Tag Archives: private home

MND says no to relaxing property cooling measures

Posted on 5 Jul 2014 | Comments Off on MND says no to relaxing property cooling measures

The Ministry of National Development (MND) said it is too early to relax the property cooling measures, according to media reports.

The cooling measures include extra stamp duties to rein in speculative buying as well as the total debt servicing ratio (TDSR) framework which was rolled out last year.

Even though there is decline in home sales, prices have remained relatively stable.

“It is still too early to relax the property market cooling measures. If the measures are removed prematurely, we could see a sharp increase in demand and housing prices,” said a spokesman.

He added that the measures were placed to “ensure a stable and sustainable property market.”

MND’s statements came after property developer Kwek Leng Beng warned of a possible impact on the country’s the reputation as a global city, while calling for a review of the property cooling measures.

The National University of Singapore (NUS)’s Residential Price Index showed that resale home prices rose 0.8 percent month-on-month in May, after dropping for nine months, while Urban Redevelopment Authority (URA)’s flash estimates for private home prices showed a 1.1 percent decline in prices in Q2 2014 or its third continuous quarter of price decrease.

Christine Li, OrangeTee’s Head of Research and Consultancy, said the government will remain cautious since interest rates remain low and Singaporeans are still keen on investing in property.

“Four years ago, mass market units were about $700 to $800 psf. Now, the more attractively priced units are already nearing $1,000 psf,” she noted. “I think upgraders from Housing Board flats in particular will still prefer a steeper price correction.”

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Posted in Cooling Measures, Government, Property Market / Real Estate

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Effects of TDSR so far

Posted on 25 Jun 2014 | Comments Off on Effects of TDSR so far

The impact of the Total Debt Servicing Ratio (TDSR) became quickly apparent when it was introduced in June 2013, with private home sales dropping 73.3 percent to 482 units in July 2013 from 1,806 units in June 2013, said media reports.

Analysts noted suburban homes were most affected. Data compiled by Knight Frank Singapore indicated new home sales in the suburbs fell 63 percent in H2 2013 from the first half of the year.

Aimed at ensuring financial prudence among borrowers, the TDSR specifies that the total monthly payments’ of a borrower, including car and home loans and even credit card debts, should not exceed 60 percent of the borrower’s income.

Alice Tan, Knight Frank’s Director of Consultancy and Research, said, “The TDSR basically impacts on mortgage loan eligibility and affordability of private homes and the mass market segment typically caters to upgraders and middle-income home buyers.”

Tan noted these buyers might have decided to forego their purchases after their loan requests have been rejected.

Meanwhile, the effect of TDSR on prices became apparent only on the latter part of the year. Notably, the Urban Redevelopment Authority (URA)’s residential property price index slipped 0.9 percent in Q4 2013, marking its first decline in almost two years.

Home prices dipped again in Q1 2014 by 1.3 percent – its biggest drop since Q2 2009 – when prices plunged by 4.7 percent.

The TDSR also affected the private residential resale market. CBRE figures showed that sales volume in the secondary market fell 50 percent in H1 2014 from H1 2013.

With this, some developers have offered discounts to boost sales. However, other developers are unlikely to do so for some projects as they have “limited room to adjust their prices due to the high land prices they have committed to, earlier on,” said Tan.

Moving forward, developers may build smaller units, which will enable them to offer affordable prices while keeping their profit margins.

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Posted in Loan / Mortgage / Finance

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