the loan-to-value limit on housing loans from 80 per cent to 70 per cent may not be an effective curb, particularly for the higher-income individuals/families and long-term speculators. I do feel that for many speculative buyers, most would probably be flush with enough capital/cash not to feel the pinch. However, it might be a bit of a stretch for the lower-income and even some middle-income families as the initial deposit outlay would now be higher.
I do, however, feel that the principle behind the move should be applauded as it is a positive attempt to cool the market, moderate rising property costs and to put a brake on speculative demand.
The set of measures safeguards the interest of genuine home buyers, those who are owner-occupiers, whilst targeting repeat buyers and speculators who buy and sell over the short term, which is now defined as within three years.
Liu Chunlin
CEO
K&C Protective Technologies Pte Ltd
THE rationale behind most property anti-speculative measures is to prick and contain the bubble. Too strong a move and it dampens the economy and penalises genuine buyers. Too little, the speculative froth goes on to dangerous levels. In my opinion, the recent measures are enough for the moment. Genuine first-time buyers need not fear.
However many buyers are upgraders, and they may be adversely affected. Where previously they hoped to get a better property through a higher valuation of their existing property perhaps even by holding on to it longer after buying the new property, and topping up with a generous available loan amount, they now have to be more circumspect. They also have to be very sure that the property bought is something they are comfortable with, lest they be penalised for an early sale.
Older buyers hoping to buy properties ahead for their children amidst a frenzied fear that properties will be out of reach, would now take comfort that there will always be enough supply, with the government showing a commitment to release public flat units and land sales when needed.
And by addressing the sandwiched class of those earning $8,000 to $10,000, the government is cooling the market further by assuring this cohort they need not worry about being pushed out to the private property sector where prices can go atmospheric and where the government is reluctant to exert a heavy hand.
David Leong
Managing Director
PeopleWorldwide Consulting Pte Ltd
Source : Business Times – 13 Oct 2010