Will the latest cooling measure send more Singaporeans to invest in Nusajaya?

Last Sunday many property investors planning for their 2nd or 3rd property purchase woke up to a rude awakening of another around of cooling measure.

Hot on the heels of a record high HDB resale flat price of over $1 million transacted recently and red hot property launches that are seeing breeze sales, MAS introduced a cap on loans tenure to 35 years and tighter limits for home loans longer than 30 years or which extend beyond age 65. In addition borrower with existing home loans can only borrow up to 40% down from 60%.

Some already pull up the handbrake but is it game over for these group of investors?

Nusajaya Properties looking up

My guess this group of property buyers will start to look for overseas opportunities. One destination that is gaining attention is Iskandar Development Region properties. One area that has been in the Singapore media of late is the Nusajaya township just 10 mins from the 2nd link.

Even before the recent cooling measures were introduced, many more gung-ho Singaporeans and expats in Singapore, who were priced out of Singapore home market, had already ventured into Nusajaya home market as early as 2009.

As security is a major concern for most Singaporeans and expats alike, developers offer gated communities for most their developments in Nusajaya providing tighter security for the safety of their residents.

Better connectivity is another factor that is drawing more Singaporeans across. The new toll free Coastal Highway is ready now and this highway allows commuters to zip through and fro between the 1st link and 2nd link in 20 mins and most amenities such as Legoland, Educity, Medical Centers, Bukit Indah shopping centers, Puteri Harbour marina resorts are all within 10mins drive.

Many of these attractions and amenities have opened this year. Nusajaya township is fast developing and no longer just a pipe dream. Confidence of Singapore property investors have since raised markedly.

Puteri Harbour Developments

For condominium lovers, some Singaporeans are looking to Puteri Harbour properties of late. Of the whole Nusajaya township, Puteri Harbour is the gem in the master plan  The vision is to turn this into a cosmopolitan metropolis with luxurious waterfront living.

Early this year Somerset Puteri Harbour Service Residence launch saw breeze sales with Singaporean buyers making up the majority and some were reportedly made multiple purchases.

It is developed by Nusajaya Consolidated Sdn. Bhd., a joint-venture company with UEM Land, is set to be managed by the Ascott Limited, an internationally distinguished service apartment operator and member of CapitaLand under a pre-arranged 10-year leaseback agreement.

More developments in Puteri Harbour are set to launch this last quarter and early 2013. One development that is geared to launch soon coming end Oct-early November is Encorp Marina. This development is also service-on-demand apartment but with more luxurious facilities in offering and is a taller development, standing 30 storeys high, as compared with Somerset which is a low-rise five and six-storey development, offering stunning marina views.

As Puteri Harbour is only just taking shape, there will be plenty of offerings in the coming year. This, I am sure will be music to Singapore property investors' ears who are affected by the latest cooling measure. Time to release the handbrake and move to a greener pasture?

35-year limit set on home loans

Curbs on long mortgages to prevent buyers from over-extending
By Rachel Chang


IN A move that took the market by surprise, the Government introduced new measures yesterday designed to cool the property market and stop home buyers from over-extending themselves.

From today, the Monetary Authority of Singapore (MAS) will restrict all home loans to a maximum of 35 years.

Home buyers who take a loan that lasts more than 30 years, or extends past their retirement age of 65, will now have to fork out significantly more in cash.

Such long loans can now only be up to 60 per cent of the property's value if this is the buyer's first mortgage. That means that he must pay 40 per cent of the price upfront, in cash.

If this is his second or more property loan, the loan limit shrinks to just 40 per cent of the property's value.

The new loan limits and rules also apply to home owners who refinance their loans.

Analysts said the moves will affect a broad swathe of property buyers and leave only young buyers under the age of 30 untouched.

In a statement last night, MAS explained that it is acting to curb upward pressure on property prices from the current low interest rates worldwide, and the rapid credit growth driven by the US' latest round of quantitative easing (QE3).

"Monetary conditions worldwide are far from normal," said MAS chairman Tharman Shanmugaratnam, who is also deputy prime minister.

But the current climate of easy credit and low rates will eventually change, he cautioned.

MAS said that this is why it is acting now to prevent prices from spiking beyond sustainable levels, so that the eventual correction "which will hurt borrowers and destabilise our financial system" can be softened, if not avoided.

The central bank also revealed the impact of easy credit on home loans over the last three years.

The average tenure for new home loans has risen from 25 to 29 years and currently, more than 45 per cent of new home loans have tenures exceeding 30 years.

In August, a 50-year home loan offered by the United Overseas Bank (UOB) drew the ire of National Development Minister Khaw Boon Wan, who described it as a "gimmick".

Long-tenure loans, said MAS, cause buyers to over-estimate their financial wherewithal.

A rising property market also gives buyers and lenders "false confidence" that the property can always be sold off for a profit if the loan becomes difficult to service.

Analysts interviewed yesterday do not expect property prices to fall drastically in reaction, but they predicted some buyers will exit the market, transaction volumes will cool and price rises will moderate.

In the third quarter of this year, both Housing Board resale prices and private property prices accelerated their climb.

The board's resale price index grew 2 per cent, outstripping the 1.3 per cent growth in the second quarter, while the private property market rose 0.5 per cent, up from 0.4 per cent in the preceding quarter.

The new changes, said observers, would land hardest on older buyers, especially those with more than one property. Young buyers should get away with just paying a shade more every month.

For example, a 40-year-old buyer can now take a loan of only 25 years if he wants to continue to be able to pay the usual 20 per cent down payment.

But if he were to take out the shorter 25-year loan of $800,000 for a $1 million property, this would now mean monthly payments of $3,051, at current interest rates of 1.1 per cent. This is $400 more than if he had a 30-year loan.

But for a buyer like investor Jack Liang, 49, who is on the hunt for his third property, the new rules mean "game over", he said.

If he finds a $1 million property that he wants, he can take only a 16-year loan, up to the retirement age of 65 years old. His monthly repayments will be $4,546, likely more than its rental yield.

Or, he can take a longer loan, but for only 40 per cent of the property's value, as it is not his only housing loan. He must then have $600,000 cash in hand to purchase the property.

"It's time to pull up the handbrake," he lamented.

Spring Mansion and Spring court en bloc to become a mixed development

Spring Mansion and Spring Court which were sold under an en bloc sale April 2011 last year will be soon be transformed into a 29 storey mixed development called One Dusun Residences.

The two properties have a combined land area of 32,593 sq ft plot and were sold to a consortium comprising 2E Capital, Nobel Design Holdings and Lian Huat Group.

Under Master Plan 2008 these 2 freehold properties have different zonings, Spring Mansion is zoned for both commercial and residential use while Spring Court residential only.

The upcoming new development will be therefore become a mixed development with retail shops and residential units. News is going around that the developer for One Dusun Residences is gearing up for launch this month.

WORK BEGINS ON CAPITAGREEN

The ground-breaking ceremony for CapitaGreen, the new Grade A office tower slated for the former Market Street Car Park, took place yesterday and the project is on track to be completed by the fourth quarter of 2014, its joint developers said.

CapitaLand, CapitaCommercial Trust (CCT) and Mitsubishi Estate Asia said the building at 138 Market Street will have a net lettable area of about 700,000 sq ft and the floor plate will range from 20,000 sq ft to 25,000 sq ft.
The 40-storey office building is expected to cost about S$1.4 billion to develop.

The developers aim to achieve the Green Mark Platinum award for the environmentally friendly building when it is completed.
Takenaka Corp has bagged the design-and-build contract for the project, which the developers hope will be completed in 32 months, instead of the usual 39 to 40 months.

The demolition of the car park was completed in December last year.
Rents at CapitaGreen are likely to range between S$12 and S$14 per sq ft, said Ms Lynette Leong, CEO of CapitaCommercial Trust Management.

Source: Today -  7 February 2012

HDB RESALE PRICES MODERATE IN Q4

The tide could be turning in favour of buyers, with home prices in Singapore showing signs of moderating.

Prices of resale Housing and Development Board (HDB) flats grew 1.7 per cent in the last quarter of last year, compared to the 3.8 per cent growth seen in the third quarter.

This brings the HDB Resale Price Index - which provides information on the general price movements in the public residential market - to 190.4.

The figures confirmed what the market had been expecting - a moderation in home prices following a year of policy tweaks by the Government to cool the red-hot property market, while home buyers are becoming more cautious in light of the uncertain economic outlook.

Market watchers also pointed out that cash-over-valuation - the cash premium paid upfront for resale flats - is showing signs of softening, dropping between S$5,000 and S$8,000 in the last quarter of last year, and could bottom out at around S$20,000 to S$30,000.

Mr Mohd Ismail, CEO of PropNex, said buyers could have more bargaining power in areas where prices are very high, where houses are on low floors, or affected by ethnic ratios.

"And when such houses are put on the market, you don't even get a buyer at zero cash-over-valuation. Therefore, if you say are there possibilities of picking houses today without paying any cash ... yes there are. But they may not have the best of the panoramic view and so on," he said.

Some expect HDB resale prices to correct by up to 3 per cent this year, with the ramped-up supply of Build-To-Order (BTO) flats expected to continue to draw first-time home buyers away from the resale market.

Said Mr Eugene Lim, executive officer of ERA Realty: "The success rate is higher now. It is a lot better. In fact, any first-timer who applies for a flat is almost certain of getting one. So, this improved success ratio ... translates into lower demand in the resale market."
Last year, the HDB offered about 28,000 flats - 25,000 under the BTO system and about 3,000 units under the Sale of Balance Flats exercise.

This year, buyers can look forward to 25,000 BTO flats coming on the market.

The HDB said "these projects will have a good geographical spread in the various towns".

It will offer nearly 3,900 BTO flats in Choa Chu Kang, Punggol, Sengkang and Tampines this month.

Source: Today - 4 January 2012

PRIVATE PROPERTY PRICES CONTINUE TO MODERATE

Despite the property market still not feeling the full impact of the latest cooling measure, flash estimates showed prices of private homes were almost flat - rising by just 0.2 per cent - between October and December last year.

In a press release yesterday, the Urban Redevelopment Authority noted: "The rate of increase in private residential property prices has continued to moderate for the ninth consecutive quarter". The 0.2-per-cent increase in the fourth quarter was in contrast to a 1.3-per-cent rise in the previous quarter.

With buyers adopting a wait-and-see attitude, property analysts Today spoke to pointed out that the estimates do not reflect the impact of the recent cooling measure, which has been described as the harshest yet.

Which is why some of them felt that prices of private homes could fall - for the first time since 2009 - in the coming months.

An increased supply of private homes, coupled with the impact of the cooling measure, could see private home prices fall by about 3 per cent in the year ahead, said Propnex CEO Mohamed Ismail.

However, Orange Tee director of research and consultancy Tan Kok Keong told Today that he expects prices to fall by between 1 and 2 per cent at most between January and March.

On Dec 7, the Government announced additional buyer's stamp duties (ABSD) which will be imposed in addition to the existing tax. Foreigners and corporations will be hardest hit, with a 10-per-cent ABSD imposed on any private homes they buy.

While the indications are that private home prices are stabilising, analysts noted that the fourth quarter is the traditional lull period for the property market.

According to the URA, its flash estimates are compiled "based on transaction prices given in caveats lodged during the first 10 weeks of the quarter supplemented by information on the number of new units sold by developers".

The statistics will be updated next month, when more data on the caveats lodged and the take-up of new projects are captured.

The URA said: "Past data has shown that the difference between the quarterly price changes indicated by the flash estimate and the actual price changes could be significant when the change is small. The public is advised to interpret the flash estimates with caution."

SLP International research head Nicholas Mak said the revised figure would likely vary by between 0.1 and 0.2 per cent.
He said: "But if the final figures are low, it's hard to tell if it is a direct impact from the ABSD. There are other factors such as the euro zone crisis and the Singapore economy."

He added: "The ABSD alone will not cause prices to drop, as it does not eliminate demand. Singaporeans and permanent residents, who are not so affected by the new measure, will sustain demand and hence prices."

Concurring, Chesterton Suntec International research and consultancy head Colin Tan said buyers should not hold their breath for prices to drop.

He said: "So long as we have slow growth or at least positive growth, so long as employment holds up, I think we do not expect prices to correct anytime soon."

Source: Today - 4 January 2012