Fewer HDB dwellers buy private properties
Number of HDB upgraders should fall as cooling measures bite, say analysts
Mayflower
Gardens Private houses (foreground) and HDB public housing (background)
in the Ang Mo Kio estate. Recent property measures have put a squeeze
on the number of Housing Board dwellers buying private properties
RECENT property measures have put a squeeze on the number of Housing Board dwellers buying private properties.
According
to the latest early figures, buyers with HDB addresses picked up 3,700
new private homes in the first six months of the year. This seems to
mark a slowdown from last year, which saw 9,985 such transactions across
12 months.
A
similar trend has been seen in the private resale market. HDB upgraders
bought just 1,550 homes in the first half of this year, compared to
5,261 for the whole of last year.
R'ST
Research director Ong Kah Seng said that the market is feeling the
effects of the cooling measures introduced in January to prevent home
buyers from biting off more than they can afford.
Not
only must buyers borrow less on their second housing loan, they also
need to stump up 25 per cent of the property's value, up from 10 per
cent. Stamp duty for second property purchases also rose to 7 per cent,
from none in the case of citizens.
"Besides,
many HDB dwellers may have also bought their private properties last
year due to a strong supply in attractive locations such as Punggol,"
said Mr Ong. There were 21,000 private property units launched last
year, compared to 10,000 so far in the first half of this year.
The
latest figures on HDB upgraders were culled from caveats lodged
voluntarily with the Urban Redevelopment Authority. They do not take
into account whether buyers own or rent their HDB flats, or if they were
buying their first or second private property.
Analysts, including Mr Ong, predict that the number of HDB upgraders will continue to shrink over the next two years.
This
is partly because of new rules issued by the Monetary Authority of
Singapore last month, which cap a person's total monthly debt repayments
at 60 per cent of his gross monthly income. That means that even car
loans will be factored in when calculating how much a person can borrow
to finance a property purchase.
DTZ's
head of Singapore research Lee Lay Keng believes the introduction of
the total debt servicing ratio could lead to HDB upgraders scaling back
their private property plans. For instance, a buyer earning $8,000 a
month who already pays $1,500 towards a car loan instalment will be
restricted to buying a second property worth $1.1 million, down from
$1.6 million previously.
"The
biggest hurdle for this group lies in the cash outlay that includes
stamp duties, downpayment and other costs. This can amount to three
times the annual income," she added.
Finance
executive Leong Yi Xing is waiting for the dust to settle in the wake
of the new measures before deciding on upgrading from his five-room
Bedok flat.
"HDB
prices are still holding up very well compared to private property
prices, which may have more room to drop. I'll wait for the price
between the two to narrow," said the 31-year-old.
More ECs up for grabs
Seven projects to go on market in second half of the year
Sea Horizon, to be launched next month, boasts "panoramic sea views" and units with french balconies and full-height windows
EXECUTIVE
condominium (EC) developers are again pulling out all the stops in the
battle for buyers as competition intensifies in the second half of this
year.
Developers
of projects under this very popular public-private housing hybrid are
no longer allowed to build gargantuan penthouse suites after unit-size
restrictions were imposed in January.
The penthouses had been selling for sky-high prices.
But
developers now aim to stand out from the crowd by offering ECs with
features such as maisonette units, waterfront views, balcony entrances
and even a "skypark" 50m above ground.
Of the seven EC projects slated for launch this year, five will go on sale some time over the next four months.
This means that of the 3,337 EC units in this year's supply, an expected 2,226 units will hit the market from now till October.
But EC supply next year is likely to plummet due to a 15-month rule on sales that was also imposed in January.
Under
the rule, EC developers have to launch their projects for sale 15
months from the date of award of the sites or after the physical
completion of foundation works, whichever is earlier.
Market
watchers reckon that there will be no new EC launches for at least the
first three quarters of next year and the number of new EC launches next
year could be as little as two projects.
ECs
are designed to cater to a "sandwiched class" of people who earn too
much to qualify for a Housing Board flat but find private property
prices too high.
Some
first-time developers with solid track records in the luxury segment
have also thrown their hats into the ring, lured by the lower total
development costs for EC projects compared with private condominium
projects.
The
price developers pay for EC sites is lower than that for private
residential plots because restrictions apply to EC resales during the
first decade of occupation.
The
new faces in the segment include boutique developers JBE Holdings and
Sing Holdings, which are both better known for their high-end projects.
"We're
very confident of the EC market... We know that EC buyers are getting
more sophisticated," JBE Holdings director Patrick Lam told The Straits
Times in an interview on Thursday at The Luxe at Handy Road, which JBE developed.
JBE's
upcoming EC project is the 506-unit SkyPark Residences at Sembawang
Drive, under a joint venture with construction firm Keong Hong.
E-applications are likely to begin in September and bookings in October.
Mr
Lam said the EC segment was a "good diversification" away from the
luxury market and added that JBE's next project is also likely to be an
EC.
JBE
won the site for $211.9 million or $323.76 per sq ft (psf) per plot
ratio (ppr) last December. The project's construction cost is likely to
be just under $150 million, Mr Lam said.
Of that, $3 million to $5 million will be spent on a 1,250 sq m "skypark" straddling three towers about 50m above ground.
No official pricing has been released but market watchers say the price could be between $720 psf and $800 psf.
Both SkyPark Residences and the upcoming 373-unit WaterWoods in Punggol will also include five-bedroom maisonette units.
WaterWoods,
next to the Flo Residence condo, is jointly developed by UE E&C and
Sing Holdings. Sing Holdings won the site last December for $162.1
million or $351 psf ppr, nearly 9 per cent higher than the
second-highest bid of $148.9 million lodged by JBE.
Sing Holdings chief executive Lee Sze Hao said the firm was using the same team working on its high-end projects for WaterWoods.
"This
segment is, after all, least susceptible to market speculation, and all
EC home owners will also eventually own just one property, which means
they present relatively less credit risk... the EC market is one of the
most stable housing segments," Mr Lee said.
Lush
Acres, City Developments' 380-unit EC at Fernvale Close, was
over-subscribed by about 1.6 times when it opened for e-applications
last Saturday.
The
next EC project to launch in upcoming months is Sea Horizon in Pasir
Ris. E-applications are expected to start early next month.
Sea
Horizon is Chinese developer Hao Yuan Investment's second EC project.
Hao Yuan launched its first EC, Forestville in Woodlands, in June.
Its developer is touting "panoramic sea views" and units that come with french balconies and full-height windows.
"Sea
Horizon is one of the rare few executive condominiums that boast a
coastal location... We believe the close proximity to the coastline will
be a big plus for many home buyers," a Hao Yuan spokesman said.
Unit sizes range from 71 sq m to 160 sq m. The project is expected to be priced below $1,000 psf.
Plenty of amenities in north-east
Checking
out the page views on the STProperty website gives an instant snapshot
of what projects buyers are keen on. This week, we look at developments
in districts 19 and 20 that have drawn the most attention.
An artist's impression of Bartley Residences, a District 19 project with an average asking price of $1,231 psf for its units.
Sky Habitat headed the District 20 list of top five private homes by page views on STProperty last week
SINGAPORE'S north-east region comprises newer estates such as Punggol and Sengkang, and the mature estate of Hougang.
Together, the three areas make up District 19.
Residents
in the area are served by popular shopping centres such as nex mall,
Heartland Mall and Hougang Mall, and newer infrastructure such as the
scenic Punggol Waterway.
The district is also connected by the North-East MRT line.
Based
on the highest number of page views on website STProperty from July 8
to 14, the top five private homes which attracted the most attention
were all 99-year leaseholds.
Topping
the list was 702-unit Bartley Residences with an average asking price
of $1,231 per sq ft (psf) for its one-, two- and three- or more bedder
units. It also recorded the highest average transacted price among the
projects at $1,191 psf between January and last month, according to data
from the Urban Redevelopment Authority (URA).
The
other four projects in the list were the 920-unit Riversails, the
380-unit Lush Acres, the 1,145-unit The Minton and the 700-unit The
Topiary.
Farther to the west lies District 20 which covers Ang Mo Kio, Bishan and Thomson.
The Central Business District is easily accessible from these areas via the North-South MRT line, buses and expressways.
Many home buyers are drawn to this area because of the ample choices of food, leisure amenities and connectivity.
Heading the list of top five private homes by page views on STProperty in the past week was the 509-unit Sky Habitat in Bishan.
It
offered one-, two- and three- or more bedders at an average asking
price of $1,530 psf. URA data showed that the average transacted price
for its units between January and last month was $1,546 psf.
The project with the highest average asking price between July 8 and 14 was the freehold Three 11 along Upper Thomson Road.
With only 65 units, its one-, two- and three- or more bedder units had an average asking price of $1,573 psf.
However, no caveats for the project had been lodged with the URA between January and June.
Its preview launch was held last month.
The other three projects that made it to the top five were The Gardens At Bishan, Belgravia Villas and Rafflesia condominium.
S'pore buyers flock to Johor's Medini project
Developers see good take-up at condo launches in Iskandar township
The
Meridin @ Medini is launching a third block of units for sale today. Of
the 5,000 people who have registered interest in the 161 units, more
than 3,000 are Singaporean
THE
township of Medini in Johor's Iskandar Malaysia is fast becoming a
property hot spot as thousands of Singaporeans rush to sign up for
launches there.
Located in the Nusajaya administrative zone, the 9.2 sq km flagship development is a 10-minute drive from the Tuas Second Link.
Iskandar's
master planners envisage Medini as a vibrant commercial and business
district, complete with malls, offices, high-end homes and a hospital.
Last
month, Pulau Indah Ventres, a 50-50 joint venture between Temasek
Holdings and Khazanah Nasional, launched the Afiniti Residences
condominium in Medini to heavy fanfare.
The 88 units on sale were snapped up in under six hours.
This
exuberance probably signalled to investors that Medini was heating up
and that the time was ripe to get in, said Chesterton Suntec research
head Colin Tan.
"Those
who didn't manage to get an Afiniti unit but saw that things were
picking up at Medini could now be going for upcoming projects in the
area," he added.
They include The Meridin @ Medini by Malaysian developer Mah Sing.
The
Meridin was selling well even before Afiniti came onto the scene - 75
per cent of the 495 units released in May had been taken up.
About half of the buyers were Singaporean, said Mah Sing chief executive Leong Hoy Kum.
Demand for the third block of units, which is being launched for sale today, is expected to go even higher.
Only 161 units are up for grabs but about 5,000 people have registered, of whom more than 3,000 are Singaporean.
The
Meridin's location - it sits next to Legoland and across the road from
Afiniti Residences - is probably a major draw for Singaporeans, said Mr
Leong.
The project's price is probably another big factor, he added.
He
said the units being launched this week are priced at RM730 (S$287) per
sq ft (psf) on average. He noted that this level offers a lower entry
point than Singapore property does and even beats the RM1,000 psf seen
at some Iskandar properties.
"This is something we normally practise, to leave some room for capital appreciation for the units in future," he said.
Another
developer that has seen strong interest in its Medini project is
Zhuoyuan Iskandar - a joint venture between China-based ZhuoDa Real
Estate Group and Malaysia's Iskandar Investment, the master planner for
Nusajaya.
The company is building Paradiso Nuova, a 382-unit condominium that it expects to launch in mid-September.
More
than 600 people have already registered their interest, about 40 per
cent of whom are Singaporean, said sales and marketing director Liang
Thow Ming.
"We
expect a diverse group of buyers - investors who want to capitalise on
Medini's story, as well as people who are keen to stay there, whether
they are Malaysians who work in Singapore or Singaporeans who are
seeking a lower cost of living," he said.
"EduCity,
Iskandar's education hub, also provides good rental potential because
there is a shortage of hostel space and the universities are enjoying
exponential growth in student numbers."
'Shell' firms can't slip past new loan regime
TDSR to apply to individuals who set up entities to buy commercial, industrial properties
INDIVIDUALS
who set up "shell companies" for buying commercial or industrial
properties to try and circumvent the total debt servicing ratio
framework may be in for a disappointment.
The
Monetary Authority of Singapore, responding to queries from The
Business Times, said that "when individuals set up local or offshore
'shell companies' which do not have substantive businesses with genuine
commercial activities, FIs (financial institutions) should assess these
cases thoroughly and apply the TDSR framework accordingly" for the
individuals concerned.
However,
existing companies trading in property and/or holding investment
properties for rental income are deemed to be engaged in "genuine
commercial activities" and hence will not be subject to the TDSR
framework. Likewise, new entities set up by, say, an established
property group or fund would not be subject to TDSR if the FIs can
establish the new entity's parentage.
The
onus will be on FIs to do a thorough investigation on the entities -
including companies incorporated in places like British Virgin Islands,
Cayman Islands and Mauritius - to establish whether they have any
substantive business or are shell companies - for them to determine
whether to apply the TDSR framework.
Under
new rules announced late last month, all FIs have to abide by the TDSR
framework when granting property loans to individuals.
In
its response to BT, MAS reiterated that the framework is not applicable
to corporates applying for property loans as they are generally subject
to a different set of credit assessment criteria.
Market
participants generally welcomed the clarification from MAS. OCBC Bank's
head of consumer secured lending Phang Lah Hwa said it will provide
clarity to potential property buyers.
Another
banking source said: "We've been in dialogue with MAS since the
implementation of the TDSR framework and the feedback given has helped
to clarify initial queries."
DTZ's
senior director of investment advisory services, Shaun Poh, told BT
that initially, when the TDSR was announced, many individuals investing
in commercial and industrial property had thought the framework applied
only to housing loans
"It was only later that they realised that they too now come under the TDSR rules," Mr Poh said.
"In
some cases, if they own existing companies with genuine businesses such
as commodity trading, they are considering making the purchase through
such entities."
On
June 28, when MAS rolled out the TDSR framework for all
property-related loans granted by FIs to individuals (including both
residential and non-residential property, and whether it is in Singapore
or overseas), it had specified that in cases where the borrower is a
sole proprietor or an individual who sets up a company solely to buy
property, FIs are required to apply the TDSR rules to the individual.
This
had led to concerns among some existing smaller property trading and
investment outfits for instance over whether their loan applications for
any future property purchases would be subject to the TDSR rules.
Among
other things, the framework stipulates that a borrower's total monthly
debt obligations must not exceed 60 per cent of his gross monthly
income. FIs are also required to apply a medium-term interest rate floor
of 4.5 per cent for non-residential property loans (and 3.5 per cent
for housing loans) in addition to applying a haircut of at least 30 per
cent to all variable income and rental income.
The
view on the ground is that MAS' target is to foster financial prudence
among mom and pop investors and prevent them from overleveraging,
particularly when interest rates rise.
As
Lee Liat Yeang, real estate practice partner at Rodyk & Davidson,
puts it: "MAS is trying to control the amount of loans extended by FIs
to individuals. Therefore if it doesn't control individuals who use
companies as an instrument for this purpose, it will not be able to
adequately ensure that such individuals are not overly extended through
their companies.
"Here,
we are talking about a shell company or special purpose vehicle that
will depend on the individual sponsors for repayment of loans."
The
founder of a boutique property investment group said that a lot of mom
and pop investors set up special purpose vehicles to buy commercial or
industrial properties. "If they buy through a GST-registered company,
they can claim back the 7 per cent GST on the purchase of the property."
Such
individual investors - who previously could get loan quantums as high
as 70 per cent of the property's valuation - will no longer have such
easy access to cheap funding, points out Mary Sai, executive director at
Knight Frank.
"So
don't expect too much bank lending. Those who have been buying
uncompleted strata commercial properties at new launches on progress
payment and flipping them within a short time - their wings have been
clipped. This is often the group that is financially stretched," says Ms
Sai. (See table)
"On
the other hand, the new environment benefits genuine investors with
financial means who don't need much borrowing; they will feel less
competition and can take their time to push for a fairer price," she
added.
The
level of enquiries for commercial property generally in the industry
has fallen at least 20 per cent since the new rules were announced three
weeks ago, said Ms Sai.
The
phenomenon of individuals setting up companies to buy properties
typically applies to the purchase of commercial and industrial
properties. The property's vendor, if it is a GST-registered company,
collects GST on behalf of the government. Residential property is
GST-exempt.
RATES TABLE1 Singapore Dollar Rates table
Top 10Jul 20, 2013 04:32 UTC
| Singapore Dollar | 1.00 SGD | inv. 1.00 SGD |
|---|---|---|
| Euro | 0.600864 | 1.664271 |
| US Dollar | 0.789603 | 1.266460 |
| British Pound | 0.516942 | 1.934454 |
| Indian Rupee | 46.893386 | 0.021325 |
| Australian Dollar | 0.860790 | 1.161724 |
| Canadian Dollar | 0.818593 | 1.221609 |
| Emirati Dirham | 2.900210 | 0.344803 |
| Swiss Franc | 0.743032 | 1.345837 |
| Chinese Yuan Renminbi | 4.846738 | 0.206324 |
| Malaysian Ringgit | 2.522338 | 0.396458 |
| SIBOR | SOR | |
| 1 Month | 0.31167 | 0.17193 |
| 2 Month | 0.36333 | 0.21120 |
| 3 Month | 0.37583 | 0.23442 |
| 6 Month | 0.43500 | 0.35964 |
| 9 Month | 0.49833 | 0.50330 |
| 12 Month | 0.56208 | 0.64434 |
