Home buyers must set realistic aspirations: Shanmugam

Posted on 7 Feb 2016 | Comments Off on Home buyers must set realistic aspirations: Shanmugam

While the government will continue to help Singaporeans own homes and have put measures in place to protect first-time buyers from a hot housing market, “they must have a realistic pathway to achieving their aspirations”, said Home Affairs and Law Minister K. Shanmugam.

During a dialogue session with over 2,000 property agents from ERA Realty on Wednesday (3 Jan), the minister recalled how a 28-year-old President’s Scholar had lamented to him about not being able to afford a private property in Katong, despite his many achievements.

“These are unrealistic aspirations for someone who’s only in his 20s,” said the minister. He noted that Singaporeans can afford to purchase property based on income levels, and have the option of buying private property, “but they need to start somewhere”, he said in reference to those eager to move up the property ladder.

Properties in Tanjong Katong are generally more expensive compared to other areas in the East, due to their prime location and accessibility to good amenities.

One of the more recent project launches in the neighbourhood is Amber Skye, a 109-unit condominium which was relaunched in March 2015 at an indicative price range of $1,680 psf to $2,500 psf.

Owning a condominium in Singapore is seen as a dream among many Singaporeans, as it is one of the 5Cs, with the other aspirations being a car, country club membership, cash and credit cards.

Despite this, Eugene Lim, Key Executive Officer at ERA Realty, has observed that fewer HDB dwellers are now jumping straight into buying private property.

Instead, he is now seeing a trend of a “fair amount of buyers upgrading to larger flat types since the second half of last year”. For instance, there are more four-room HDB flat owners shifting to five-room flats and executive flats.

“The trend of moving to larger private properties is constrained by the Total Debt Servicing Ratio (TDSR),” he said.

Introduced in June 2013, the TDSR limits the amount of a borrower’s gross monthly income that can be spent on debt repayments to 60 percent.

This has severely impacted private property sales in recent years, with transactions down to about 14,000 units in 2015 compared to around 38,000 in 2012 before the measure was introduced, revealed statistics from the Urban Redevelopment Authority (URA).

Comments Off on Home buyers must set realistic aspirations: Shanmugam

Posted in Cooling Measures, Property Market / Real Estate

Tagged , , , , , ,

How do stock market losses affect property?

Posted on 7 Feb 2016 | Comments Off on How do stock market losses affect property?

Recent declines in the Singapore stock market could signal a further property price correction in the coming months, according to JLL.

This comes as stock market movement typically leads property market movement by one to two quarters.

“Looking back into the past, the residential market for example, corrected by four to six percent a quarter in some instances. Should the market lose footing, it is not impossible to expect a recessionary correction of this magnitude,” said Dr Chua Yang Liang, JLL’s Research Head for South East Asia.

“If this scenario pans out and threatens the stability of the property market and wider economy, it may prompt the government to re-visit its property cooling measures and other macro-economic policies including economic stimulus packages.”

The sharp correction in the stock market was triggered primarily by the slowdown in the Chinese economy, said JLL. Should the economic conditions in China deteriorate further, a more severe correction in the Singapore property market cannot be ruled out.

In fact, the Asian Financial Crisis (AFC) in 1998 clearly illustrated the disruptive effects of a stock market crash on the property market, although the economic reasons for the crash were different, the report noted.

In 1998, the currency and financial crisis in Thailand resulted in an Asian currency meltdown, which also affected the city-state.

“Stock market losses, sharply rising interest rates and a severe credit crunch arising from its proximity to the epicentre of the crisis, and rising unemployment drove Singapore property prices lower by between 35 percent and 44 percent during the crisis, after the property bubble burst across Asia in 1998,” said JLL.

Moving forward, the consultancy expects stock market volatility to persist in 2016.

“The lack of clarity and transparency over the policy road map ahead to manage the slowdown in China will increase downside risk in the stock market.

“Considering that current debt levels in several Asian countries, including China, Malaysia, Thailand and South Korea, are higher than they were before the AFC, these economies are more vulnerable to a global economic slowdown,” added the report.

As for Singapore, downside risks in the local economy “from external shocks, leading to higher unemployment levels, a weaker Singapore dollar and rising domestic interest rates, similar to the AFC conditions, could lead to a sharper than desirable price correction in the property market.”

Comments Off on How do stock market losses affect property?

Posted in Property Market / Real Estate

Tagged , ,