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09 February 2013

9th February, Saturday




More checks to go with private home loans

Source: Business Times

Banks may have to adopt tougher rules before granting loans for private home purchases. This is to ensure more financial prudence.

Questions may have to be asked, like what proportion of a person's monthly gross income is being used to service the home loan. The Monetary Authority (MAS) of Singapore has asked for this mortgage servicing ratio (MSR) to be capped at 30 per cent for private homes, as was done in the case of HDB flats last month.

MAS will also introduce broader rules in which the lender looks at total monthly debt payments of the borrower before granting property loans - to further strengthen the credit evaluation process.

When contacted, MAS would not comment on whether it has any impending plan to extend a prescriptive MSR cap to private home mortgages (like the one it imposed on HDB flats as part of last month's property cooling measures). However, it confirmed advising financial institutions (FIs) that they should also consider applying the MSR to loans and refinancing facilities for private residential properties. "In addition to applying a MSR for HDB flats, MAS expects FIs to continue to be prudent in assessing the repayment ability of borrowers for all residential property loans," it added.


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Private home resale deals up 16.7% in Jan

Source: Business Times

Resale volumes for private residential homes jumped 16.7 per cent month-on-month to hit 920 transactions in January, as buyers rushed to complete transactions before the new property cooling measures kicked in.

The measures which kicked in on 12 January included additional buyer's stamp duty (ABSD) rates being raised between five and seven percentage points and tighter loan-to-value limits on housing loans.

The 920 transactions achieved was almost three times the 309 resale transactions seen in January last year. This however could be attributed to Chinese New Year falling on January last year and the pullback in demand witnessed with the initial introduction of ABSD in December 2011.

Driven by bargain hunters, suburban home sales in the outside central region (OCR) saw the greatest increase in resale volume, rising 30 per cent to 501 units; transactions of homes in the city fringe (rest of central region or RCR) increased by 17 per cent to 229. Conversely, resale volumes for homes in the core central region (CCR) declined 9 per cent to 190 units in January, according to data from SRX.

Homes prices in the RCR and OCR region gained 2.5 per cent and 1.1 per cent respectively in January to reach $1,256 per sq ft (psf) and $997 psf respectively. In contrast, homes in the CCR saw a drop of 2.9 per cent month-on-month to $1,878 psf.

"After the latest round of cooling measures, buyers could have shifted their demand towards smaller and more affordable units in view of the tighter financing restrictions and higher cash outlay," suggested an analyst.

With new home prices hitting fresh highs, buyers have turned to the resale market in search of bargains, said another analyst. However, the CCR experienced a drop as foreigners typically constitute about 30 per cent of purchasers of high-end properties. "High-end to luxury properties have started to recover a bit the last quarter from the ABSD imposed in 2011 but this has taken another hit (following January's cooling measure).

Lee Sze Teck, senior manager of training, research, and consultancy at DWG said transactions in February could remain subdued with some buyers staying on the sidelines.

"But if prices hold, these buyers are likely to enter the market and send transaction volume up in March and April. Prices in the private residential market are likely to stay stable in 2013."

On the public housing front, the resale market showed signs of stabilising, with cash-over-valuation (COV) rising just $1,000 to $34,000 in January and overall median resale price dipping 0.7 per cent to $457,000.

The stabilisation was probably due to the government committing to build at least 23,000 flats in 2013, said DWG's Mr Lee. Indeed, the reduced mortgage service ratio (MSR) will serve to cap the COV paid for resale flats.

"To meet the lower MSR, buyers have to either lower the loan quantum or buy a smaller resale flat. This means that the bigger resale flats (five-room and above) will face downward pressure on the COVs while the smaller resale flats will see more interest. Taking into account these factors, COVs could ease by up to 10 per cent in 2013," said Mr Lee.

It is estimated that 1,500 resale flats were transacted in January, compared to the 1,560 monthly average seen in the last quarter of 2012. Overall, HDB median rents remained unchanged at $2,400.


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Property still good investment: Analysts

Source: The Straits Times

Last month's cooling measures might have dampened sentiment but the White Paper on Population has perked up property investors with the prospect of 6.9 million people needing homes.

Marketing agents are already starting to use the White Paper in their sales pitches while developers believe that the population policy will help their business and the real estate industry in general.

But experts warn that there could be a number of market cycles between now and 2030, when the 6.9 million figure could be reached, so prudence and a long-term perspective are essential.

They suggest looking for property in good locations and in business areas, so the property can be easily leased even if there is a large supply of homes competing for tenants in the future.


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Show-flats open despite festivities

Source: The Straits Times

The notion that property takes a back seat during the festive weekend seems to have gone out the window going by the number of show-flats that will be open.

Changing lifestyles and interests and smaller family units mean many people find themselves with more free time during the Chinese New Year break, experts say.

Developers have been quick to spot the trend.

Far East Organization, for one, will keep all its show-flats open. It will also throw in a special festive treat in the form of a 3.88 per cent discount for projects like Hillsta in Choa Chu Kang, Seastrand in Pasir Ris and Seawind in the East Coast area.

The Frasers Centrepoint Homes project Q Bay Residences in Tampines will be open as will EL Development's La Fiesta in Sengkang and CapitaLand condos d'Leedon in Leedon Heights, The Interlace in Alexandra Road and Sky Habitat in Bishan.


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Mapletree Business City a boost for Alexandra area

Source: The Straits Times

With its gleaming glass and steel facade, Mapletree Business City (MBC) looks like it would be more at home downtown than at its suburban location.

The $766 million project at the junction of Alexandra and Pasir Panjang roads boasts amenities such as a heated, outdoor lap pool, a 300-seat auditorium, an air-conditioned food court and a childcare centre.

Completed in 2010, it has brought new vitality to an area dominated by warehouses and light industrial businesses that support the nearby port.

Analysts said the area could become the next commercial hub as projects get more sophisticated.

MBC, which took 26 months to build, has a net lettable area of 1.7 million sq ft. Three blocks of business park space account for nearly 1.3 million sq ft; office space in one 18-storey block makes up the rest.

The rents at MBC are higher than those at its neighbours. Office space rents for $6.60 to $6.80 psf a month while business park space goes for around $6 to $6.50 psf. In contrast, rents at nearby Alexandra Technopark, a high-tech business park completed in the 1990s, average $3.70 to $5 psf.

MBC is linked via covered walkways to Mapletree's adjacent properties, The Comtech and PSA Building, as well as the Labrador Park MRT station.


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Strong demand for industrial sites; bids at top of forecasts

Source: Business Times

Three industrial sites drew bids on the top end of expectations, reflecting continued strong demand, even as the speculative element has been sieved out.

This could reflect the hunger of small and medium enterprises (SMEs), said an analyst.

Another analyst noted that while the recently introduced sellers' stamp duty has sieved out speculators, the asset class still has strong investment underpinnings.

The first site, a 3.96-hectare plot with a 30-year tenure and maximum gross plot ratio (GPR) of 1.4, drew a top bid of $61 million, or $102.18 per sq ft per plot ratio (psf ppr) from Soon Hock Group.

The second site, a 0.3-ha parcel in Tuas South Street 8 (Plot 10), drew a total of 13 bids. The top bid of $2.4 million ($73.45 psf ppr) was put up by Boilermaster Holdings.

The last site, a 0.35-ha plot at Ubi Avenue 4 with a 30-year lease and GPR of 2.5 drew 10 bids. The top bid of $16.2 million ($172.00 psf ppr) was put up by Boustead Singapore's BP-Ubi Industrial.


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