Tag Archives: loan-to-value

Buoyant S’pore property sales spark fresh concerns

Posted on 30 May 2012 | Comments Off on Buoyant S’pore property sales spark fresh concerns

Buoyant property sales in recent months have sparked fresh concerns that another round of cooling measures may be on the cards despite the last round of measures introduced in December 2011.

Experts said the appetite for home purchases in Singapore is still strong despite several rounds of cooling measures that were introduced by the government.

In fact, property developers have been selling over 2,000 private homes every month in 2012 — well above the monthly historical average of 1,400 units.

During the last parliament sitting, National Development Minister Khaw Boon Wan told the House that the five rounds of measures implemented between September 2009 and December last year would need more time to cool the property market.

Although property sales are expected to remain above 2,000 units a month over the next few months, experts said it was unlikely that the authorities would introduce another round of cooling measures soon.

Norman Ho, a real estate partner at Rodyk & Davidson, said: “I don’t think any cooling measures should come in any further. … I don’t think (capital gains tax) should be implemented because Singapore, being an open economy, … it actually has a repercussion on the economy.

“It destabilises the economy. It just doesn’t affect the purchasing of residential property itself, but it affects the whole outlook of the economy.”

Low borrowing rates and a flush of liquidity in the market have been blamed for the buoyant property demand.

Experts said one way to curb demand is to restrict housing loans available for home buyers.

Donald Han, HSR’s special advisor, said: “To restrict the number of multiple investments per investor, one possible option would be to look into the loan-to-value ratio.

“That is, if you are looking at your first property for your own occupation, that loan quantum can be as high as 80 per cent. But once you are buying into your second and third property, that could come down to as (low) as 60 per cent or even 30 to 50 per cent.”

Nicholas Mark, research head at SLP International, said: “The problem right now in the residential property market is not the level of speculation nor high price growth.

“Prices are stabilising. In fact in some sectors, prices are declining marginally, while the level of speculation has reached a three-year low.

“The problem is actually over-investment — there is a risk there could be a bubble caused by shoebox apartments.”

Analysts said the rising supply of shoebox apartments is one of the factors that is keeping the property sector hot.

By 2015, some 9,700 shoebox apartments are projected to be ready. Eight out of ten apartments will be in the heartlands, an untested market for such apartments that is the size of four car park spaces.

Some analysts have suggested that any possible cooling measures should just be focused on this segment.

Source : CNA – 2012 May 29

Comments Off on Buoyant S’pore property sales spark fresh concerns

Posted in Property Market / Real Estate

Tagged , , , , , , ,

Concerns over asset price bubbles in Singapore

Posted on 8 May 2012 | Comments Off on Concerns over asset price bubbles in Singapore

The seeds of the next financial crisis could be sown even before the current one is completely over.

That’s the warning from some experts at a conference on asset price bubbles in Singapore at the Singapore Management University.

However, they noted that crisis could be averted, if central banks did a better job of communicating their policy stance to the market.

Property price bubbles are in part driven by uncertainty about savings.

And this happens easily in a global environment of low interest rates, with investors seeking out higher-yielding assets.

However, China has managed to rein in property prices, with clear signals from authorities.

David Fernandez, managing director and head, Emerging Asia Research, JP Morgan, said: “The numbers come out, its down, and we all look around and say, ‘is it down enough? Are they going to stop this yet?’ And then you have another speech that this is still a policy priority… So in this case, it’s having a bubble come down with a direction stated by the policymaker.”

But not all policy messages are well received by the market, as in the UK recently.

James Mirrlees, Emeritus Prof of Political Economy, University of Cambridge, 1996 Nobel Laureate in Economics, said: “The Chancellor of the UK was saying ‘Please banks, lend more’. And I think that clearly counts as a not very effective macro-prudential policy, although it is very clear and might well be regarded as very predictable.”

Macro-prudential policies also include lowering the loan to value ratio of housing loans – to prevent risky borrowing by individuals.

These measures – along with punitive taxes for housing transactions – have been adopted by administrations in Hong Kong and Singapore to stem sharp property price increases.

Some experts said this is a problem that comes with success.

David Mayes, BNZ Professor of Finance, University of Auckland, said: “Singapore is an extremely successful economy – you’ve got to live with it. This is going to be reflected in that your wealth is going to go up compared to other people.

“Some of this is going to happen in prices. If you’re not allowing it to happen through the exchange rate, it’s going to happen through domestic prices.”

As economies prosper, experts said it is only natural that people look to spend money to improve their standard of living.

But other policy tools – such as transfers to the poor – are needed, to even out the distribution of wealth.

Source – CNA : 7 May 2012

Comments Off on Concerns over asset price bubbles in Singapore

Posted in Property Market / Real Estate

Tagged , , , ,