Govt monitoring ABSD reimbursing
Several developers are reimbursing the hefty additional buyer's stamp duty (ABSD) in a bid to move sales in selected projects.
And the practice, which has created concerns about the possible distortion of property and loan values, has drawn the attention of regulators and raised the possibility of intervention should it get out of hand.
These "discounts" could distort property prices as they are given only after a buyer has completed the transaction. This means sales caveats may not reflect the actual purchase price of the property, unlike upfront discounts which are worked into the reported transacted price.
Said one property consultant, who declined to be named: "The ABSD reimbursement is being made in this way so that it does not affect the pricing. If they give a discount on the price, then their pricing is affected, and the developers don't want that because it may upset their earlier buyers who did not get to enjoy the discount."
Developers which have been reimbursing the ABSD include Cheung Kong (Holdings) Ltd, Far East Organization, Allgreen Properties and Aspial Corporation's World Class Land.
Some offer to reimburse fully the additional stamp duty charges, while others cover a part of it.
Aside from price transparency, the practice of reimbursing the ABSD has raised the concern that it could distort loan values.
When contacted, MAS said: "When taking up a housing loan, the consumer is required to disclose to the bank whether he has received any rebates or discounts from the seller or any other party, and if so, the amount of the rebate or discount. The bank will deduct any discount, rebate or any other benefit offered from the purchase price before calculating the loan amount."
Source: Business Times – 30 April 2012
What underpins home demand at developer sales
Recent private home buying has focused on developer sales, particularly those for suburban condominiums. The focus is driven by financial considerations and innovative product designs.
Developer sales can be significantly pricier than resale homes in the vicinity but may still be attractive because of the progress payment schemes where mortgage financing is effective only when the project is completed, whereas a resale property requires one to commit immediately.
Shoebox apartments have a special place among buyers who are single. Many such apartments were purchased directly from developers – meeting the preference among the younger, economically active buyers for future payments.
For shoebox units which will be completed this year and the first half of next year, the bulk may have been bought without the sellers’ stamp duty and hence may be priced attractively in the resale market.
Special project designs have been successful in wooing buyers, with buyers willing to pay a premium of 10 to 20 per cent to resale properties in the vicinity, depending on the age of the completed properties.
Resale segment has its own attractions
Resale properties that are priced attractively will be able to woo buyers who have financing power. Interestingly, such buyers are the ones who ultimately purchase at lower prices. Resale properties can be a long-term investment gem and may allow the investor to top up his overall wealth faster than the rest.
Buyers of fairly new resale properties in convenient locations or tried-and-tested developments can also feel safer than buying new properties in far-flung locations, although many new places may present exciting growth opportunities in the long term.
A persistent dichotomy in the resale and developer segments will mean that resale properties that have average concepts will cater to practical but financially-ready buyers, whereas creatively-designed developer projects will have a role in continual product innovation in Singapore’s mature housing market.
Source : Today – 27 Apr 2012
The most bullish of all bull runs?
Judging from the recent spate of positive market news, it appears that there is no better time to be involved in property than the present.
A report on Wednesday highlighted the sharp rebound in resale transactions of completed private homes last month, confirming that the secondary market had indeed recovered to levels before the additional buyer’s stamp duty (ABSD) was imposed in December.
Only a day earlier, it was reported that rentals for homes in the private market had risen yet again for February. Overall, the message was that, with the exception of small pockets of weak rents in some locations, the leasing market has been pretty resilient – even amid news of expatriates returning home in numbers.
But if you look at the data, there had never been so many renter households in Singapore before. For the whole of last year, there were 45,062 private leasing contracts lodged with the Inland Revenue Authority of Singapore.
Meanwhile, according to the Housing and Development Board’s website, the number of subletting approvals for last year totalled 26,130. Ostensibly, these numbers are keeping rents for both private and public apartments fairly high, if not higher.
Thus, who are the renters? Mainly locals who are beneficiaries of en bloc sales.
Their impact on the market cannot be denied, especially their roles in the robust sales of new properties and in the high rents for both private homes and public flats.
Many analysts expect another round of cooling measures to be introduced. We have already seen off five rounds of cooling measures but we do not seem to have got much further from square one. If the measures do not address the issue of low borrowing costs directly, I would not rule out just another round but a few more.
Finally, the widespread optimism has even begun to permeate the moribund high-end market segment.
Projects located in the prime central areas as well as those on the fringe are being re-launched with discounts, rental guarantees, luxury fittings and designer interior decor.
The thing with market launches is that they help provide more recent sale benchmarks against which buyers and sellers in the secondary or resale market can rely on to conclude their transactions.
As it is, some agents are already spreading the word that the suburban market is over-bought and over-supplied and that it may be time to re-enter the prime segment. The prices on a per square foot basis has certainly narrowed between prime and fringe versus suburban.
Yes, it does seem a lot more convincing this time around. Is this finally the year of the high-end market?
Source : Today – 27 Apr 2012
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