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09 October 2012

9th October, Tuesday




Bank, property stocks take it on the chin

Source: Business Times

Bank and property stocks fell Monday as the market weighed the possibility - following last week's mortgage curbs - that the government was prepared to step in with more measures to check property prices.

Developers were largely sanguine about the potential impact such measures would have on sales but consultants saw more tightening ahead.

Property watchers largely agreed that the latest measures - which saw residential property loans capped at 35 years and loan-to-value (LTV) ratios tightened - are mostly preventive rather than punitive in nature.

This is due to other key liquidity drivers, such as low forward rates, easy loan access and healthy system liquidity, which are likely to continue to be conducive for housing demand.

The next round of policy measures might be targeted at addressing low interest rates, said one analyst.

That said, measures targeting the residential sector, if introduced, are unlikely to be seen in the immediate term, said Lee Sze Teck, DWG senior manager of training, research and consultancy. Rather, policies targeting the non-residential sectors may be introduced as money flows into those sectors, he said.

Another analyst agreed. "I won't rule out measures for the non-residential sector, especially for the industrial sector. This could be in the form of LTV and seller's stamp duty to weed out speculators who flip within a short period of time," she said.


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Home loan curbs 'will hit older buyers'

Source: The Straits Times

Investors in a weak financial position and buyers in their 40s and 50s will feel the effects of the latest property rules most acutely, analysts say.

The changes, unveiled by the Monetary Authority of Singapore last Friday, are similar, in effect, to higher interest rates, they said.

Some older buyers who already have a loan may abandon plans to buy an investment property, the analysts added.

Older buyers will be forced to take shorter loans if they do not wish to pay a larger amount upfront. In some cases, the monthly rental received from these properties may not even be sufficient to cover their monthly mortgage.

For instance, a 50-year-old investor will now be able to get a maximum loan term of only 15 years if he wants to avoid the stricter loan-to-valuation limits.

This means that if he buys a three-bedder at Sunville in the Serangoon area for $1.2million, his monthly repayment on a 15-year loan will be $4,367 (assuming he has another loan). Previously, assuming he met the bank's credit assessment criteria, he could have taken a 25-year loan with a monthly mortgage of only $2,773. The rent for such a unit would be about $3,800.


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Most developers unlikely to give discounts: Experts

Source: The Straits Times

At least one property developer here is offering an effective discount on homes in the wake of the latest cooling measures.

But property experts do not expect all developers to follow suit.

Far East Organization's immediate response was to give a 2 per cent furniture voucher for units at its newest launch, eCO, to mitigate the effects of the new home loan rules. It is now giving a 1.5 per cent sweetener - in the form of furniture vouchers - until Thursday, for eCO at Bedok South Avenue 3.

Far East is also offering furniture vouchers for other projects in response to the measures.

Developers like Qingjian Realty (South Pacific) and UIC do not see the measures affecting sales.

But Allgreen Properties, behind recent launch Riversails, said weekend sales were slightly slower than sales in the previous week. Since last Friday, 80 units have been sold.

A City Developments spokesman said: "As these measures have just been released, the market will take time to absorb the news, and we will assess the situation accordingly."


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$1m HDB flats 'best value' for money

Source: The Straits Times

A growing group of cashed-up home buyers - armed with a budget of $1 million or more - is waiting for premium Housing Board flats.

They are usually private-property downgraders or young couples armed with budgets that would previously take them to condominium showflats only, said real estate agents.

With the growing price differential between private property and HDB flats in prime locations such as Bishan, Queenstown and Clementi, they find that a premium HDB flat which commands a seven-figure sum is actually the best value for their money.

Data from the Singapore Real Estate Exchange showed that in five HDB towns - Clementi, Bukit Merah, Bishan, Toa Payoh and Queenstown - the price per sq ft (psf) of flats has increased 15.5 per cent in the past two years.

In contrast, the price psf for non-landed private properties in those areas has increased by 27.7 per cent in the same period - giving rise to a widening price gap.

It is also difficult to find condo units above a certain size in these locations, said agents. The executive flats which have sold for more than $900,000 this year average about 1,600 sq ft.

For one couple, these HDB flats which go for $1 million are a decent deal. "With our combined income, we are not eligible for Build- to-Order flats or even executive condominiums like Heron Bay," she said. "And we want a place that is at least 1,000 sq ft, in a good location."


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Flats near former rail station for rent

Source: The Straits Times

Two blocks of flats, which once housed staff of Malaysia's railway operator, will be offered for rental to lower-income households next month.

The 318 units near the now-defunct Tanjong Pagar Railway Station will be leased out under the Housing Board's Public Rental Scheme (PRS) and Interim Rental Housing (IRH) scheme.

The flats have been left vacant for about a year after train services between Malaysia and Singapore were relocated to Woodlands in July last year.

Painting and refurbishment works are being carried out in Blocks 1 and 2 in Spooner Road which comprise one-, two- and three-room flats.

Of the 318 units, 208 are one- and two-room flats which will be offered under PRS. The remaining 110 are three-room flats which will come under the IRH scheme.

The move is part of HDB's drive to increase the supply of public rental flats to 57,000 units by 2015.


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Prime office rentals continue slide in Q3

Source: Business Times

Even as vacancies improved in the prime office market in the last quarter, rentals continued their downward trend, suggesting that recovery is unlikely in the near term.

Grade A vacancies fell in 3Q to 6.8 per cent from 7.9 per cent in 2Q, according to a report by a real estate consultant.

The sharpest decline in vacancies was seen in the Marina Bay sub-market, which fell three percentage points from 2Q to 9.8 per cent in 3Q. Orchard Road was the only exception, where the vacancy rate rose a tad to 2 per cent from 1.5 per cent in the second quarter, though it remained a tight market.

Despite the slight improvement in the vacancies, overall Grade A rent in 3Q 2012 fell 3.6 per cent from the previous quarter to $9.13 per sq ft (psf).

The largest drops were recorded in the core CBD areas of Marina Bay and Raffles Place, where rents slipped by 2.5 per cent and 3.9 per cent, respectively.

Rentals in the City Hall and Marina Centre vicinity fell 1.8 per cent in 3Q after remaining flat in the previous quarter.

Although analysts expect a continued decline in vacancies over the next quarter that should help stabilise effective rents in the CBD, short-term recovery is unlikely given the cautious demand and the more than 1.2 million sq ft of vacant space due to come onstream in the next six months.


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Investment Sales


Good Class Bungalow activity dips in Q3

Source: Business Times

The volume of deals in Good Class Bungalow Areas (GCBAs) slipped in the third quarter, based on a preliminary analysis of caveats by a consultancy.

Between July and September, 14 such properties changed hands for a total $285.1 million, down from 18 transactions at $358.8 million in 2Q.

Among recent bungalow deals in GCBAs is one for a property in Gallop Road, which was sold for $28 million or $1,874 psf on a freehold plot measuring 14,940 sq ft. The two-storey house, completed a few years ago, has a basement large enough for at least five cars; it also has six bedrooms, a guest room and a swimming pool. Its built-up area is around 10,000 sq ft.

A freehold bungalow in Margoliouth Road, off Stevens Road, changed hands last month for $20 million, or at $1,572 psf on land area of around 12,725 sq ft.

A bungalow along Cassia Drive, sitting on 11,195 sq ft of land, sold for $18.33 million or $1,637 psf; other transactions in 3Q include a bungalow in Peirce Hill, which fetched $23.80 million or $1,570 psf.

The slowdown in GCB sales in 3Q can be seen as a lull following pent-up demand seen in 2Q, when "a lot" of good units were sold, said one agent. The 2Q showing reflected a recovery from 1Q, when nine bungalows totalling $223.8 million were sold.

The GCB sales tally for the first nine months of the year is 41 deals ($868 million). The current cautious momentum is expected to continue this quarter and into next year, as sentiment will be affected by the situation in Europe and continued uncertainty in the global economy, notwithstanding QE3.

Assuming three to four GCB deals a month in 4Q, there could be 50 to 55 transactions totalling $1 billion to $1.1 billion in 2012.


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Two adjacent freehold plots in GCB area up for sale

Source: Business Times

Two adjacent sites totalling 45,155 sq ft of sprawling freehold land in the Chee Hoon Avenue Good Class Bungalow Area in the Dunearn/Adam Road location have come on the market.

The indicative price is $1,600-$1,800 per sq ft of land area, which works out to around $72.2 million to $81.3 million.

The latest property on the market comprises two land lots of 18,989 sq ft and 26,166 sq ft at Jalan Asuhan, off University Road. The site can be accessed via Dunearn, Bukit Timah and Adam roads.

Potential buyers may choose to buy one or both plots, which is marketed via private treaty sale. The property is on one of the highest points in the neighbourhood offering a panoramic view.


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International Markets


China's home prices increase for 4th month

Source: Business Times

China's new home prices rose for a fourth month as a rebound in property sales eased developers' funding woes, according to real estate website.

Prices in September climbed 0.17 per cent from August to 8,753 yuan (S$1,712) per sq m, the country's biggest real estate website owner said in an e-mailed statement Monday, based on its survey of 100 cities. The city of Kunshan in the eastern Jiangsu province had the biggest gain, with prices rising 2 per cent.

Home prices have reversed declines since June after the central bank cut interest rates to stem an economic slowdown and some local authorities eased restrictions as land-sale revenues fell. The central government has pledged it won't waver from curbs, including home-purchase restrictions.


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