Monday, January 26, 2009

Recession May Stretch But Govt Ready: MM Lee

Source : The Business Times, January 24, 2009

THE big question is just how long Singapore will remain in a recession. The government, on its part, will be ready to deal with all possible fallouts from the economic slowdown, said Minister Mentor Lee Kuan Yew.

'We don't know how long it will last, that's the big question mark. So we are prepared for all eventualities, it may last one year, two years, or it may go on for three years. But we must be prepared for it,' he told reporters after a visit to the Eastern Coastal Park Connector Network yesterday.

Giving his views on the Budget statement, which was delivered in Parliament by the Finance Minister on Thursday, Mr Lee described the $20.5 billion package as 'not over-generous, but not ungenerous'. He reiterated how the priority this year was always to save jobs as well as help the low-income and jobless in society.

'There is no better way of fighting this recession than to have jobs. For the lower-income, those who are out of work or retrenched, we have got to help them go through this rough patch. There's $2 billion-odd dollars in various GST (Goods and Services Tax) credits and U-Save and S&C (service and conservancy) charges and so on,' said Mr Lee.

The park connector network that Mr Lee toured yesterday at East Coast together with National Development Minister Mah Bow Tan is the longest of the seven loops in Singapore that have been planned island-wide.

To date, about 105km of park connectors have been completed, and NParks says it aims to develop a 300km-long network of green corridors across Singapore by the year 2015. The Urban Redevelopment Authority has already safeguarded land for 360km of park connectors over the next 10 to 15 years.

For the coming financial year, NParks says it will accelerate the development of the park connector networks in light of the economic downturn. Instead of the planned 20km track to be built in FY2009, it is aiming to complete a total of 42km at a cost of $40 million. Mr Lee said he has been encouraging the park connector networks initiative over the years, adding that it was important for all stakeholders to think of 'ingenious ways and means' to keep Singapore a clean and green city.

'For everyone who wants to get out of the urban jungle, they can come here and find the surroundings completely different. We have to do this in many parts of Singapore. By the time we have about 350km (of park connectors), within 700 sq km of land, there are not very many countries that can say they have that,' said Mr Lee.

He did acknowledge that the problem of littering continues to be a 'constant battle' the government has to contend with, given that there are a million foreign workers in Singapore who may come here with different habits.

'But they need to do the jobs that Singaporeans don't want or cannot do, so you can't say that (the foreigners) have to go and do a training course before they start work. We have to put up with all these aberrations,' said Mr Lee.

Property Transactions With Contract Dates Between January 5th - 16th, 2009

Calling Off Home Deals Not So Easy

Source : The Sunday Times, Jan 25, 2009

Giving up deposit is not enough once Option to Purchase is exercised

In every downturn, there will be some investors or speculators - made desperate by the change in market direction - who want to get out of their private home deals.

Property consultants said they have of late received calls from such buyers seeking ways to get out of their purchases. A litigator, who declined to be named, said inquiries on this matter started flowing in late last year.

The Real Estate Developers' Association of Singapore has indeed reminded buyers that they cannot just walk away from their sales contracts and return their units.

Its honorary legal adviser Kwa Kim Li reminded buyers of that point again when she spoke at a construction and property prospects seminar earlier this month.

Try as these buyers might, if they have inked a sale and purchase agreement, they have little chance of getting out of a binding contract, property consultants and lawyers said.

Buyers who had bought on deferred payment in 2006 and 2007 in particular are having cold feet as the completion date of their developments approaches and the bulk of the payment is due.

The Government revealed late last year that there were 10,450 uncompleted private homes bought under the deferred payment scheme, which allows buyers to pay just 10 to 20 per cent up front for an uncompleted home and the rest upon completion.

Market watchers had cautioned that the already weak property market would be hit hard by potential defaults, should many buyers fail to follow through with their deals.

Whether they can or cannot do so, there are apparently a sizeable number of buyers out there who are willing to forfeit their 20 per cent deposit to get out of a long-

term commitment they never planned for, particularly in Singapore's sharpest and deepest recession, industry sources said.

'If you are at the option stage, you can walk away.

'But once you exercise it, you can't walk away unless you declare yourself a bankrupt,' said Jones Lang LaSalle head of residential Jacqueline Wong.

A purchase starts with the seller making an irrevocable offer - an Option to Purchase - to the buyer, so that he will not sell the same property within a period of usually 14 days to another buyer.

The buyer can walk away at this stage.

But after he exercises the Option to Purchase, he cannot do so as a binding contract has been created.

How the rules work...

Under Singapore's Housing Developers Rules, a buyer who wants to walk away from or repudiate his sale and purchase agreement has to get the developer to agree to it.

'If the purchaser fails to pay an instalment, the vendor (developer or seller) has a right to choose to annul the sale and purchase agreement or to claim against the purchaser for the unpaid instalment as a debt,' said Ms Foo Soon Yien, director of Bernard & Rada Law Corp.

If it is the former, the vendor has the right to keep 20 per cent of the purchase price as well as the interest from all unpaid instalments, and resell the unit, she said.

If he chooses the second option, he can take legal action, obtain judgment and enforce it against the buyer to compel him to pay.

That's not all. The buyer also has further liability to meet any price shortfall if the property is sold at a lower price, said Mr Lim Ker Sheon, a director at law firm Characterist.

Pandora's box

While they can allow it, developers have no wish to let buyers walk away in a weak market as they would have problems selling the units they take back, experts said.

'If a developer agrees, it will be like opening a Pandora's box. Nobody will agree to it,' said Ms Wong.

'On the flip side, in a bull run, the seller or developer can't turn around and tell the buyer to

offload it back to them just because they can sell it at a higher price.'

A more likely scenario would see the developer taking the buyer to court and declaring him a bankrupt, she said.

Marco Polo Developments, now known as Wheelock Properties (Singapore), did sue those who defaulted on the progress payments for its posh Ardmore Park project due to the 1997 Asian financial crisis and win some suits.

'Usually, the threat of a legal suit is enough to wake the buyer up,' said Ms Wong.

Still, a number of Indonesians walked away from their purchases during the Asian financial crisis and disappeared, said an industry veteran who declined to be named.

What next for buyers?

Buyers who have difficulty paying for their purchases will have to sell the properties at a lower price.

Under genuine circumstances where the buyer wants to pay but has problems doing so, the developers may, on a case-by-case basis, offer alternative payment modes such as staggered payments or instalments, consultants said.

'They may choose to allow the buyers a longer period to repay, with or without interest,' said the industry veteran, adding that the critical stage where potential defaults are concerned has yet to come.

'In every downturn, there will be people who want to walk away but can't.'

Carrots Galore For Home Buyers

Source : The Sunday Times, Jan 25, 2009

Developers, agents offer perks like cash hongbao, stamp duty waivers

With the property market currently at a standstill, developers and agents are dangling carrots with the hope that buyers will bite.

Cash hongbao, stamp duty waivers and outright discounts of as much as 50 per cent have all been rolled out to entice home buyers.

Some agents have also resorted to tricks such as advertising an unusually low price for a unit, just to get home buyers to call.

And this could be just the tip of the iceberg, said property experts. In past recessions, developers have been known to offer free cars with certificates of entitlement, years of maintenance fee waivers and free interior decoration services.

No other sweetener interests buyers more than price discounts, according to property agents.

As buyers adopt a wait-and-see attitude towards buying property, an increasing number of developments have slashed their prices - some by as much as 50 per cent.

AG Capital's The Aristo@Amber for example, has had its prices cut from about $1,700 per sq ft (psf) last July to $900 psf last month.

At City Square Residences in Kitchener Road by City Developments, prices have fallen from a high of over $1,000 psf last year to less than $800 psf for some units recently.

Developers are also giving non-official discounts to buyers who bother to haggle.

Businessman Derrick Wong, 44, who has been shopping for an apartment, said he was offered discounts ranging from 6 to 10 per cent even before he asked.

'These developers seem really desperate to sell. A year ago, when the property market was booming, getting a 3 per cent discount was unimaginable,' he said.

The most common sweetener offered by property developers, it seems, is a stamp duty waiver.

Of the 10 new property developments The Sunday Times checked with, eight cited waiving stamp duty fees as a perk for buyers.

Stamp duty is a tax on commercial and legal documents that buyers have to pay. It is about 3 per cent of the transacted price of a property.

It may not sound like a lot, but stamp duty fees for a $1 million property can come up to $30,000. Buyers can pay the amount by cash or from their Central Provident Fund monies.

Other developers are luring home seekers with cash giveaways.

Far East Organization, for example, is giving out $12,888 hongbao to the first eight buyers of the Lakeshore and Hillview Regency condominiums starting today.

Agents marketing its Waterfront Waves condominium in Bedok Reservoir also recently text-messaged their clients informing them of hongbao giveaways of up to $12,888 for those who buy now.

But developers say the hongbao are not bait.

'The hongbao are meant to add to the good cheer of the season, rather than a sweetener per se,' said a Far East Organization spokesman.

Still, agents are so keen to sell that some even offer to open showflats at night and during the Chinese New Year public holiday specially for busy potential buyers.

One agent who is marketing a new apartment project in the east said that he would open showflats for clients as late as 10pm.

'Most of our clients are professionals who work until very late. Some even work on weekends. So we try to accommodate their schedules as much as we can,' he said.

Stories of agents using dirty tricks have also surfaced.

Engineer Aloysius Tan spotted an online advertisement for a two-bedroom Bayshore apartment selling for $680,000. But when he called the agent, he was told that the price is actually $1.2 million.

The agent then tried to push to him the other apartments she was selling that fell within his $700,000 budget.

Said Mr Tan, 29: 'I don't understand how the agent could have got the price wrong in the ad, unless she had the intention to deceive in the first place.'

Other home shoppers say agents would entice them to visit showflats with the promise of discounts, although they would not say how much.

Said housewife Rina Mohamed, 37: 'The agents will make us go down to the showflat and then we find out they are offering just $1,000 to $2,000 worth of discounts. What a waste of time.'

In the East Coast and Telok Kurau area, where more than 15 new residential developments will be ready in the next few years, competition is especially stiff among property agents.

Some have resorted to bad-mouthing their competitors to buyers and are all too happy to list the inferior qualities of the other developments.

Said Mrs S. Goh, 32, a teacher: 'Sometimes, I find agents tend to focus more on the negative points of other developments instead of marketing their own projects.'

HDB Resale Prices Inch Up But Demand Falls By 24%

Source : The Straits Times, Jan 24, 2009

PRICES of Housing Board resale flats continue to defy the gloom, although the pace of increase is easing off a little.

The prices of HDB resale flats rose 1.4 per cent in the fourth quarter of last year, but the impact of the economic gloom is being felt as the cash-over-valuation portion for resale deals fell 21 per cent. -- ST FILE PHOTO

Data from the last three months of last year show that prices inched up 1.4 per cent, following a robust surge of 4.2 per cent in the third quarter and 4.5 per cent in the second.

Valuations are still rising but not as much as before, said C&H Realty managing director Albert Lu.

HDB resale prices are supported by a relatively strong base of potential buyers, particularly for three- to four-room flats, said ERA Asia Pacific's associate director, Mr Eugene Lim.

Experts say the impact of the gloomy economic outlook has seeped into the HDB market, reflected in the significant drop in the median cash-over-valuation portion for resale deals.

It fell from $19,000 in the third quarter to $15,000 in the fourth - a drop of 21 per cent - and back to levels last seen around the third quarter of 2007.

Demand was also down: Fourth-quarter resale deals fell 24 per cent to 6,186 transactions, while the number of resale deals for the whole year dipped 3 per cent from the figure in 2007.

Despite the relatively large fourth-quarter drop, property experts expect fairly strong demand as the continued economic slowdown will bring new buyers.

'If the economy does not improve, there will be more downgraders and increasingly cautious home buyers in the wake of retrenchments and tighter budgeting,' said PropNex chief executive Mohamed Ismail.

If the recession drags on, prices may fall, albeit marginally, said ERA's Mr Lim, although C&H Realty's Mr Lu said they could just level off.

'This is about the peak for HDB (resale) prices, but they won't fall immediately because there is demand and valuations are still holding,' he said.

Median sub-let rents remained steady and owners are still keen to rent out their homes.

The total pool of HDB flats approved for sub-letting grew from 21,400 units in the third quarter to about 22,200 units in the fourth.

But demand has been hit. While sub-letting deals for the whole of last year grew by 20 per cent, the number of such deals for the fourth quarter fell 7 per cent to 3,690.

Special Measures To Lift Property Sector

Source : The Straits Times, Jan 23, 2009

THE ailing property sector has received a special Budget boost, with a host of measures to help developers wait out the slump in demand.

Property tax will be deferred for two years for land approved for development. This means developers sitting on their land bank will not have to pay this tax - which can amount to millions of dollars - for the time being.

Rules have also been relaxed for developers who bought government land sites and foreign developers who own private residential land here.

Normally, they have to develop the land within six years, and they cannot resell the land without developing it.

But these developers have been given a one-year extension of this period so that they have more flexibility in building and selling their developments according to market conditions.

On top of that, those who have decided they want out of the development can now resell the land or dispose of their interest in it before Jan 21 next year.

Foreign developers have also been given more leeway. Currently, they are required to sell all the units in their project within two years of completion and are not allowed to rent out unsold units.

They have now been given two more years to dispose of the units and they can also rent out unsold apartments for up to four years.

All property owners and firms will also benefit from the Inland Revenue Authority of Singapore's bringing forward of its assessment on property taxes this year.

Property values rose last year, pushing up tax bills for their owners, but the market has since turned and an updated assessment would yield some savings.

Most developers and tax experts applauded the Budget steps.

'The measures will provide welcome relief and help to ease funding for the industry, and provide developers with flexibility in scheduling their developments,' said the Real Estate Developers' Association of Singapore.

Hong Leong Group, which has property investments through its companies City Developments and Hong Leong Holdings, said the moves 'are a huge confidence boost to the economy and property market and we welcome it'.

Deferring tax on land for development 'will help reduce business costs and help the company spread costs over a period of time', while the other measures 'will provide more flexibility for developers and will ease pressure on the markets', it said.

Foreign developers also cheered the measures specifically directed at them.

'I am very pleased by the pro-active measures taken by the Singapore Government to support foreign property developers,' said Malaysian tycoon Francis Yeoh, who is managing director of YTL Corporation.

'I find the measures realistic, and I am confident that they will give the property market in Singapore a much-needed boost.'

YTL owns two plots in Sentosa Cove as well as Westwood Apartments in Orchard Boulevard.

But some industry watchers thought the Government could have gone further.

In the 1998 Budget following the Asian financial crisis, the Government waived, rather than deferred, property tax for land under development for five years.

'The deferment of property tax will help to ease developers' holding costs, but is viewed as less desirable compared to previous downturn Budgets where property tax exemptions were handed out,' said Ms Tay Huey Ying, director for research and advisory at property consultancy Colliers International.

Bigger Grant For First-Time HDB Home Buyers

Source : The Straits Times, Jan 23, 2009

FIRST-TIME home buyers were given a leg up on the property ladder yesterday with the expansion of a grant designed to help financially struggling home hunters.

Another 2,700 first-timers will qualify for the additional CPF housing grant every year, due to changes announced by Finance Minister Tharman Shanmugaratnam.

In a rare move, the Government has lifted the income ceiling for first-time home buyers qualifying for the additional grant - from $4,000 a month previously to $5,000 now.

At the same time, the grant's maximum amount has been raised from $30,000 to $40,000.

This comes about 18 months after the additional housing grant was raised from $20,000 to $30,000 in August 2007.

Then, the eligibility criterion was also lifted to $4,000 from $3,000.

Mr Tharman said the total number of households benefiting from HDB's additional housing grant scheme will now be boosted to 8,000 annually.

The enhanced scheme, which aims to ensure that public housing remains affordable to first-timers, will double the estimated cost of the scheme to about $150 million per year, he said.

Market watchers observed that the additional housing grant - typically aimed at the low-income group - is now being extended to the lower middle-income group.

PropNex chief executive Mohamed Ismail said this departure was a 'positive move' as HDB prices have risen about 30 per cent in the last two years.

'With prices going up, monthly mortgages are also rising. In this difficult time, the grants will really help first-timers who want to buy a home, and start a family,' said Mr Ismail.

Mr Samuel Ng, 43, head of the Marine Parade Family Service Centre, said the latest HDB initiative will address some newlyweds' concerns during this crisis.

In particular, the move seems to address the 'sandwich class' or what he calls, the 'middle poor'.

'For the really low-income, there is already a support network in place for them. But the low- to mid-income families often find themselves squeezed, and find that there are fewer social initiatives that cater to them.'

Housing, Mr Ng pointed out, is crucial to starting a family. This is one of the priorities for the Government.

Mr Tharman said yesterday that the Government will spend $1.6 billion this year - and the same in each of the next three years - to support marriage and parenthood.

These include initiatives such as government-paid maternity leave, infant-care and childcare subsidies.

Ms Y.L. Huang, a 25-year-old teacher, welcomed the news as her income combined with her fiance's exceeds the $4,000 mark for the housing grant.

'Knowing we now qualify for a bigger housing grant makes buying a new home a bit easier,' she said.

Private Home Prices Fall 6.1% In Q4

Source : TODAY, Weekend, January 24, 2009

BUYERS of new private homes don’t have to worry about not being able to move in on time even as some developers take advantage of incentives announced in Thursday’s Budget that allow them to extend the completion period of their projects.

To help developers improve their cash flow and give them more flexibility to plan their projects, the Ministry of National Development will allow developers of uncompleted Government residential sale sites to apply for a one-year extension of the completion period without having to pay an extension premium. But this only applies if none of the residential units in the project has been sold.

For projects in which homes have been sold, the extension will only be allowed up to the date of delivery of the sold units as stipulated in the sales agreement signed between the developer and the purchasers.

The Budget measure was announced just a day before the Urban Redevelopment Authority (URA) reported private home prices falling by the most a decade as they slipped 6.1 per cent in the fourth quarter last year.

This was much worse than the 5.7 per cent decline in the URA’s flash estimates and down from a 2.4 per cent decline in the third quarter. For the whole of last year, prices fell 4.7 per cent, compared to the 31.2-per-cent rise in 2007.

Rents for private homes also retreated along with home prices, declining 5.3 per cent in the fourth quarter, extending the 0.9-per-cent fall in the previous three months.

The URA data also showed there were 64,982 uncompleted units of private homes at the end of December, of which 31,004 units are expected to be completed between 2009 and 2011. Of the total, 43,414 or a hefty 66.8 per cent remained unsold, suggesting prices are likely to fall much further in the coming months.

Amid the gloomy prospects for the property market, analysts told Today developers — especially the larger ones — are likely to apply for the extension so that they can price their projects better at a later time.

City Developments (CDL), one of Singapore’s largest developers, welcomed the move. “The extended timeline gives us more flexibility in the way we market the property. We will certainly explore how best to utilize these measures in relation to the market conditions where necessary,” said a CDL spokesperson.

While prospects are bleak in the year ahead, Mr Li Hiaw Ho, executive director of property consultancy CBRE says the continued moderation of prices will kick-start the market, especially in the mid-tier and mass-market projects.

Saying that home prices are likely to see a further correction of 10 to 15 per cent this year, Mr Li added: “We believe sales momentum will pick up gradually from the second quarter onwards so that the total number of new homes transacted this year should be higher than the 4,264 units chalked up last year, at around 5,000 to 6,000 units.”

Public Housing Market Slows

Source : TODAY, Weekend, January 24, 2009

Surprise drop of 24% inQ4 volume, but analysts say HDB demand intact

IT WAS a drop that caught most analysts by surprise — raising fears of a demand downtrend amid a souring economy, even in the traditionally resilient public housing market.

After a strong showing in the first three quarters, the number of Housing and Development Board (HDB) resale flat transactions plunged 24 per cent in the last quarter of 2008 to 6,186. That brought the total transaction volume last year to 28,419 — or 3 per cent lower than in 2007.

Prices, on the other hand, have continued to climb, but at a much slower pace. he HDB resale price index rose 1.4 per cent in the fourth quarter, down from 4.2 per cent in the third quarter.

The widening gap in price expectations between buyers and sellers in a weakening market is one of the reasons for the decline in volume, said ERA’s Asia Pacific associate director Eugene Lim, who noted the longer time needed to negotiate a deal.

“Opportunistic buyers would offer below valuation ... while sellers still want to have as high a cash-over-valuation (COV) as possible. So the haggling will take time,” he said.

Already, the overall median COV values have decreased about $4,000 — or about21 per cent — to $15,000 in the fourth quarter. In fact, going by HDB statistics, a buyer of a five-room flat in Ang Mo Kio would only need to pay a median COV of $7,000 in the last three months, compared to $20,000 in the previous quarter.

But Ms Carol Loo, a 26-year-old prospective buyer, is biding her time and hoping for a good bargain. The insurance agent, who is getting married in August and plans to buy a resale flat in June, is confident that prices will drop further.

“Already, some agents are willing to drop the COV. A lot of people are affected by the economic crisis. Some owners will find that they can’t finance their mortgages and ... need to get it off their plate really soon. When it’s a fire sale, they are usually willing to go down below valuation,” said Ms Loo, who is looking for a flat in Pasir Ris.

Another reason for the low volume, said PropNex chief executive Mohamed Ismail, could be the lack of units put on the market by HDB upgraders due to the dearth of private condo launches in the fourth quarter.

While analysts say the fallout from the global financial crisis and economic downturn hurt buying sentiment in the fourth quarter, many think the HDB market will be largely resilient.

“HDB is the most affordable housing, so the base is there. It’s just a difference in expectations, that’s why sales have slowed. But support in terms of buyer interest is still there,” said ERA’s Mr Lim.

In fact, Dennis Wee Group’s vice-president, Mr Chris Koh, said the expected deterioration in economic conditions could ironically spur demand for HDB flats from private condo downgraders.

The Government’s move to increase the additional CPF housing grant for first-time HDB buyers to $40,000 from $30,000 in tandem with the raised household income ceiling to $5,000 from $4,000 will encourage low to middle-income young couples to buy their first flat through the resale market as well, said Mr Ismail. Surprise drop of 24% inQ4 volume, but analysts say HDB demand intact

Property Slump Worsens

Source : The Straits Times, Jan 24, 2009

Private home prices fall 6.1%; more new projects delayed

THE property slump gathered pace on two fronts late last year with rents moderating and private home prices registering their biggest quarterly fall in a decade.

Developers also continued to delay the completion of new flats as well as office projects as the recession tightened its grip.


Prices slumped 6.1 per cent in the last three months of last year, according to the Urban Redevelopment Authority (URA) yesterday, higher than the earlier estimate of 5.7 per cent.

The slump follows a 2.4 per cent fall in the third quarter, which was the first decline in over four years.

Private home prices - which started last year on an uptrend even as sales fell dramatically - dropped 4.7 per cent over the whole of the 12 months. It was a striking contrast to 2007 when prices surged a whopping 31.2 per cent.

The declines will likely continue this year with some consultants estimating that falls of 10 to 20 per cent are possible.

In the fourth quarter, homes in prime districts fell the most - by 6.5 per cent - while suburban home prices dropped 5.9 per cent.

The slump in suburban home prices reflects waning buying interest for mass-market property, said Knight Frank's director of research and consultancy, Mr Nicholas Mak.

This segment was initially expected to hold up better than the high-end segment last year but the mood has become so cautious that some homeseekers are buying HDB resale flats instead, he said.

Rents are feeling the pain as well. Private home rents fell 5.3 per cent in the fourth quarter after a marginal 0.9 per cent decline in the third quarter.

Non-landed homes in prime districts recorded the largest drop of 6.1 per cent with mass-market homes down 4.3 per cent. Overall, private home rents rose 2 per cent last year.

Sales are on the slide as well. A total of 7,701 resale homes were transacted last year, down from 20,980 in 2007 while sub-sales, an indicator of speculative activity, fell to 1,628 units last year, down from 4,097 in 2007.

New home sales went into freefall last year, with a record low of only 4,264 changing hands, down from 14,811 in 2007.

Price declines should be accompanied by increased buying volumes, said Chesterton Suntec International's head of research and consultancy, Mr Colin Tan.

But one reason that is not happening now is that prices have not fallen low enough. To generate demand, the price drops have to be bigger than seen in previous downturns as this is the worst downturn ever, he said.

To add to the gloom, there is also a standstill in the investment market due to the tight credit situation facing developers. 'Those who want to capitalise on the lower prices today still find it hard to do so,' said a market watcher.

The two parallel markets give rise to a divergence in the price expectations of buyers and sellers, he said.

The market will take several quarters to find its new footing with at least some price convergence between buyers and sellers, he added.

This quarter is likely to be a slow period due to the cautious sentiment, poor economic conditions and interruptions by the Chinese New Year celebrations, said CBRE Research.

While the market is expected to stay tentative, the continued price falls should kick-start some sales, especially in mid-tier and mass-market projects, said its executive director, Mr Li Hiaw Ho.

There is no lack of supply, even as developers pushed back the completion of more projects to beyond 2011.

The URA now expects 7,012 private homes to be completed next year, down from an earlier estimate of 8,538. The number for 2011 has been revised to 13,686, down from a forecast of 16,145.

Meanwhile, rentals of office space, shops and industrial properties all fell in the fourth quarter, as leasing interest softened in light of the economic climate.

Further drops in rentals are expected, experts said.

Singapore Private Home Prices Dip 6.1% In Q4 Amid Downturn

Source : Channel NewsAsia, 23 January 2009

The economic downturn is hitting home, with private residential prices recording their steepest drop in a decade.

Private home prices fell by 6.1 per cent in the fourth quarter of 2008, worse than an early estimate of a 5.7 per cent drop.

The quarter-on-quarter decline in the October to December period follows a 2.4 per cent drop in the third quarter ended September.

Strong demand pushed up private home prices by about 31 per cent in 2007. But the picture changed very quickly in just one year.

In 2008, overall prices of private residential properties fell by 4.7 per cent, hurt by the global slowdown. Market watchers said they expect to see more downside.

Karamjit Singh, managing director of Credo Real Estate, said: "I expect the decline to accelerate, going forward, as the full effect of the meltdown that took place in the fourth quarter is being felt by the market. Q1 (2009) and Q2 would definitely be negative. In fact, I won't be surprised if prices will reflect declines by more than 6.1 per cent."

Donald Han, managing director of Cushman & Wakefield, said: "We think, probably, Q1 will be worse than Q4, mainly because we are at the epicentre of the economic downturn. We expect home buying mood to also descend from here... probably anything from 6 per cent to 7.5 per cent for Q1 and the same number for second quarter."

Prices of homes in prime areas continued to slip faster than those in the mid-tier and mass market segments in the fourth quarter of 2008. They fell 6.5 per cent, compared with the 6.2 per cent drop for the mid-tier and the 5.9 per cent decline for the mass market segments.

It is unclear how long and how deep the recession will be, but some market players are already expecting the potential fall in private home prices to be comparable to levels seen during the Asian financial crisis when prices dropped by 42 per cent over two years.

Sales of private homes also declined in the fourth quarter. There were only 407 transactions, about 72 per cent lower than in the third quarter.

Despite the gloomy economic outlook, property analysts believe sales momentum will pick up towards the second half of the year. They expect 5,000 to 6,000 units to be sold in 2009, higher than the 4,264 transacted last year.

According to the Urban Redevelopment Authority, 706 uncompleted units were launched for sale by developers in the fourth quarter, down from 2,244 units in the previous three months.

Many developers have delayed projects as demand and prices head south. Analysts say that in total, about 10,000 units have to be deferred, easing concerns of an oversupply in the private residential market.

The frail market sentiment also impacted the private home rental market, which saw a 5.3 per cent drop in rentals in the fourth quarter.

Meanwhile, public housing prices remained more resilient. HDB resale flat prices in the fourth quarter rose by 1.4 per cent, albeit lower than the 4.2 per cent increase recorded in the third quarter.

But transactions fell by 24 per cent to about 6,190 units, while the median cash-over-valuation amount dropped by S$4,000 to S$15,000 in the fourth quarter. Property analysts expect the downtrend to continue.

Donald Han said: "You will have the (resale flat prices) beginning to taper off after a very strong 14 per cent last year. We probably expect the HDB prices to remain flat for the first half, before you see a slight dip towards the second half of 2009." - CNA/ir

Developers Grateful For Small Mercies

Source : The Business Times, January 24, 2009

They are glad that the Budget allows them to push back projects

NOT all their wishes for the Budget were met, but real estate developers were still glad to receive property tax rebates and other measures that would help them with project deferments in these tough times.

But even before the government stepped in, the slow property market had already forced several developers to hold back their projects. What the Budget does is to reduce the pain of doing so.

Among other measures announced on Thursday, the government gave a one-year extension of the completion period for private residential projects. It also extended from two to four years the period for developers with Qualifying Certificates to dispose of all residential units in their projects, and developers can rent out unsold units during this period.

The extended timeline creates 'more flexibility in the way we market the property and also provides an alternative source of revenue in the interim, through rental', said a City Developments (CDL) spokesperson. As a UBS Investment Research report also pointed out, the help 'relieves pressure on developers who bought en bloc projects in 2006-2008 to rush to complete projects and avoid exacerbation of residential price declines'.

But even before the Budget, some property developers were already delaying their projects in the face of slumping demand and prices. According to the Urban Redevelopment Authority yesterday, private residential prices fell 6.1 per cent in Q4 2008.

For projects which have not been built, developers have another incentive to postpone them as construction costs are expected to fall further.

'Developers have to defer (projects) whether they like it or not,' said Thio Gim Hock, CEO and group managing director of OUE. The developer, which bought The Grangeford at Leonie Hill en bloc in 2007, has put the property back on the rental market. It is also deferring another project, the Parisian.

Large property developers have made similar plans. Keppel Land said on Wednesday that it will consider delaying the construction of some projects to save costs. CDL also said late last year that it will hold back the launch of new residential projects such as The Arte at Thomson and The Quayside Collection.

'We will continue to monitor the market conditions closely, reassess and decide (launches) accordingly at the appropriate time,' the CDL spokesperson told BT.

Private Housing Supply Shrinking As Prices Fall

Source : The Business Times, January 24, 2009

Developers delay projects' expected completion dates to beyond 2011

DEVELOPERS appear to be turning their backs on the property market, deferring more projects as property prices keep falling.

Private residential property prices fell 4.7 per cent last year. This, after rising over 30 per cent in 2007. On a quarterly basis, prices fell 6.1 per cent.

And according to statistics from the Urban Redevelopment Authority (URA), the number of private residential homes expected to be completed between 2009 and 2011 is now also expected to be lower.

URA said that as at Q4 2008, there were 64,982 private residential units in the pipeline. Of these, about 31,000 units were expected to be completed between 2009 and 2011, lower than the pipeline supply of about 34,600 private residential units as at Q3 2008.

URA said that the decline in the pipeline supply was mainly because a number of developers had in Q4 2008, made adjustments to the expected year of completion of their private housing projects to beyond 2011.

DTZ senior director for research Chua Chor Hoon said that while developers have already been delaying completions over the last few quarters, the momentum increased in Q4 2008. She also believes that with the recent Budget announcements giving developers more leeway to delay completion of their projects, 'there would be further adjustments to improve the supply-demand balance'.

Still, she notes that 10,448 private housing units are expected to be completed this year, which is higher than the past 10-year average of 8,700 units. 'These projects are at the advanced stage of construction and cannot be delayed. These would add pressure on prices and rentals.'

While the property tax deferment on approved development sites is expected to cost the government $290 million over the next two years, Knight Frank director of research and development Nicholas Mak said that this will not have much impact on the supply pipeline - but only because many developers have already decided to do this. He does, however, believe that it will help developers bear the holding costs.

Barclays economist Leong Wai Ho added: 'I don't think these (Budget) measures per se will reverse the slide in the property market. The dominant factors in the near term are the increase in white-collar unemployment and falling household income.'

Poorer economic prospects are more likely to persuade developers to defer projects.

Already, of the 64,982 uncompleted units in the pipeline, 43,414 units were still unsold. These comprised 3,880 units that had been launched for sale by developers and 14,386 units which had the pre-requisite conditions for sale and could be launched for sale immediately. The remaining 25,148 units with planning approvals did not have the pre-requisite conditions for sale.

Prices of non-landed properties fell by 6.3 per cent in Q4 2008 compared with the decline of 2.5 per cent in the previous quarter. For the full year, prices of non-landed properties fell by 5.3 per cent.

Prices of non-landed properties in Core Central Region1 (CCR) fell by 6.5 per cent in the quarter while prices of non-landed properties in Rest of Central Region (RCR) and Outside Central Region (OCR) fell by 6.2 per cent and 5.9 per cent respectively. For the whole 2008, prices of non-landed properties in CCR, RCR and OCR fell by 5.6, 4.7 and 2.9 per cent respectively.

Mr Mak said that despite the mass market sector experiencing the slightest decline in home prices, a drop in prices in OCR reflected that buying interest for mass-market private homes has waned. 'Prices of mass-market homes were initially thought to be able to hold better than high-end private residential properties in 2008, as some buyers settle for mass-market private homes for lower-cost alternatives. However, the cautious homebuying sentiments have become so significant that some homeseekers chose to purchase HDB resale flats,' he added.

Rental decline accelerated, easing by 5.3 per cent in Q4 2008 quarter-on-quarter. Mr Mak noted: 'On a yearly basis, the 2 per cent growth rate in 2008, though still positive, is a far cry from the double-digit expansion observed in the last two years.'

Last year saw the total number of homes sold fall to 13,593 units, down from a record high of 40,654 units in 2007.

CBRE Research executive director Li Hiaw Ho notes that the fall in sales volume was seen in both the primary and secondary markets, with only 419 new homes, 965 resale homes and 203 sub-sales registered in the fourth quarter. 'The decline in sales momentum was indeed significant as both home-buyers and developers retreated from the market,' noted Mr Li.

For the whole year, the 4,264 new private homes sold was a record low, and made up only 29 per cent of the 14,811 new homes sold in 2007. Similarly, a total of 7,701 resale homes were transacted last year, compared with 20,980 sold in 2007. Sub-sales fell to 1,628 in 2008 from 4,097 in 2007.

40% Tax Rebate For Owner-Occupied Residential Properties

Source : The Business Times, January 23, 2009

THE government will provide a 40 per cent property tax rebate for owner-occupied residential properties for 2009 in a bid to ease the financial burden on households this year.

The rebates will cost the government some $75 million in all, said Finance Minister Tharman Shanmugaratnam yesterday.

He also said that right now, owners who own higher-value homes (homes with a net annual value of more than $150,000) or secondary residences have to pay income tax on the net annual value of their property. This tax will be removed from year of assessment 2010 onwards.

The net annual value of a property is an estimate of how much the property will fetch on the rental market, less related expenses.

Analysts said that the 40 per cent property tax rebate is a broad measure that will help most households here, as most homes in Singapore are owner-occupied. Right now, the property tax for owner-occupied homes stands at 4 per cent of the property's net annual value.

On the other hand, income tax exemption for higher-value homes or secondary residences will affect few. Most properties have a net annual value of less than $150,000, said Ooi Boon Jin, executive director of KPMG Tax Services.

Analysts said that the two measures should be taken together with all the other handouts announced yesterday.

'If you look at the whole thing holistically, families will save a few hundred here, a few hundred there, which all adds up,' said Choo Eng Chuan, tax services partner at Ernst & Young. 'A 40 per cent property tax rebate for owner-occupied homes is a broad-based measure.'

Some analysts pointed out that owners who rent out their properties will not benefit from the property tax rebate. The property tax on rental properties is 10 per cent of the net annual value.

The government yesterday offered a 40 per cent property tax rebate to landlords of industrial and commercial properties. If this had been extended to residential properties as well, it would have helped ease the financial burden of Singapore's expatriate community - if the rebates are passed on by the landlords - said Tay Huey Ying, Colliers' director for research and advisory. 'This will help to improve Singapore's cost competitiveness,' she said.

Mr Tharman also said that to ensure that public housing remains affordable to first-time home buyers, the government has decided to increase and broaden the Additional CPF Housing Grant (AHG) for first-time home-buyers.

It will increase the maximum grant amount to $40,000, from $30,000 previously. At the same time, the household income ceiling will also be raised from $4,000 to $5,000.

'Another 2,700 first- time home-buyers will benefit from the enhanced AHG every year, bringing the number of beneficiaries of the AHG scheme to 8,000 yearly,' said Mr Tharman.

The enhancements will more than double the estimated cost of the AHG scheme to about $150 million a year.

$75m Relief For Home Owners

Source : The Straits Times, Jan 23, 2009

One-off 40 per cent rebate means property tax stands at 2.4 per cent for lived-in properties

HUNDREDS of thousands of home owners will get a one-off 40 per cent property tax rebate this year.

The rebate is for owner-occupied residential homes and will cost the Government $75 million.

This move is even more drastic than the 15 per cent property tax rebate given in the 1998 Budget that followed the Asian financial crisis, noted Ernst & Young's director of human capital and tax services, Ms Wu Soo Mee.

Market watchers welcomed the move. 'This is one that will reach out to the widest number of people, whether you own a public or private property, and will go a long way in helping struggling households this year,' said PropNex chief executive Mohamed Ismail.

Mr Eric Cheng, executive director of HSR Property Group, calculated that the average household could save 'a few hundred dollars' a year on property tax.

Owners who live in their home pay 4 per cent property tax on the annual value of their property.

A 40 per cent rebate means owners now pay 2.4 per cent tax on their lived-in properties. In the 1998 Budget, the rebate meant home owners paid 3.4 per cent, said Ernst & Young's Ms Wu.

'It's a big relief and will definitely help everyone in this recession,' she said.

The income tax on a property's net annual value (NAV) has also been scrapped, with effect from the 2010 year of assessment.

NAV is the annual value, shown on your property tax bill, of your property in Singapore minus allowable expenses.

The annual value is the gross amount at which the property can be expected to be rented from year to year.

Under current tax rules, if the NAV of an owner-occupied residential property is less than $150,000, it is exempt from income tax. This exemption will not be available to your investment property and any rental income you derive will also be subject to income tax.

After yesterday's changes, those who own higher-value homes, or those who own second homes but do not collect rent for it, no longer have to pay income tax on the NAV of their property.

Ms Wu noted that this benefits higher-income families, as most home owners do not own properties that have a NAV above $150,000.

HSR's Mr Eric felt that while the measures will not have any direct impact on the market, it will give home owners much-welcomed monetary relief in the light of the difficult economic times.

私宅价去年末季跌6.1% 是10年来最大季度跌幅

Source : 《联合早报》January 24, 2009








高纬物业(Cushman & Wakefield)新加坡董事经理韩永利表示,本地楼市和经济走势紧紧相扣,我们正处于金融海啸的暴风眼,局势至少要到下半年以后才会平息,因此楼市还会继续在上半年走下坡,尤其是高档私宅。









世邦魏理仕(CB Richard Ellis)执行董事李晓和则说:“新加坡经济萎缩,市场情绪低迷谨慎,而且又碰上农历新年,第一季的交易量预计将非常惨淡。私宅价格全年将进一步下跌10%至15%。”


过去半年延后发展并短暂出租的项目包括幸运大厦(Lucky Tower)、景福苑(The Grangeford)、彬珠阁(Pin Tjoe Court)、祥鹤谷(Flamingo Valley)、富丽华大厦(Furama Tower),唯美园(Fairways),淑雅阁(Sophia Court)和林肯苑(Lincoln Lodge)等。


Source : 《联合早报》January 24, 2009


组屋价格 上半年可能失守



除了组屋转售价格继续上升外,组屋溢价中位数(median cash-over-valuation)以及转售交易量都下滑,显示市场已明显降温。









Orange Tee执行董事陈道俊估计,组屋转售价可能在今年持平,即使有所下跌,幅度也会低于5%。


市场情绪转弱 买家变得更谨慎