Showing posts with label Payment Schemes For Private. Show all posts
Showing posts with label Payment Schemes For Private. Show all posts
Sunday, October 28, 2007
Saturday, October 27, 2007
Deferred Payment Scheme For Home Buyers Scrapped
Source : The Straits Times, Oct 27, 2007
THE Government last night scrapped the deferred payment scheme that allowed homebuyers to postpone payments on new property.
It said the strong economy and property market allowed it to axe the scheme. This would also deter speculators and force people to be more prudent when committing to pricey real estate.
It was a response to signs of overheating in the market, National Development Minister Mah Bow Tan said last night. 'There's a danger that we may feel over-exuberance in the market. There's also a danger it may actually encourage excessive speculation,' he said.
Buyers will now have to make progressive payments in step with the construction process, instead of deferring payment till the property is completed a few years later.
Experts say prices and sales will be hit, though the impact may not be significant, given the robust demand.
'Now the property market is 'red-hot', maybe after withdrawing deferred payment it will just be 'hot',' said Mr Ku Swee Yong, director of marketing and business development at Savills Singapore. 'There is strong, genuine demand driving sales. Taking away this scheme will only spook speculators. It will take away the froth that is false demand.'
The deferred payment scheme was introduced in 1997, when the market was lacklustre. It is no longer relevant today, said Mr Mah.
Projects that have been approved can continue with deferred payments, but others - uncompleted private homes and commercial properties, including industrial ones - will be hit by the withdrawal, which took effect last night.
Some experts say deferred payment encouraged speculators - pushing up prices. 'Once speculators find it riskier to go into the market, there will be less competition for homes,' said an industry observer. 'Developers may have to lower their prices, and prices may level off. It's good to cool the market, so that you are in tune with the rest of the world.'
Progressive payments call on buyers to pay an amount varying from 5 per cent to 25 per cent of the purchase price at various stages of construction. A 10 per cent payment is required once foundation work is completed, which can be in as soon as six months after purchase or up to 18 months.
Luxury homes have continued soaring in price, while new Government figures show that speculation is becoming a market factor.
Sub-sales - owners selling uncompleted properties - in the core central region comprised 21.6 per cent of total sales in the three months ended Sept 30.
Overall, sub-sales accounted for 12.7 per cent of total deals. They accounted for 28 per cent of total deals in 1996, when speculation was rife.
'Speculation has not reached the mid-1990s level, but at the rate it's going, it could increase, so why not nip it in the bud?' said Ms Tay Huey Ying, director of research and consultancy at Colliers International .
The Real Estate Developers' Association of Singapore said: 'The need for this scheme has diminished with the strong market recovery.'
Some experts say yesterday's move may trigger fears of further Government intervention, which may then indirectly hit prices and sales.
Mr Mah did not rule out the possibility of further moves: 'We are monitoring the market very closely. Obviously, the objective is to make sure that our prices do not overrun, do not go beyond the fundamentals.
'We want to make sure the market is a stable and healthy one.'
THE Government last night scrapped the deferred payment scheme that allowed homebuyers to postpone payments on new property.
It said the strong economy and property market allowed it to axe the scheme. This would also deter speculators and force people to be more prudent when committing to pricey real estate.
It was a response to signs of overheating in the market, National Development Minister Mah Bow Tan said last night. 'There's a danger that we may feel over-exuberance in the market. There's also a danger it may actually encourage excessive speculation,' he said.
Buyers will now have to make progressive payments in step with the construction process, instead of deferring payment till the property is completed a few years later.
Experts say prices and sales will be hit, though the impact may not be significant, given the robust demand.
'Now the property market is 'red-hot', maybe after withdrawing deferred payment it will just be 'hot',' said Mr Ku Swee Yong, director of marketing and business development at Savills Singapore. 'There is strong, genuine demand driving sales. Taking away this scheme will only spook speculators. It will take away the froth that is false demand.'
The deferred payment scheme was introduced in 1997, when the market was lacklustre. It is no longer relevant today, said Mr Mah.
Projects that have been approved can continue with deferred payments, but others - uncompleted private homes and commercial properties, including industrial ones - will be hit by the withdrawal, which took effect last night.
Some experts say deferred payment encouraged speculators - pushing up prices. 'Once speculators find it riskier to go into the market, there will be less competition for homes,' said an industry observer. 'Developers may have to lower their prices, and prices may level off. It's good to cool the market, so that you are in tune with the rest of the world.'
Progressive payments call on buyers to pay an amount varying from 5 per cent to 25 per cent of the purchase price at various stages of construction. A 10 per cent payment is required once foundation work is completed, which can be in as soon as six months after purchase or up to 18 months.
Luxury homes have continued soaring in price, while new Government figures show that speculation is becoming a market factor.
Sub-sales - owners selling uncompleted properties - in the core central region comprised 21.6 per cent of total sales in the three months ended Sept 30.
Overall, sub-sales accounted for 12.7 per cent of total deals. They accounted for 28 per cent of total deals in 1996, when speculation was rife.
'Speculation has not reached the mid-1990s level, but at the rate it's going, it could increase, so why not nip it in the bud?' said Ms Tay Huey Ying, director of research and consultancy at Colliers International .
The Real Estate Developers' Association of Singapore said: 'The need for this scheme has diminished with the strong market recovery.'
Some experts say yesterday's move may trigger fears of further Government intervention, which may then indirectly hit prices and sales.
Mr Mah did not rule out the possibility of further moves: 'We are monitoring the market very closely. Obviously, the objective is to make sure that our prices do not overrun, do not go beyond the fundamentals.
'We want to make sure the market is a stable and healthy one.'
Deferred Payments Scrapped In Bid To Cool Property Fever
Source : The Business Times, October 27, 2007
Market players expect blip, not crash, to follow the exit of the buy-now-pay-later scheme.
In a surprise move yesterday, the government said that it was withdrawing the deferred payment scheme (DPS) for the sale of uncompleted private properties in a bid to discourage speculative buying and cool the property market.
Market players said that the move could unnerve some buyers in the short term - leading to a drop in demand. A crash, however, was unlikely as the recovery of the mid-tier and mass markets this year shows that there is strong underlying demand from non-speculators.
Developers will not be allowed to offer the DPS with immediate effect, but a developer that has already obtained approval to offer the scheme for a project may continue to do so.
The DPS allows buyers to buy a property by forking out only a 10 per cent or 20 per cent downpayment, with the rest due upon completion - sometimes as long as three years later.
The scheme was introduced at a time when the property market was lacklustre and the economy was in recession.
But with the property market now booming, critics have said that the scheme encourages speculation as some seek to resell their properties at a profit without immediately worrying about payments.
Announcing the scrapping of the DPS yesterday, the Urban Redevelopment Authority (URA) said that the scheme was no longer needed as the property market has recovered.
The Real Estate Developers’ Association of Singapore (Redas) agreed, saying that it understands the government’s decision to withdraw the DPS. ‘The need for this scheme has diminished with the strong market recovery over the last two years,’ Redas added.
A spokesman for City Developments (CDL) said that the move had been ‘expected’ for some time.
It is estimated that less than half of the buyers of CDL’s projects use the DPS. Said the spokesman: ‘We have been actively discouraging buyers from taking up DPS by way of a price differential.’
Lippo Group is one of the few developers that have not offered the DPS for any of its launches here. ‘I do not think it would affect the sales of our projects,’ Lippo executive director Thio Gim Hock said.
Lippo developments like The Trillium and Newton One have sold well. Mr Thio believes that Lippo’s buyers are not speculators. But he concedes that although the buyers may not flip properties immediately, some do sell after a few months.
The market could see an initial cooling in response to the government intervention, analysts said.
‘What will affect the market is the idea that the government is flexing its muscles,’ said Ku Swee Yong, Savills Singapore’s director of marketing and business development. ‘Frankly, how the signal is going to be interpreted or misinterpreted is going to decide the market’s reaction.’
Mr Ku also said that institutional funds that invest in property here could be unhappy as the government’s move adds volatility to the marketplace.
Looking at the other side of the issue, Lippo’s Mr Thio pointed out that with the DPS, banks, which lent money to developers for construction, had to bear greater risks. ‘In a rising market, banks are not worried to give loans,’ he said.
Citigroup economist Chua Hak Bin had raised the alarm in a report earlier this year when he pointed out that the estimated average debt-to-equity ratio at Singapore property developers with a market capitalisation of more than $1 billion rose to 61 per cent in the first quarter, from 50 per cent a year earlier.
However, Dr Chua believes the rationale for axing the DPS now has more to do with ‘taking away the froth at the high-end market’.
‘Banks have become more cautious anyway,’ he said.
United Overseas Bank (UOB) said that the move should help property prices stabilise. ‘That’s good news for the loans market as more property buyers would now be taking loans with banks,’ said Kevin Lam, the head of UOB’s loans division.
Property stocks are expected to fall on Monday when the market resumes trading. ‘It (the announcement) will affect market sentiment as it will have an impact on future demand,’ said David Lum, an analyst at the Daiwa Institute of Research. ‘The stock market always looks to future demand, and it is no secret that the scheme has been one of the major drivers of demand.’
Market players expect blip, not crash, to follow the exit of the buy-now-pay-later scheme.
In a surprise move yesterday, the government said that it was withdrawing the deferred payment scheme (DPS) for the sale of uncompleted private properties in a bid to discourage speculative buying and cool the property market.
Market players said that the move could unnerve some buyers in the short term - leading to a drop in demand. A crash, however, was unlikely as the recovery of the mid-tier and mass markets this year shows that there is strong underlying demand from non-speculators.
Developers will not be allowed to offer the DPS with immediate effect, but a developer that has already obtained approval to offer the scheme for a project may continue to do so.
The DPS allows buyers to buy a property by forking out only a 10 per cent or 20 per cent downpayment, with the rest due upon completion - sometimes as long as three years later.
The scheme was introduced at a time when the property market was lacklustre and the economy was in recession.
But with the property market now booming, critics have said that the scheme encourages speculation as some seek to resell their properties at a profit without immediately worrying about payments.
Announcing the scrapping of the DPS yesterday, the Urban Redevelopment Authority (URA) said that the scheme was no longer needed as the property market has recovered.
The Real Estate Developers’ Association of Singapore (Redas) agreed, saying that it understands the government’s decision to withdraw the DPS. ‘The need for this scheme has diminished with the strong market recovery over the last two years,’ Redas added.
A spokesman for City Developments (CDL) said that the move had been ‘expected’ for some time.
It is estimated that less than half of the buyers of CDL’s projects use the DPS. Said the spokesman: ‘We have been actively discouraging buyers from taking up DPS by way of a price differential.’
Lippo Group is one of the few developers that have not offered the DPS for any of its launches here. ‘I do not think it would affect the sales of our projects,’ Lippo executive director Thio Gim Hock said.
Lippo developments like The Trillium and Newton One have sold well. Mr Thio believes that Lippo’s buyers are not speculators. But he concedes that although the buyers may not flip properties immediately, some do sell after a few months.
The market could see an initial cooling in response to the government intervention, analysts said.
‘What will affect the market is the idea that the government is flexing its muscles,’ said Ku Swee Yong, Savills Singapore’s director of marketing and business development. ‘Frankly, how the signal is going to be interpreted or misinterpreted is going to decide the market’s reaction.’
Mr Ku also said that institutional funds that invest in property here could be unhappy as the government’s move adds volatility to the marketplace.
Looking at the other side of the issue, Lippo’s Mr Thio pointed out that with the DPS, banks, which lent money to developers for construction, had to bear greater risks. ‘In a rising market, banks are not worried to give loans,’ he said.
Citigroup economist Chua Hak Bin had raised the alarm in a report earlier this year when he pointed out that the estimated average debt-to-equity ratio at Singapore property developers with a market capitalisation of more than $1 billion rose to 61 per cent in the first quarter, from 50 per cent a year earlier.
However, Dr Chua believes the rationale for axing the DPS now has more to do with ‘taking away the froth at the high-end market’.
‘Banks have become more cautious anyway,’ he said.
United Overseas Bank (UOB) said that the move should help property prices stabilise. ‘That’s good news for the loans market as more property buyers would now be taking loans with banks,’ said Kevin Lam, the head of UOB’s loans division.
Property stocks are expected to fall on Monday when the market resumes trading. ‘It (the announcement) will affect market sentiment as it will have an impact on future demand,’ said David Lum, an analyst at the Daiwa Institute of Research. ‘The stock market always looks to future demand, and it is no secret that the scheme has been one of the major drivers of demand.’
Another Property Brake
Source : Weekend TODAY, October 27, 2007
Govt scraps 'outdated' deferred payment scheme
Property punters and those financially lax, you're next.
The latest measure to keep prices stable crept up on the property market late on Friday afternoon, when the Government suddenly took away a popular financing option for buyers of uncompleted private homes and offices.
With immediate effect, buyers can no longer ride on the deferred payment scheme, whereby a purchaser not only pays a small fraction of the price upfront, he can also wait a couple of years before forking out the remainder.
Such grace was needed during the economic slump of 1997, when the scheme was introduced to encourage demand.
But in good times like today, it is "no longer relevant", said National Development Minister Mah Bow Tan.
Scrapping the scheme will also "encourage greater financial prudence as buyers will have to ensure they have sufficient funds or are able to secure adequate loans from banks before they commit to buying a property", said the Urban Redevelopment Authority (URA).
While most industry players and analysts agreed with the rationale, some were puzzled by the timing.
Calling the removal a "wrong signal" to investors, property analyst Colin Tan wondered why there was a need for such a sentiment-pricking measure when data do not suggest that speculative activities are anywhere near 1996 levels.
A decade ago, the Government stepped in with painful curbs, chief of which was a tax on gains made from property sales done within three years from the time of purchase.
In this round's booming property market, the authorities have implemented a suite of "softer" measures including tweaking land supply, repeatedly warning about "monitoring" the market, singling out bullish projection by certain research firms and raising development charges.
As it is, investor confidence has softened due to growing fears of a United States recession triggered by the ongoing credit crunch, said Mr Tan, research director at Chesterton International.
Furthermore, didn't several officials come out to say there was no bubble forming in the property market, he asked.
But in Mr Mah's view, there are now "signs of overheating", even though the strong economy has also been behind the 20 per cent surge in private home prices since the start of the year.
"Don't forget with the scheme, you actually encourage speculators to come in, so it's not necessary to add further to the current market," he told reporters on the sidelines of an event on Friday evening, shortly after the URA released a statement about the scheme's removal. The announcement came after the close of the stock market and so did not touch property-related stocks, which might fall next week after digesting what some deem to be negative news.
The Real Estate Developers' Association of Singapore (Redas) said in a statement, which mirrored factors listed in the URA statement, that it "understands" the Government's decision "in view of the strong economic growth, buoyant property market and positive employment situation".
Colliers International's research director Tay Huey Ying was not surprised by the measure, which she viewed as "preventive action" against overheating and financial imprudence.
A recent sign that the Government had apprehensions about the DPS came earlier this year, she said. In April, the central bank had warned that the widespread use of deferred payment schemes (DPS) by developers could pose additional risks to banks. Under such plans, a buyer could put down a 10-per-cent downpayment and then pay the remainder when the Temporary Occupation Permit (TOP) is issued near to the project's completion date. That grace period could be two or three years. So, the scheme essentially shifts the financing burden away from households or office-space buyers, to developers and construction firms. In addition, some developers have the practice of selling bonds backed by future payments promised by buyers of units under construction.
At the same time, home loans growth here have continued to hit new highs month after month, as those on DPS start borrowing from banks when the TOP date nears.
City Developments Limited (CDL), in reaction to the measure, said the company has been "actively discouraging" homebuyers from using the DPS by informing them that the scheme effectively means paying 5 per cent more at the end of the financing period.
But would scrapping the scheme spell fewer buyers and lower demand? Ms Tay feels the property price recovery will not be derailed, especially not in the mass market, where speculative activity accounts for just 5 per cent of total sales. Furthermore, those who use the deferred payment plan number fewer than those who pay progressively, meaning making payments at various stages of the project's completion, said CDL spokesman Gerry de Silva.
In contrast, HSBC reportedly said in April that 60 per cent of its customers who bought properties under construction opted for the DPS.
Now that the deferred payment scheme is gone, it is "good news for the loans market, as more property buyers would now be taking loans with banks", said United Overseas Bank.
Govt scraps 'outdated' deferred payment scheme
Property punters and those financially lax, you're next.
The latest measure to keep prices stable crept up on the property market late on Friday afternoon, when the Government suddenly took away a popular financing option for buyers of uncompleted private homes and offices.
With immediate effect, buyers can no longer ride on the deferred payment scheme, whereby a purchaser not only pays a small fraction of the price upfront, he can also wait a couple of years before forking out the remainder.
Such grace was needed during the economic slump of 1997, when the scheme was introduced to encourage demand.
But in good times like today, it is "no longer relevant", said National Development Minister Mah Bow Tan.
Scrapping the scheme will also "encourage greater financial prudence as buyers will have to ensure they have sufficient funds or are able to secure adequate loans from banks before they commit to buying a property", said the Urban Redevelopment Authority (URA).
While most industry players and analysts agreed with the rationale, some were puzzled by the timing.
Calling the removal a "wrong signal" to investors, property analyst Colin Tan wondered why there was a need for such a sentiment-pricking measure when data do not suggest that speculative activities are anywhere near 1996 levels.
A decade ago, the Government stepped in with painful curbs, chief of which was a tax on gains made from property sales done within three years from the time of purchase.
In this round's booming property market, the authorities have implemented a suite of "softer" measures including tweaking land supply, repeatedly warning about "monitoring" the market, singling out bullish projection by certain research firms and raising development charges.
As it is, investor confidence has softened due to growing fears of a United States recession triggered by the ongoing credit crunch, said Mr Tan, research director at Chesterton International.
Furthermore, didn't several officials come out to say there was no bubble forming in the property market, he asked.
But in Mr Mah's view, there are now "signs of overheating", even though the strong economy has also been behind the 20 per cent surge in private home prices since the start of the year.
"Don't forget with the scheme, you actually encourage speculators to come in, so it's not necessary to add further to the current market," he told reporters on the sidelines of an event on Friday evening, shortly after the URA released a statement about the scheme's removal. The announcement came after the close of the stock market and so did not touch property-related stocks, which might fall next week after digesting what some deem to be negative news.
The Real Estate Developers' Association of Singapore (Redas) said in a statement, which mirrored factors listed in the URA statement, that it "understands" the Government's decision "in view of the strong economic growth, buoyant property market and positive employment situation".
Colliers International's research director Tay Huey Ying was not surprised by the measure, which she viewed as "preventive action" against overheating and financial imprudence.
A recent sign that the Government had apprehensions about the DPS came earlier this year, she said. In April, the central bank had warned that the widespread use of deferred payment schemes (DPS) by developers could pose additional risks to banks. Under such plans, a buyer could put down a 10-per-cent downpayment and then pay the remainder when the Temporary Occupation Permit (TOP) is issued near to the project's completion date. That grace period could be two or three years. So, the scheme essentially shifts the financing burden away from households or office-space buyers, to developers and construction firms. In addition, some developers have the practice of selling bonds backed by future payments promised by buyers of units under construction.
At the same time, home loans growth here have continued to hit new highs month after month, as those on DPS start borrowing from banks when the TOP date nears.
City Developments Limited (CDL), in reaction to the measure, said the company has been "actively discouraging" homebuyers from using the DPS by informing them that the scheme effectively means paying 5 per cent more at the end of the financing period.
But would scrapping the scheme spell fewer buyers and lower demand? Ms Tay feels the property price recovery will not be derailed, especially not in the mass market, where speculative activity accounts for just 5 per cent of total sales. Furthermore, those who use the deferred payment plan number fewer than those who pay progressively, meaning making payments at various stages of the project's completion, said CDL spokesman Gerry de Silva.
In contrast, HSBC reportedly said in April that 60 per cent of its customers who bought properties under construction opted for the DPS.
Now that the deferred payment scheme is gone, it is "good news for the loans market, as more property buyers would now be taking loans with banks", said United Overseas Bank.
Friday, October 26, 2007
Govt Withdraws Deferred Payment Scheme For Property Purchases
Source : Channel NewsAsia, 26 October 2007
The government has withdrawn the deferred payment scheme for property purchases.
This applies to all residential, commercial and industrial properties.
This is seen as the clearest move yet to cool the property market.
Amid the strong growth in the property sector, there have been calls on the government to step in.
Analysts say the latest move did not come as a total surprise.
Tay Huey Ying, Research and Consultancy Director, Colliers International, says: "Just as the government has been watching the market, the market has also been watching the government very closely to see when they will be implementing measures to cool down the market. So I would say that this is something that the market is expecting. It's just a matter of time."
Under the Deferred Payment Scheme, developers could offer buyers of uncompleted private properties the option to defer part of their payment for the units they buy.
When the scheme first started, buyers had to pay an initial 20 percent downpayment in full.
They were allowed to defer payment on the remaining 80 percent of the purchase price.
But subsequently, they were allowed up to half of the downpayment.
These deferred payment plans have been seen as key to driving growth in the property market.
Property watchers say withdrawing the scheme will keep speculation in check but they expect the market to remain buoyant.
Mr Tay says: "Genuine purchasers are likely to continue to carry on with their purchases. And since demand fundamentals remain healthy, I think the level of activity will remain active especially since sub-sale currently accounts for only 12 per cent of total transactions. And in the mass market, sub-sales currently only account for only 5 per cent of total transactions."
Private home prices have risen almost 23 percent so far this year. - CNA/ch
The government has withdrawn the deferred payment scheme for property purchases. This applies to all residential, commercial and industrial properties.
This is seen as the clearest move yet to cool the property market.
Amid the strong growth in the property sector, there have been calls on the government to step in.
Analysts say the latest move did not come as a total surprise.
Tay Huey Ying, Research and Consultancy Director, Colliers International, says: "Just as the government has been watching the market, the market has also been watching the government very closely to see when they will be implementing measures to cool down the market. So I would say that this is something that the market is expecting. It's just a matter of time."
Under the Deferred Payment Scheme, developers could offer buyers of uncompleted private properties the option to defer part of their payment for the units they buy.
When the scheme first started, buyers had to pay an initial 20 percent downpayment in full.
They were allowed to defer payment on the remaining 80 percent of the purchase price.
But subsequently, they were allowed up to half of the downpayment.
These deferred payment plans have been seen as key to driving growth in the property market.
Property watchers say withdrawing the scheme will keep speculation in check but they expect the market to remain buoyant.
Mr Tay says: "Genuine purchasers are likely to continue to carry on with their purchases. And since demand fundamentals remain healthy, I think the level of activity will remain active especially since sub-sale currently accounts for only 12 per cent of total transactions. And in the mass market, sub-sales currently only account for only 5 per cent of total transactions."
Private home prices have risen almost 23 percent so far this year. - CNA/ch
S'pore Ends Delayed Home Payments Scheme
Source : The Business Times, October 26, 2007
Singapore said late on Friday that real estate developers could no longer let home buyers delay payments on the bulk of their property purchases, a move that could douse the rise in housing prices.
Residential property prices in the city-state have soared to their highest levels in a decade, fuelled by a strong economy and a supply crunch as well as liberal payment schemes that allow buyers to make a 10 to 20 per cent deposit and delay the bulk of payments until a project nears completion.
But Singapore's Urban Redevelopment Authority (URA) said these schemes, introduced in 1997 when the economy was in recession, were no longer necessary.
'In view of the current buoyant property market, the Government has decided to withdraw the deferred payment scheme for the sale of uncompleted private residential and commercial properties with effect from 26 Oct 2007,' URA said on its website.
Up to 90 per cent of buyers in projects by Singapore developers such as City Developments and Keppel Land opt for such payment schemes.
The URA said the move would encourage greater financial prudence among investors by compelling them to seek sufficient funds or adequate bank loans before they commit to buying a property.
According to government figures released earlier on Friday, Singapore private home prices rose 8.3 per cent between July and September, or over 21 per cent since the start of the year.
Some government leaders have expressed concern that the rapid rise in housing prices could threaten Singapore's competitiveness with rival regional cities such as Hong Kong.
Fewer uncompleted residential units in Singapore were sold in the third quarter versus the previous quarter, reflecting investor unease following the sub-prime mortgage debt fallout in the United States.
'I think we're at the peak of property prices. If this move doesn't cool property prices, we could see the reintroduction of the capital gains tax to further weed out property speculators,' said Song Seng Wun, an economist at CIMB-GK Research.
Analysts said the move could also hit investor sentiment on Singapore property shares, although bigger firms such as CapitaLand were well diversified out of the city-state.
'There is still a lot of demand for homes. The underlying market fundamentals are still strong because of robust wage and jobs growth,' Ku Swee Yong, director of marketing and business development at consultancy Savills, said. -- REUTERS
Singapore said late on Friday that real estate developers could no longer let home buyers delay payments on the bulk of their property purchases, a move that could douse the rise in housing prices.
Residential property prices in the city-state have soared to their highest levels in a decade, fuelled by a strong economy and a supply crunch as well as liberal payment schemes that allow buyers to make a 10 to 20 per cent deposit and delay the bulk of payments until a project nears completion.
But Singapore's Urban Redevelopment Authority (URA) said these schemes, introduced in 1997 when the economy was in recession, were no longer necessary.
'In view of the current buoyant property market, the Government has decided to withdraw the deferred payment scheme for the sale of uncompleted private residential and commercial properties with effect from 26 Oct 2007,' URA said on its website.
Up to 90 per cent of buyers in projects by Singapore developers such as City Developments and Keppel Land opt for such payment schemes.
The URA said the move would encourage greater financial prudence among investors by compelling them to seek sufficient funds or adequate bank loans before they commit to buying a property.
According to government figures released earlier on Friday, Singapore private home prices rose 8.3 per cent between July and September, or over 21 per cent since the start of the year.
Some government leaders have expressed concern that the rapid rise in housing prices could threaten Singapore's competitiveness with rival regional cities such as Hong Kong.
Fewer uncompleted residential units in Singapore were sold in the third quarter versus the previous quarter, reflecting investor unease following the sub-prime mortgage debt fallout in the United States.
'I think we're at the peak of property prices. If this move doesn't cool property prices, we could see the reintroduction of the capital gains tax to further weed out property speculators,' said Song Seng Wun, an economist at CIMB-GK Research.
Analysts said the move could also hit investor sentiment on Singapore property shares, although bigger firms such as CapitaLand were well diversified out of the city-state.
'There is still a lot of demand for homes. The underlying market fundamentals are still strong because of robust wage and jobs growth,' Ku Swee Yong, director of marketing and business development at consultancy Savills, said. -- REUTERS
Deferred Payment Schemes For Property Purchases Withdrawn
Source : The Straits Times, Oct 26, 2007
THE Government has withdrawn deferred payment schemes for all property purchases with immediate effect.
The Urban Redevelopment Authority (URA) said in a statement that this is 'in view of the strong economic and property market conditions'.
Such schemes - first approved in Oct 1997 - previously allowed buyers of uncompleted private homes and offices the option to defer part of the progress payments, after forking out an initial 20 per cent downpayment.
This move was introduced 'at a time when the property market was lacklustre and the economy was in recession.'
But since the market has now recovered and is 'buoyant', the URA added, the Government has decided to withdraw the scheme with regard to the sale of all uncompleted properties with effect from 26 Oct.
The URA added that this removal will 'encourage greater financial prudence, as buyers will have to ensure that they have sufficient funds or are able to secure adequate loans from banks before they commit to buying a property.'
THE Government has withdrawn deferred payment schemes for all property purchases with immediate effect.
The Urban Redevelopment Authority (URA) said in a statement that this is 'in view of the strong economic and property market conditions'.
Such schemes - first approved in Oct 1997 - previously allowed buyers of uncompleted private homes and offices the option to defer part of the progress payments, after forking out an initial 20 per cent downpayment.
This move was introduced 'at a time when the property market was lacklustre and the economy was in recession.'
But since the market has now recovered and is 'buoyant', the URA added, the Government has decided to withdraw the scheme with regard to the sale of all uncompleted properties with effect from 26 Oct.
The URA added that this removal will 'encourage greater financial prudence, as buyers will have to ensure that they have sufficient funds or are able to secure adequate loans from banks before they commit to buying a property.'
Withdrawal Of Deferred Payment Scheme (DPS) For Property Purchases
Source : Urban Redevelopment Authority News Releases, 26 October 2007
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The Government announced today the immediate withdrawal of the Deferred Payment Scheme (DPS) for property purchases in view of the strong economic and property market conditions.
Deferred Payment Scheme
In Oct 1997, the Government allowed developers to offer to purchasers of uncompleted private residential and commercial properties the option to defer part of the progress payments due after the initial 20% downpayment, to a later stage.
In Nov 2001, the Government further allowed developers to defer up to half of the initial 20% downpayment up to the issue of Temporary Occupation Permit or any time before that. These DPS were introduced at a time when the property market was lacklustre and the economy was in recession.
Buoyant property market and strong economic growth
The property market has since recovered and has been growing strongly in the last few years, driven by economic fundamentals including our robust economic growth and rise in wages. In view of the current buoyant property market, the Government has decided to withdraw the DPS for the sale of uncompleted private residential, commercial and industrial properties with effect from 26 Oct 2007.
The removal of the DPS will also encourage greater financial prudence, as buyers will have to ensure that they have sufficient funds or are able to secure adequate loans from banks before they commit to buying a property.
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For media enquiries, please contact:
Ms Ang Hwee Suan
Head, Public Relations
DID: 63218134
Email: Ang_Hwee_Suan@ura.gov.sg
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The Government announced today the immediate withdrawal of the Deferred Payment Scheme (DPS) for property purchases in view of the strong economic and property market conditions.Deferred Payment Scheme
In Oct 1997, the Government allowed developers to offer to purchasers of uncompleted private residential and commercial properties the option to defer part of the progress payments due after the initial 20% downpayment, to a later stage.
In Nov 2001, the Government further allowed developers to defer up to half of the initial 20% downpayment up to the issue of Temporary Occupation Permit or any time before that. These DPS were introduced at a time when the property market was lacklustre and the economy was in recession.
Buoyant property market and strong economic growth
The property market has since recovered and has been growing strongly in the last few years, driven by economic fundamentals including our robust economic growth and rise in wages. In view of the current buoyant property market, the Government has decided to withdraw the DPS for the sale of uncompleted private residential, commercial and industrial properties with effect from 26 Oct 2007.
The removal of the DPS will also encourage greater financial prudence, as buyers will have to ensure that they have sufficient funds or are able to secure adequate loans from banks before they commit to buying a property.
--------------------------------------------------------------------------------
For media enquiries, please contact:
Ms Ang Hwee Suan
Head, Public Relations
DID: 63218134
Email: Ang_Hwee_Suan@ura.gov.sg
Saturday, August 11, 2007
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