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31 January 2013

31st January, Thursday




Mortgage takers beware the twin risks of 2015

Source: Business Times

Watch out for 2015. That's when home-loan borrowers face higher interest rates just as an abundant supply of newly completed units comes on the market.

The Singapore economy's exposure to the property market is now at a record high level, posing greater risks to the financial system, said an analyst.

"Total mortgage loans as a percentage of SGD banking sector deposits has reached a new high at 30 per cent," he revealed. The previous peak was hit in 2004, when mortgages made up 28-29 per cent of deposits.

"In addition, outstanding mortgage loans as a percentage of GDP rose to 44 per cent as of end-2012," he said.

Commenting on Singapore's 44 per cent mortgage exposure to GDP, the analyst conceded that while he did not know what the government's "comfort" level of exposure was, he felt a ratio of about 30-40 per cent was more sustainable in the longer term.

The latest round of property-cooling measures announced earlier this month indicates that exposure levels have started to cross the comfortable zone, he said.

He said it was important for borrowers to do the necessary "stress-testing" to take into account potentially higher interest rates and determine whether their properties will remain affordable under higher-rate scenarios.

Secondly, there is a large supply of new housing, which will hit the market in the next three years. "Some 128,100 new housing units that will hit the market in the coming three years, with a peak likely in 2015," he said.

"The combination of rising interest rates and abundant supply by 2015 argue for more than the usual amount of caution and the latest round of property cooling measures should be viewed against this backdrop. Whether more is required remains to be seen."


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New towns should take local characteristics into account: experts

Source: Channelnewsasia

Singapore will soon see a number of new towns in areas like Bidadari, Tengah and Tampines North.

Experts said the development of these places should take local characteristics and history into account, as this will not only retain the town's history and uniqueness, it will help create a more varied environment in Singapore.

But observers said the challenge of building new towns is in calibrating the balance between residential space and amenities.

A sociologist with the National University of Singapore, said: "To make these towns attractive for new families, infrastructure should be ready -- so to have the rail system or bus services set up, to have service providers, amenities, restaurants, supermarkets to be there.


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Office rents set for recovery: CCT

Source: Business Times

Singapore’s office rents are set to rebound from their first annual decline in three years as new supply shrinks and more businesses expand, according to the biggest office property trust in Asia outside of Japan.

Rents in the city are reaching a trough and demand may rise as the country positions itself as a regional business hub, said Lynette Leong, chief executive officer of CapitaCommercial Trust (CCT).

Supply for the next three years will be about 0.8 million sq ft a year, down from 1.3 million sq ft over the past two decades, she said.

Singapore's office rents fell 0.3 per cent in the fourth quarter, extending the decline in 2012 to 1.3 per cent, the government said on Jan 25. They climbed 8.4 per cent in 2011 and 13 per cent in the previous year, government data showed.

But analysts say it's still too early to pinpoint a time for a recovery. Global economic headwinds are a concern and there is also a risk of secondary space that can be returned to the market should occupiers or tenants relocate to new buildings.


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