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They don’t go far enough in curbing excess

Posted on 23 Feb 2010 | Comments Off

WHILE I welcome the government measures announced in last Saturday’s report, ‘New rules to curb property speculation’, I doubt if they are effective enough to cool the market.

The rise in private and public property prices in the past four years has far outpaced the average Singaporean’s pay hike.

I can think of half a dozen reasons for the sharp increase in private property prices:

Low interest rates;

The sharp rise in the non-resident population between 2006 and last year;

A loss of faith in investing with banks, investment banks and fund managers following the collapse of Lehman Brothers;

The low deposit and creative payment schemes crafted by developers;

The storage of collective property sales which were not promptly developed but kept in developers’ land banks, resulting in short supply; and

The herd mentality leading to the property chase.To discourage speculation, the Government should raise the interbank interest rate to at least 2.5 per cent to help beat its projected inflation rate of 2 to 3 per cent this year.Review capital gains tax on property bought and sold within three years – a measure used in the middle of the last decade.

Ban collective sales of condominiums or landed property which are less than 30 years old, unless there is a good reason to do so.

To avoid a land squeeze, developers must redevelop an en bloc property within three years of acquisition.

David Goh

Source : Straits Times – 23 Feb 2010

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Posted in Loan / Mortgage / Finance, Property Market / Real Estate

Tagged Govt Policy, Home Loans, Housing Loans, Property Speculation, Singapore Property, Singapore Property Market, Stamp Duty

1 semi-D + 1 cluster house = 1 flat and $700k loss

Posted on 22 Aug 2009 | Comments Off

In mid-1990s, many made mistake of thinking prices would keep going up

IN 1995, Mr Zachary Tsai (not his real name) paid nearly $1.3 million for a second house. A general manager with a manufacturing company in his early 40s, he earned a five-figure salary and lived in a semi-detached house he owned in Upper East Coast with his wife and four children.

But pressured by his ‘rich and successful’ friends, he decided to pool his hard-earned savings of $300,000 with his sister to put down a deposit on a three-storey cluster house in Kew Gate, a 31-unit leasehold development in the Upper East Coast area.

Intending to sell it about 10 years later, and confident of being able to repay the mortgage and make a handsome profit, he took out a 90 per cent bank loan.

Any thought that he would lose his job and house prices would drop like a stone never occurred to him. But the unthinkable became an unpleasant reality. Continue reading →