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Lowering land prices is like taking money from reserves

Posted on 17 Apr 2011 | Comments Off

National Development Minister Mah Bow Tan says that lowering the price of state land is equivalent to taking money from Singapore’s reserves.

Mr Mah was rebutting comments from Workers’ Party (WP) Secretary-General Low Thia Khiang, who had proposed that the cost of state land be lowered so that homes can be built cheaper.

Speaking to reporters on the sidelines of a community event on Saturday, Mr Mah stressed that land in Singapore is part of the country’s national reserves.

He said: “That is precisely what the elected presidency was meant to do, to protect our reserves, to prevent political parties during election time from coming up with all sorts of promises to say, ‘oh, I’m going to take money from the reserves to do this, that and the other’.”

Mr Mah also stressed that the number of new HDB flats is not small, and the lowering of prices will inevitably affect the value of resale homes.

He said: “Of course, WP says, ‘don’t worry, it’s only going to come later’. As I’ve said, that’s very small comfort. That’s like telling people, ‘don’t worry, the tsunami is coming, it’s only going to hit us a few hours later’. But I say ‘no, it’s going to hit us almost immediately’. Why? because all the markets are inter-linked.”

Mr Mah also declined a debate on housing with the National Solidarity Party, saying that the government’s position is very clear.

Source : CNA – 16 Apr 2011

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Tagged HDB, Housing Development Board, Land Price, Ministry of National Development, Real estate, Singapore Prperty

Property cooling measures hit private property market

Posted on 14 Jan 2011 | Comments Off

The latest round of property cooling measures which kicked in Friday appears to have caused a knee-jerk reaction from the private property market.

Channel NewsAsia understands that some sellers even rushed to close deals before midnight to avoid the new rules. Others pulled their properties from the market.

To 36-year-old Christopher Ng, the new measures were welcome news as he hopes prices will soon soften.

The first-time private property buyer has been looking for a home for the past six months, but was put off by high prices and small units.

But, he now faces a new dilemma. “My other agents actually called me and said that most of the listings have been delisted, and so the supply actually has shrunk,” he said.

The tightening measures have sent shockwaves through the market, with some rushing to close deals before midnight.

Mr Ng said he was rushed by his agent into making an offer for a house on Thursday night, as the seller wanted to close the deal quickly. However, another buyer pipped Mr Ng for the property.

Chris Koh, director, Dennis Wee Group, said: “I am aware of one particular case where the buyer said, ‘In that case, I’d better exercise the option yesterday.’ So in the evening of yesterday, after the news was out, one of my sales person said … the purchaser said ‘let me exercise the option.'”

Of the new measures, one of the harshest was on sellers’ stamp duty – which went up to a maximum 16 per cent on property sold within the first year, a jump from three per cent previously.

Banks will also reduce the maximum loan to those who already have one or more mortgages to 60 per cent of the property value.

The aim is to lower demand that’s been driving prices up.

These measures are a direct hit to the profit margin of those looking to buy and sell within a few years.

While the market now appears to be more favourable to first time private home buyers, analysts say upgraders may also be affected.

Donald Han, vice chairman, Cushman & Wakefield, said: “You’re upgrading from an HDB to a private property, and assuming that private property is under construction, the loan quantum that’s available to you is going to be 60 per cent of the value or the purchase price, whichever is lower, and you need to fork out 40 per cent cash in that sense.

“And you’re stuck with a property that you cannot sell until you have a place to move into, and the new property is under construction and will only be ready in two, three years time. So that will be a disincentive for cross-over buyers into the private market.”

It has been less than five months since the previous round of cooling measures.

While the market appeared to take the August measures in its stride, with 1,900 homes sold in November, the new and stricter rules are likely to reduce the number of short to medium-term investors. Market watchers say it will encourage buyers to think longer term.

Source : ChannelNews Asia – 14 Jan 2011