Issue 111

Copyright 2011-2013 www.Propwise.sg. All Rights Reserved.

CONTENTS
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4 Impacts of the MAS Measures on
Mass Market Buyers Property Selling Tip #4: Seller Stamp Duty Singapore Property News This Week Resale Property Transactions (June 20 June 25)

FROM THE

EDITOR

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SINGAPORE PROPERTY WEEKLY Issue 111

4 Impacts of the MAS Measures on Mass Market Buyers

By Gerald Tay (Guest Contributor)

After seven cooling measures and now another shadow one again, I think many of us are already immune by now, Another one again! Whens the next one? From my previous writings, Ive mentioned we do not need a rocket scientist brain to comprehend how hot we are in the property market cycle with so many cooling measures from the government.
As for the magic question To buy or not to buy now, you should have known by now (I hope you do) that if you are going to buy any property today, you will be paying very expensively. Unless you do really know how to create value despite the high price you paid for, or youre drowning in cash,
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SINGAPORE PROPERTY WEEKLY Issue 111 buying just about any property today is like trying to walk across a field of landmines without getting a leg blown off. Poor returns for mass market buyers? For many mass market buyers and investors who bought into local new property launches during the last two years to get better returns than bank deposits, they would most likely be disappointed with the pathetic rental yields and capital gains if any in future, upon completion or T.O.P. Some eager mass market buyers might say that with all the strict property measures and a tighter market, property developers today are offering many freebies and discounts, so they can benefit from a buyers market with lower prices. Surely, no logical mind will even expect close to a good deal from a developer in a hot market?! Buyers now might not know what sucker looks like until they look at
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themselves in the mirror. Developers cashing in on mass market frenzy Property developers, like any other business, are in the business of making profits to account to their shareholders they are not some charity home dishing out free stuff for nothing! Everything has a price to it and one will be paying for it one way or the other. With continued price increases from previous months and sell-outs of several property projects, there is still a market for mass market property developers to make good money.

With strong holding power (especially for large developers), coupled with low borrowing costs for acquiring land and other capital expenditures, there is no reason why any property developer will want to miss out on the tasty opportunity of cashing in on a
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SINGAPORE PROPERTY WEEKLY Issue 111 sucker mass buyer market, make easy money and accumulate enough food before the dreaded winter comes. Developers will want to reap in as much profit as they can now before a severe price correction, rise in interest rates or market crash occurring. They know it is not a matter of if it will happen, but when. Many middle class buyers will unfortunately be slaving away in their jobs (if they still have a job to keep later) to pay off their loans, while the rich sellers and other vested interest groups, will simply laze away in the Bahamas. What it all means for mass market buyers on the latest cooling measures: 1. Tighter credit availability means restriction in growth of future capital gains, if any Credit is the blood of any booming property
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market. Like a blood transfusion, without enough access to it, one is going to get blood clots and heart attacks. The MAS announcement even took pains to emphasize that these rules are "structural in nature", which means that they are here to stay for the long term and will not be removed even if there is a correction in the market (unlike the LTV rules, which are flexible depending on market conditions). 2. Retiring on future property gains is nothing but a dream If the latest measures are going to be "structural in nature" for years to come, for the many mass market property buyers hoping to retire on their property gains, this may turn out to be nothing more than wishful thinking.

SINGAPORE PROPERTY WEEKLY Issue 111 The concept of owning a home as an Asset Enhancement for the middle class is no more than mistaking lead for gold. 3. An even more limited pool of future buyers in the market If no one is going to buy or can afford to buy, then who are sellers going to sell to? If someone truly believes he/she can try their luck and sell to some sucker foreign buyers in the future, I suggest he/she goes to a casino instead to avoid a painstakingly slow death in servicing losses. At least its faster there. With the internet, many foreign buyers are a lot more knowledgeable and savvy today. For the many new property projects that are due for completion soon, many will face a very limited pool of buyers. Those speculators, who assume they will sell at
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higher prices, will be sorely disappointed when the current party ends. For the mass market investors who cannot sell or rent out their property at reasonable yields and think that alternatively, they can stay in it for themselves, they have to pray hard they can remain in their jobs and be able to afford to pay off the mortgage payments and other expenses of the property when interest rates rises. 4. Todays middle class consumers may find it difficult to buy a good property investment and grow their wealth when the opportunity arises in future The Total Debt Servicing Ratio is taken into account when borrowing to buy a property. It takes into account the monthly repayment amounts for all (property and non-property) loans of the borrower. In the case of joint
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SINGAPORE PROPERTY WEEKLY Issue 111 borrowers, the TSDR is computed based on the total monthly debt obligations and total gross monthly income of the borrowers. A discount of 30% on all variable income (e.g. bonuses and commission) and rental income is applicable too. For the middle class who have been spending a large portion of their monthly income or commissions to service their expensive car, credit cards and other loans to lead conspicuous lifestyles in good times instead of prudent investing or spending for an uncertain future (i.e. spending tomorrows money), this ruling may prove to be the knife in the back for many of them. Will the latest property measures cause a major price correction? Not yet. Rather than a simple demand and supply equation, the dynamics that fuel our
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unique property market works on many highly complex and intricate factors, some of which are unknown and not within the control of our government policies.

These measures are implemented to hopefully prevent any further price escalation beyond reasonable levels and maintain a stable property market. In the event of a major price correction due to uncontrollable economic factors, the government hopes to prevent a market crash that may be catastrophic to our fragile economy.
Well as they say, hope is not a guarantee. By guest contributor Gerald Tay, CEO of CREI Academy Group, who exposes widelyheld property investment myths that have proven highly ineffective in creating wealth, and prevent a comfortable retirement for the ordinary investor.

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SINGAPORE PROPERTY WEEKLY Issue 111

Property Selling Tip #4: Seller Stamp Duty

At the time of this writing, a Seller Stamp Duty (SSD) is applicable for the below situations: (1) If you property is bought between 30 August 2010 to 12 January 2011, the following SSD applies: 3% of price or market value if the property is sold within the first year. 2% of price or market value if the property is sold within the second year. January 2011, the following SSD applies: 16% of price or market value if the property is sold within the first year. 12% of price or market value if the property is sold within the second year.

8% of price or market value if the property is sold within the third year.
4% of price or market value if the property is sold within the fourth year.

1% of price or market value if the property is sold within the third year.
No SSD when the property is sold after a holding period of three years.

No SSD when the property is sold after a holding period of four years.
By Eileen Tan and Ui Wei Teck, property investors and authors of Enjoying Mid-Life Without Crisis. This tip and dozens more are from their book.
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(2) If your property is bought on or after 13

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SINGAPORE PROPERTY WEEKLY Issue 111

Singapore Property This Week

Residential
Private home prices increase in second quarter According to the Urban Redevelopment Authority's second quarter flash estimates, the private home price index increased by 0.8 percent from Q1, with a 3 percent increase for non-landed home prices in suburban areas. In Q1, the increase for private home and non-landed home prices was 0.6 and 1.4 percent respectively. Property consultants and analysts predicted a decrease in the volume of transactions for private home in the near future, but were reluctant to forecast any drop in private home prices. At the same time, the Monetary Authority of Singapore
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took action to prevent loopholes previously used to circumvent tighter loan-to-value limits on second and subsequent housing loans and longer-tenure loans. (Source: Business Times)

HDB resale price growth in Q2 lowest in over four years

HDB flat resale prices in Q2 have the lowest growth in over four years, signaling signs of stabilizing. HDBs resale price index (RPI) showed only an increase by 0.5 percent, the lowest since Q1 of 2009. It was reported that cooling measures introduced in January and an abundance of new flats were the two main reasons for the halt.

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SINGAPORE PROPERTY WEEKLY Issue 111 The Mortgage Servicing Ratio (MSR) for HDB flats was cut in January to 35 per cent of a borrower's gross monthly income for loans from 40 per cent previously, which was thought to have reduced purchasing power of HDB buyers and deflated the price growth momentum. Resale price in Q2 was also held down by an abundance of supply. (Source: Business Times) Love for property drives up debt levels Singaporeans love for property has driven up their debt levels to 75 percent of GDP, doubling that of 38 percent in 2000. This is considered high compared to other countries in the region, except for Australia, Korea and Malaysia. Housing loans in Singapore make up 74 percent of total consumer loans. The government has announced that it would take action to ensure more prudent borrowing,
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which, according to bankers, will have impact on loan volumes yet its impact is to be observed. (Source: Business Times) Commercial Ying Li appoints group COO Tan Kiang Hwee has been appointed as group chief operating officer for Ying Li International Real Estate Limited. Mr. Tan will be based in Singapore first, before being relocated to Chongqing next year, following Ying Lis expansion into integrated commercial property development in Chongqing, particularly in central business districts and urban renewal projects. Mr. Tans experience in real estate spans more than 25 years, with his previous position as group chief executive of building consultancy

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SINGAPORE PROPERTY WEEKLY Issue 111 Surbana Corporation, appointments in the Housing and Development Board and the Ministry of National Development. (Source: Business Times) Rental gap in retail space narrows The rental gap in retail space between the regional centers and Orchard Road has narrowed, as average monthly gross rents of prime retail space in Orchard Road declined 0.9 percent while regional centers gained 0.1 percent in Q2. This mean the price gap between Orchard Road and the regional centers narrowed even more from 10.1 percent in Q1 to 9 percent in Q2. Non-luxury and fast-fashion sectors were reported to move from Orchard Road to more suburban locations, which have been dominated by food and beverage operators. Despite looming supply in the suburbs, landlords still
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maintained their asking rents at $31.1 psf per month. Orchard Road rents came in at $35.1 psf in Q2. (Source: Business Times)

SINGAPORE PROPERTY WEEKLY Issue 111

Non-Landed Residential Resale Property Transactions for the Week of Jun 20 Jun 25
Postal District 1 1 4 4 4 5 5 9 9 9 9 10 10 10 10 10 11 11 12 12 12 12 13 13 Area (sqft) 2,379 667 1,711 1,711 1,335 818 1,367 2,702 1,744 904 1,356 2,885 958 1,313 861 990 1,066 1,399 463 506 1,152 1,432 2,174 1,604 Transacted Price ($) 7,351,110 1,340,000 3,890,000 2,951,888 2,200,000 900,000 1,480,000 7,500,000 3,430,000 1,550,000 1,800,000 10,200,000 1,725,000 2,280,000 1,445,000 1,600,000 1,540,000 1,844,000 795,000 865,000 1,150,000 1,380,000 2,826,000 1,840,000 Price Tenure ($ psf) 3,090 99 2,008 99 2,273 99 1,725 99 1,648 99 1,100 99 1,083 FH 2,776 FH 1,967 FH 1,714 FH 1,327 FH 3,536 FH 1,801 FH 1,736 999 1,678 FH 1,616 FH 1,445 FH 1,318 FH 1,718 99 1,710 FH 998 FH 964 FH 1,300 FH 1,147 FH Postal District 14 14 14 15 15 15 15 15 15 15 15 15 15 16 16 16 16 16 16 16 17 18 18 19 Area (sqft) 1,270 1,055 1,119 1,604 1,001 872 3,046 1,195 732 1,098 872 1,442 3,197 1,345 980 840 947 2,239 1,378 1,141 1,324 1,066 958 764 Transacted Price ($) 1,493,000 970,000 970,000 2,900,000 1,350,000 1,100,000 3,800,000 1,480,000 860,000 1,280,000 938,000 1,500,000 3,250,000 1,730,000 1,200,000 960,000 985,000 2,140,000 1,220,000 1,000,000 1,190,000 1,060,000 905,600 1,050,000 Price Tenure ($ psf) 1,175 FH 920 FH 866 99 1,808 FH 1,349 99 1,262 FH 1,247 FH 1,239 FH 1,175 99 1,166 FH 1,076 FH 1,040 FH 1,017 FH 1,286 99 1,225 FH 1,143 FH 1,040 99 956 99 885 99 876 99 899 FH 995 FH 945 99 1,374 FH

Project Name MARINA BAY RESIDENCES THE SAIL @ MARINA BAY REFLECTIONS AT KEPPEL BAY THE OCEANFRONT @ SENTOSA COVE CARIBBEAN AT KEPPEL BAY REGENT PARK THE SPECTRUM GRANGE INFINITE RIVERGATE RIVERSIDE 48 PACIFIC MANSION ARDMORE PARK BELMOND GREEN MELROSE PARK WILLYN VILLE THE TESSARINA BIRMINGHAM MANSIONS THOMSON 800 TREVISTA CASA FORTUNA SUITES @ TOPAZ ST MICHAEL'S CONDOMINIUM AVON PARK EURO-ASIA PARK

Project Name NICOLE GREEN CASA EMERALD ASTOR THE SEAFRONT ON MEYER MANDARIN GARDEN CONDOMINIUM CALLIDORA VILLE ONE AMBER EMERALD EAST MANDARIN GARDEN CONDOMINIUM VITRA ONE @ PULASAN CHELSEA LODGE SIGLAP SHOPPING CENTRE COSTA DEL SOL LANDBAY CONDOMINIUM CHANGI COURT THE BAYSHORE BAYSHORE PARK CASAFINA EASTWOOD GREEN CARISSA PARK CONDOMINIUM RIS GRANDEUR EASTPOINT GREEN GOLDEN HEIGHTS

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SINGAPORE PROPERTY WEEKLY Issue 111

Postal District 19 19 19 19 19 19 19 19 19 20 20 22 23 23 23 23 25 26 Project Name KOVAN RESIDENCES FONTAINE PARRY SUNGLADE KENSINGTON PARK CONDOMINIUM KOVAN MELODY THE SUNNYDALE SUN ROSIER SIMON PLAZA EVERGREEN PARK GRANDEUR 8 GRANDEUR 8 PARC OASIS MI CASA PARKVIEW APARTMENTS PARKVIEW APARTMENTS PARKVIEW APARTMENTS CASABLANCA FOREST HILLS CONDOMINIUM Area (sqft) 1,442 1,238 1,044 1,658 1,518 1,345 2,077 1,615 1,345 1,227 1,722 1,507 1,367 980 936 980 926 1,582 Transacted Price ($) 1,850,000 1,525,000 1,245,000 1,900,000 1,700,000 1,340,000 1,940,000 1,480,000 1,180,000 1,400,000 1,400,000 1,400,000 1,470,000 875,000 820,000 850,000 895,000 1,180,000 Price Tenure ($ psf) 1,283 99 1,232 999 1,192 99 1,146 999 1,120 99 996 99 934 FH 917 FH 877 99 1,141 99 813 99 929 99 1,075 99 893 99 876 99 868 99 967 99 746 99

NOTE: This data only covers non-landed residential resale property transactions with caveats lodged with the Singapore Land Authority. Typically, caveats are lodged at least 2-3 weeks after a purchaser signs an OTP, hence the lagged nature of the data.

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