Singapore banks

Singapore banks’ credit-loss risks are limited as housing remains affordable, borrowers can repay the loans and the government is taking steps to cool the market, Standard & Poor’s Ratings Services said.

The assessment is valid even if a property asset bubble forms in the city-state, S&P said in a report today. S&P said Singapore banks have begun to raise mortgage rates, limiting returns from property investments.

“This in turn helps reduce the likelihood of a speculative bubble and limit the risk of credit loss for banks,” Ivan Tan, an S&P credit analyst, said in the report.

Mortgages represent about 25% of loan portfolios for Singapore’s banks, making them the single largest industry risk, S&P said. The island-state’s three local banks are DBS Group Holdings, Oversea-Chinese Banking Corp. and United Overseas Bank.

Singapore’s private home prices surpassed the previous all- time peak achieved in 1996, after rising 5.2% in the second quarter and 5.6% in the first three months of the year, according to the Urban Redevelopment Authority.

Thailand property

The Bank of Thailand has played down concerns over the country’s record foreign direct investment fuelling a property bubble.

“Many foreign investors still choose to invest in the stock market while some choose to invest in bonds,” Bank of Thailand’s domestic economy department director Methee Supapong said on Monday according to the Bangkok Post.

The amount of foreign investment in the country’s real estate remains small, due to strict foreign ownership laws in Thailand that largely forbid foreigners from freeholds and restricts leases to 30 year periods. Investors have long called for these restrictions to be eased, but, Thailand, in contrast to some of its larger neighbours, Singapore and Hong Kong, has not become a speculators market. Bangkok property prices rose over 4 per cent over the last year, but Thailand has enjoyed relatively stable market prices since its recovery from the 1997 crash.

The Bank’s comments come several days after Supavud Saicheua, managing director and head of research of investment brokerage Phatra Securities warned Thailand’s property and stock markets run a risk of facing a bubble burst if foreign capital continues flowing into Asia.

With further liquidity expected in the market, partly due to US Federal Reserve measures, some Asian economies are expected to grow 7.7 per cent on average this year. Anticipating this drive for investment and in an attempt to slow the Baht’s meteoric rise the Thai Government has recently introduced capital inflow taxes that have deflected some investment.

However, with market forces exceeding the government’s own, inflationary pressure is still strong in the region, heightened further by the US dollar’s expected weakening against the Baht with the injection of USD 600 billion by the Federal Reserve.

Real Estate Agent

Get yourself a good property estate agent who can provide you the services of selecting and buying a real estate. He should guide with the rest of the process of transaction.

Ensure the ownership

Before purchasing, ensure that you are buying the property from the original owner.

Eligible to Sell

Check and make sure the seller has the eligibility to sell his property and is not under any bank debt or mortgage. If that is the case then inquire about permission from the lender or bank to sell the property.

Eligible to Buy

There are strict rules for buying HDB flat or property so makes sure you have the eligibility to buy yourself. As for foreigner investors, there are some restrictions by the government of Singapore.

Working and interacting closely with bankers and a few select real estate agents, I can feel that there are signs that the private condo/apartment market is showing signs of slowing down. The reasons being —too many coming on stream from all directions, developers trying to off-load as many units as they possibly can, price reaching a level that hits buyers’ affordability threshold . The way i see it, this sector has reach a plateau and likely to stay flat for sometime until the surplus stock is taken up. As to when it will take off again is anybody guess. But personally I do not expect a acute dip in price here as the economy is still vibrant and there is no intention by those in charge to slow the growing population.

On the HDB front, HDB resale is still very hot and selling like Macdonalds at Liat Tower. Somebody in the HDB had done some miscalculation and reduced the supply side from 2002 onwards. That was a boo-boo. As a result of this mismatch, the present fierce demand for low cost housing can only be met by the supply from the HDB resale market. The great influx of buying by foreigners who have become citizens and PRs have also weighed in on the pressurized demand. If you ask me, putting your money ( provided you meet HDB rulings) in a well select big unit HDB near MRT is still the best bet if you are looking for something with good upside potential. Need I tell you why?

The next sector that is still hot is landed properties of all shapes and sizes. There is this perception among increasing number of landed buyers that paying $1000 for per sq ft on landed is better that putting same or more on a apartment space in the sky. While you can increase your living space in a landed, you cannot do that with a apartment. The demand for freehold/999 leasehold landed is so strong that sellers are now playing hard to get and asking price that banks are reluctant to match. If this trend continue, you will now see a COV ( cost over value) syndrome taking over this sector of the market. The reason for the heated demand is scarcity. At present landed constitute 6% of the total 1.2 million households. If you look at detached and semi-D houses they comprise 2.7%. This number will only get smaller as supply is diminishing. Government’s release land is mainly for high density housing. Occasionally they do release pockets of lip-service supply for 99 year landed.

In the last 3 months, I have arranged an increasing number of loan packages for purchase of landed properties by foreigners( PRs). Almost all share the same perception —-they all see greater appreciative value in parking their money in a good landed property.They all believe that landed will still have room for price to go up. They all have stable income and have intent to make Singapore their permanent home. More importantly, they all have no problem getting approval from the authority to buy as long as it is one and for owner occupation.

So if you ask me, I believe that even in this high market, there is still a good buy ………….provided you have deep pockets and a good nose.

Moses CM Tan
Synergy Business Network
Email : mosestan4@yahoo.co.uk
Mobile phone; +65- 96359288

RESALE prices for HDB flats have smashed records for the eighth straight quarter with a surge of 4.1 per cent in the April to June period. Prices passed the 1996 peak back in 2008 and have not looked back since. And the march shows no sign of letting up, with median cash over valuation (COV) at a record $30,000 in the second quarter.

This is 20 per cent ahead of the $25,000 in the January to March quarter.

COV is the cash paid upfront by a buyer over a flat’s valuation, and is often an indication of demand levels. The HDB figures out yesterday show resale prices are almost 18 per cent above the previous peak in the last quarter of 1996. Meanwhile, the HDB said yesterday it launched almost 9,000 new flats in the first half – equal to last year’s total supply – and will launch another 7,200 in the second half to meet demand.

It will launch 1,000 new flats in Jurong West and Bukit Panjang this month. The total home supply will be complemented by 4,700 new homes under HDB’s design, build and sell scheme (DBSS) and recently sold executive condo sites. Despite this, resale activity keeps growing. Transactions hit 9,114 in the second quarter, up about 7 per cent on the first. Nearly all deals involved cash paid upfront. The percentage of resale transactions done above valuation increased to 96 per cent, up from 93 per cent in the previous quarter.

The pace being set by buyers and sellers has also prompted fresh concerns on whether the market is overheating. In estates like Queenstown the median resale price for an executive flat was an eye-popping $781,500 in the second quarter and $685,500 in Bishan. The median resale price for five-roomers was $682,500 in Marine Parade and $675,000 for Queenstown.

Associate Professor Sing Tien Foo of the National University of Singapore’s real estate department noted that apart from the price index surpassing the 1996 peak, it has also increased by more than 60 per cent compared with 2003 prices. He said that price increases appear to be supported by strong economic fundamentals for now, with demand coming from upgraders, downgraders, PRs and home buyers who cannot wait three years for new HDB flats.

As government policies on resale flats discourage speculation, this price growth is unlikely to be a housing bubble, observed ERA Asia-Pacific associate director Eugene Lim. Prof Sing added: ‘But if price rises continue unabated, we should be concerned. When deviations from fundamentals are too large, some corrections in prices could occur.’

Mr Lim noted that the robust resale market is having a spillover effect on private property as HDB owners can upgrade thanks to the relatively high prices they can get for their flats.
Values in the private property market rose 5.3 per cent in the second quarter over the first despite slowing sales. But as private property prices inch up, some buyers in that market could turn to the HDB resale sector, adding to demand, said PropNex chief executive Mohamed Ismail.

Some analysts believe prices have reached a new era. ‘Property prices move in cycles and prices will go up and down. But generally, it will move in an uptrend due to scarcity of land in Singapore,’ said Mr Lim. ‘Even if prices come down, I think it’ll still be higher than five years ago. It is unlikely we will go back to that level.’

While property agents say home buyers – especially first-timers – are getting increasingly disgruntled about blazing resale prices, some estates are still selling at levels below the 1996 peak.
PropNex agent Steven Ng, who recently helped a couple in their 50s sell a five-room Bishan flat for $615,000 – $70,000 above valuation – said the sellers were happy as they bought it at less than half that amount more than 10 years ago. ‘But some sellers in Bishan who bought at 1996 peak have still yet to see price levels at the price they paid,’ he said.

Source : Straits Times – 24 July 2010

Data released by the Urban Redevelopment Authority (URA) on Friday showed that overall prices rose by 5.3 per cent in the second quarter of 2010, compared to 5.6 per cent in the first three months of the year.

This was marginally higher than the initial forecast of a 5.2 per cent climb for Q2 reported earlier this month.

The increase pushed the residential property price index to an all-time high, surpassing the market peak of 181.4 points in Q2 of 1996.

Non-landed home prices in the city and prime districts rose 5.4 per cent in Q2. Those in the city fringe cost 4.6 per cent more. And suburban home prices increased 5.7 per cent.

Landed home prices rose at a slower rate of 6.2 per cent in Q2 compared with 8.3 per cent in Q1.

Projects like The Minton and Waterbank were among the star performers in the second quarter.

But new home sales slowed in late-May, with sentiment hit by the European debt crisis.

Even with prices at a new high, observers do not expect more government intervention, for now.

Liang Thow Ming, Credo Real Estate’s executive director (residential services), said: “The measures that they have put in over the last two years have already brought sub-sales, in terms of percentage point, to a not-normally-seen single-digit (number). In that sense, I think speculation has been managed.”

Sub-sales, a key gauge of speculative activity, fell to 7.7 per cent in Q2, down from 9.6 per cent in the first three months.

Looking ahead, market watchers expect home prices to continue to moderate. They said prices could rise by some 3 to 5 per cent in the third and fourth quarter. That will bring the full-year increase to between 16 and 21 per cent.

Investors may also be comforted by rentals of private residential properties rising 5.9 per cent in Q2, up from 4.7 per cent a quarter ago.

Nicholas Mak, real estate lecturer at Ngee Ann Polytechnic, said: “This could be due to the improving job market. We are starting to see more foreigners being attracted to our shores and this will likely to continue due to the better economic forecast.”

Higher rentals may also spill over into the HDB rental market.

With economic recovery, observers expect property market sentiment to remain positive.

All in, new home sales reached 8,413 units in the first half. Analysts said sales could hit 14,000 units for the whole year.

- CNA

In the first nine months of this fiscal year beginning October 2009, a record 2,900 complaints were filed against property firms, or 48.3 per cent of a total of 6,000 complaints.

OCPB secretary-general Niroth Charoenprakob said all complaints against property firms were about their failure to honour contracts.

Some of the complaints were about property firms not delivering the residence to the customer; firms unable to proceed with construction of the project when they face financial problems; not building infrastructure as promised in the advertising; not returning the down payment when the bank rejects a customer’s loan application.

However, OCPB has succeeded in dealing with 80 per cent of the complaints through negotiations, while the other 20 per cent have taken their cases to the civil court.

Niroth said that in all the cases filed in court, the customers will win and get pay back their money though it could take one to two years.

To help customers select the best property firms, OCPB has launched a campaign to find the best property firms by awarding stars to companies under the ‘The Star Property firm’ plan.

This scheme looks at five areas to find the best property firms. They are: financial structure, experience in property sector, design and construction standards, social and community responsibility, and customers’ application.

The 10 property firms who received ‘Star Property Firm’ rankings this year are: Pruksa Real Estate, Supalai, LPN Development, NC Housing, Charoem Nakorn Co, Home Place Development, Green Asset Co, Kanda Decor, Success Property, and Big 3 Asset. They were selected from 18 property firms who applied for the classification.

Niroth said that although there have been some complaints against property firms with the star classification, they are very few.

However, OCPB can withdraw the star if property firms fail to keep their commitments to their customers and the customers takes their cases to the court, he said.

Auto sector is behind property as the one with the most complaints, followed by the service sector, and consumer products.

They said prices and rental rates for residential and commercial properties could fluctuate if the problem continues for another three months. This may force businesses to move out.

Landlords may have to lower rent or take measures to prevent flooding to attract tenants.

Some buyers are now asking about the risk of flooding when they check out a property, including those that are not directly hit.

Executive director of Residential Projects, Orange Tee, Steven Tan, said: “In the past, this was never an issue. Now we can see that they are starting to have a concern whether the condominium or house that they want to buy will encounter this problem.”

Nicholas Mak, Real Estate lecturer at Ngee Ann Polytechnic, said: “Even if the property is not prone to flooding, but just because it is near another property that often suffers flooding whenever it rains, it could be guilty by association and its value could also be adversely affected.”

Source: Channel NewsAsia