FEBRUARY 2013 |
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the project, a unit fl oor plan and a breakdown of a unit’s fl oor area. They also have to provide information on at least one completed project they have built (new developers must be tied in with an already-established fi rm). In addition, developers have to obtain the homebuyer’s consent should there be changes to the layout of the unit.
Controls on website advertising were also tightened, prohibiting any misleading or false information. The rising popularity of ‘shoebox’ apartments also became more apparent in the fi rst quarter of the 2012, with record numbers of the under-500- square-foot apartments being sold. The new regulations imposed on developers helped investors see more accurately what kind of space they would be getting in these small property buys. Dividing space into specifi c areas means that less-usable parts of the property (balconies, for instance) were more obvious.
Moving on a few months, September
saw the Federal Reserve announcing the third round of quantitative easing: QE3. Quantitative easing has been a series of measures introduced by the ‘Fed’. The fi rst (QE1) came into effect in November 2008, when the US Central Bank started buying mortgage- backed securities. Upon conclusion in March 2010, US$1.25 trillion of such securities had been purchased. QE2 began in November 2010 when the Fed continued to reinvest payments on the securities purchased during QE1. It also purchased US$600 billion of long-term Treasury securities. The second program ended in June 2011. QE3 is a variation on the previous measures – to quote Savills: “It [has] a more regular pace of mortgage-backed securities purchasing planned at US$40 billion per month with no deadline. The Fed also pledged to maintain fed funds rate near zero at least through 2015.” What effect would this have on the property market? Most experts predicted prices rising even higher, although some said this would be tempered fairly quickly.
FEATURE
QE3 was met with some negative views.
Propwise.sg ran an article entitled: “QE 3: Operation Screw, the Singapore Property Market and You”. Little doubt there what the author thought. (The article is in fact very informative, if you’d like to learn more. Find it at:
www.propwise.sg/ qe-3-operation-screw-the-singapore- property-market-and-you). The concerns stemmed from the fact that the easing measures would effectively infl ate a housing bubble – creating the illusion of additional wealth where in fact none exists. It’s too soon to see the full effect of QE3 on the Singaporean market, but watch this space. To add further to a fairly tumultuous year for property professionals in the
“Investors can see more accurately what kind of space they will be getting in small apartments”
country, the government announced a mortgage loan cap in October 2012. The regulations took effect on 6 October 2012, applying to both HDB fl ats and private homes, with the aim of promoting long-term stability in the property market.
Under the rules, the loan tenure for all new residential property loans has been cut to 35 years. In addition, stricter loan-to-value (LTV) limits have been implemented for loans exceeding 30 years.
This was partly to blame for the decrease in sales that October 2012 brought.
Home sales in Singapore fell by nearly 26% in October, after September saw the highest level in three years. A total of 1,948 units were sold in October, down from 2,621 the previous month.
The rapid decline was mainly attributed to the lack of property launches – Channel News Asia reported that launches were down (coincidentally) around 26%. The negative news landing in our inbox didn’t last long.
According to the Q4 brief from Savills, transaction volume over the
preceding 10 months saw a 21% increase over 2010’s full-year total (which was itself a record-breaker). The time period totalled 19,792 homes sold, in comparison to 2010’s 16,292. However, as this article was being written, the Singaporean government introduced a further set of cooling measures. These ones fi nally seem to have hit the target in people’s minds already, no matter what their eventual effect on the market may be. Released in a 12-page press release, the severity of the new regulations have tempered experts’ predictions for the property market. As Adrian Bishop reported on OPP Connect: “Buyers formed long lines at La Fiesta showroom at Sengkang Square, Singapore as they rushed to beat stamp duty rises introduced on Saturday 12 January and the raising of Additional Buyer’s Stamp Duty from 5% to 7%. “The tax will be imposed on Permanent Residents buying their fi rst property and Singaporeans buying their second property. Other buyers wanted to avoid new Loan-To-Value limits from the banks.
“Those getting a second loan will have their Loan-To-Value limits reduced to as low as 30 per cent, depending on the loan tenure or borrower’s age. CNBC reported an analyst’s prediction of over 42,000 new homes being completed in 2013, nearly double that of 2012’s 21,859. This compares with an average annual housing demand of 20,000 units since 2001.”
So, what’s next for Singapore? The cooling measures have, as I mentioned, seriously lowered the expectations of market experts. Where there were split opinions a month ago, now there is an almost unanimous prediction of fl attening or falling prices over the next year.
PropertyGuru (
propertyguru.com. sg) have forecast little change in the numbers of foreign investors, however – they are of the opinion that any who have weathered previous cooling measures will continue to do so. Andrew Batt, international Group Editor for the news sites, pointed out that to really make an impact on foreign investment the government may have to put a stop to it all together; which
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would hugely damage the country’s reputation as a business hub.
Singaporeans overseas It’s worth having a look at this from the other side, as well – Singaporeans are becoming a greater presence in the international property industry as investors.
“The severity of the new regulations have tempered experts’ predictions for the market”
Singapore has just become even more attractive to overseas agents and developers.
Now we’ve seen the loan-to-value rules implemented, it is likely that Singaporeans will start looking to Malaysia in particular, due to the availibility of high-margin fi nance. It looks like the headlines in 2013 could be interesting as well.
India
Singapore statistics
Residential Property Facts • Price (sq.m): $16,350 • Rental Yield: 2.95% • Rent/month: $4,817 • Income Tax: 15.13% • Roundtrip Cost: 4.67% • Cap Gains Tax: n.a. • Landlord and Tenant Law: Pro-Landlord
Rental Yields Singapore centre condos Cost (us$)
75 sq. m. = 1,306,425 120 sq. m. = 1,962,000 175 sq. m. = 3,218,425 300 sq. m. = 5,577,000
Yield (p.A.)
3,279 4,817 7,168
11,988
Source:
www.globalpropertyguide.com
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