RESIDENTIAL MARKET
Cooling measures won't hit banks heavily: Citi Research
The latest round of property cooling measures is unlikely to impact banks heavily, with mortgage and construction loan demand expected to remain resilient this year, though at a slower growth rate.
This is because data so far since the cooling measures were implemented suggests that demand for property is still strong, Citi Research said in a report yesterday.
It expects the mortgage growth rate to reach 9 per cent this year, compared with 16 per cent last year. It also predicts the growth rate for construction and non-bank financial institution loans to drop only slightly from over 17 per cent to about 15 per cent.
Citi Research cited the sale of about 300 units at the 630-unit QBay Residences, and the strong interest received at a Jurong residential site near the MRT station with 12 developer bids as evidence of continued strong demand.
Also, despite the previous six rounds of property cooling measures, there was still a growth of over $20 billion in net mortgage drawdowns last year. The latest measures in mid-January - the most comprehensive yet - could lead to lower residential sales volume, seeing the net new mortgage drawdowns taper to $14 million this year, said analyst Robert Kong.
He also expects demand for construction loans to be "robust".
In relation to the White Paper suggesting a population of 6.5-6.9 million by 2030, National Development Minister Khaw Boon Wan has said that about 200,000 homes will be built by 2016 and enough land for 700,000 homes will be set aside by 2030.
Based on this, Mr Kong predicts government residential land sales to remain at $7-8 billion annually for the next two years (it came up to $8.6 billion last year), supporting strong levels of construction loans.
Source: Business Times –6 February 2013
Few bids for site in Queenstown
A plum, 99-year leasehold private housing site opposite the Queenstown MRT Station drew just three bidders, surprising property consultants who had expected between five and 10 contestants for the plot.
The top bid was, however, within expectations at $562.8 million, or $883 per square foot per plot ratio (psf ppr). This came from a consortium backed by Hong Leong Holdings and City Developments. Predictions for the top bid had ranged from $700 psf ppr to $1,100 psf ppr.
Some market watchers whom BT had earlier spoken to had expected the plot to be keenly contested because strata landed homes could be built on it with prior written approval from the Housing & Development Board (HDB). They say that such sites are getting harder to come by.
Two tenders for 99-year leasehold residential plots at Lakeside and Ang Mo Kio after the latest property-cooling measures were announced had attracted more than 10 bidders.
The plot is also located in an area known for its highly sought-after homes.
A five-room HDB Strathmore unit is observed to be asking for up to $100,000 cash-over-valuation, one of the highest transactions recorded.
One reason the tender fell short of expectations could be the large sum of over $500 million that developers had to cough up for the plot.
The effect of the cooling measures, rolled out in January, may be starting to set in, too.
Located along Commonwealth Avenue and just next to Queenstown MRT Station, the 1.2-hectare plot can potentially yield about 700 homes, according to the HDB.
It has a 4.9 plot ratio (ratio of maximum gross floor area to land area), which means it can accommodate a high-rise condo of over 40 storeys, said consultants.
Source: Business Times –6 February 2013
Indirect discounts for home buyers under review
The dangling of sweeteners to home buyers by developers to take the sting out of recent property cooling measures is being reviewed by the Government.
It is concerned that sweeteners such as stamp duty rebates and furniture vouchers cause home prices to be artificially inflated.
The Straits Times understands that the Urban Redevelopment Authority (URA) is looking into the practice and might act soon, as indirect discounts could make the cooling measures seem ineffective.
Unlike upfront discounts, some rebates and vouchers are given only after a buyer has completed a purchase, so the price cuts are not reflected in the sales caveats lodged with the URA.
That means home prices fed to the URA quarterly price index - based on caveats lodged - might not reflect real property values.
Experts say this causes home prices to be less transparent and keeps them artificially inflated.
But developers prefer indirect discountsas they do not affect the caveat pricing. This keeps the official pricing firm so earlier buyers are not unhappy at missing out on price cuts, and also props up home prices islandwide.
Sources say as a start, the URA could be looking at publishing net prices that take into account indirect discounts as part of its monthly developers' sales data.
The latest property curbs last month led developers to pull out all the stops. Some offered rebates to lessen the impact of the additional buyer's stamp duty (ABSD). Frasers Centrepoint, for instance, offered stamp duty discounts of 5 to 7 per cent to all buyers of Q Bay Residences in Tampines. Buyers could take an upfront discount or a rebate after 20 per cent of the price had been paid.
Giving full or partial ABSD rebates is not new but if the latest curbs lead to an increase in the practice, it would distort prices.
Developers say URA has already been encouraging them informally to be more transparent with prices. Some add there is no benefit in masking prices as the Government has stated its intention to see prices soften and artificially propping up prices might only attract more measures.
Some experts add that the review is overdue as developers' indirect discounts are negating the impact of the measures.
A National Development Ministry spokesman said the true purchase price of the property must be accurately conveyed to the potential buyer so that he can make an informed decision.
The Commissioner of Stamp Duties can also recover any deficient duties if the declared price of a property falls below its market value, he added.
The Monetary Authority of Singapore said that since 2002, it has required banks to factor in any discount or other benefit when calculating an appropriate loan.
Source: The Straits Times –6 February 2013
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