Singapore Real Estate – Downtrend Unlikely to Continue

As buyers are waiting for the market to dip further with news such as Japanese billionaire Katsumi Tada losing $15.8 million (SGD) on his St Regis penthouse, here are some news that is happening around the world and in Singapore that could make you think a little bit more why waiting might not be the best thing to do.

World Stimulus Plans in order

China stimulus plans

These are some abstracts of what happened just a month odd ago in China, the biggest concerned market in the world.

CHINA DATA: Earlier, sentiment was supported by Chinese data showing consumer inflation remained at 1.4 percent in March, well below the government’s official target. That fueled expectations the central bank might launch new stimulus to fend off deflation. Low inflation is a boon to consumers but a bout of potentially damaging deflation could add to fears about the Chinese growth outlook.

CHINA STIMULUS: “We expect possibly the weakest” growth in China this quarter since the 2008 crisis, “and thus more easing,” Citigroup economist Minggao Shen said in a report.

Japan stimulus plans

NIKKEI RECORD: Japan’s Nikkei 225 closed down 0.2 percent to 19,907.63 after rising above 20,000 for the first since April 2000 during the morning session. The gains were based on expectations for Japan’s economic recovery and brisk corporate earnings, following aggressive monetary stimulus. The benchmark index, however, could not sustain that level as investors turned to take profits.

With any stimulus, there will be more money flowing which supports strong inflation for months to come, especially with markets like China and Japan. Real estate no doubt has always shown and is one of the most preferred asset class to combat against inflation.  Continue reading “Singapore Real Estate – Downtrend Unlikely to Continue”

Redhill GLS – Litmus Test to Singapore Market

The Singapore Government has cut short of supply to their Government Land Sales with the announcement of 7 new sites for next year in H1 2014. Of the 7, 4,630 private apartments can be carved to the supply and it’s one of the lowest supply introduced since 2010.

Right next to Wingtai’s “The Crest” (960 psfppr in September 13) would be the only GLS plot (2.37ha) which is at City fringe for H1 2014 and can potentially yield 655 homes would be the highlight of the exercise.

This would be a good indicator of Singapore developers sentiments for the market on whether are they still positive on topping and developing their land bank for the consumers.

With limited residential supplies coming online, the Government is watching very closely on the supplies as well to prepare a soft landing should the market do some corrections.

this is an interesting plot

ps. What’s interesting to me would be the commercial plot which is right next to City Plaza. The area has a good vibe going on with UOL’s Katong Regency coming online.

Cooling Measure for Executive Condominiums

To complete the loop for a sustainable Executive Condominium (ECs) market, Ministry of National Development has introduced 3 primary measures to the EC segment, primarily:-

  • Reduce EC Cancellation Fees – From existing 20% down to 5%
  • Resale Levy for Second-Timer Applicants – Formerly second timers are not required to pay a levy. This is applicable to only new EC land sales which are launched on or after 9th December 2013
  • Revision of Mortgage Loan Terms – From a previous mortgage servicing ratio (MSR) level of 60% to now 30% of a borrower’s gross monthly income. The MSR cap will apply to EC purchases from today onwards.

You can read more from the official source.

How will it affect the EC Market?

This will still primarily drive the 1st timers to purchase at ease and since they have lower cancellation fee, this would allow them to think prudently on their financing capability. Backing out would be less painful for them.

2nd timers would probably rush for existing EC launches prior before today so they would be able to avoid the levy. Again, these pool of purchasers would weed out in the market gradually.

EC developers would also be more careful when it comes to bidding for future EC land when it comes to affordability of EC purchasers since the MSR level came down drastically. We’ll see more competitive land bids for future plots; if not lesser.

Will it affect the Overall Market?

As of current, the primary indicator would still be HDB. With HDB prices tapering and aggressive supplies in the pipeline introduced by the government coming online, this would be the median basis of the fundamentals.

Prices should soften for the resale market for the next two quarters, as we’re experiencing a shift of tide already from the seller to the buyer’s market.

Whilst prices might soften, residential buyers should not expect a drastic drop in pricing as the rental market for residential segment is still active.

Prepare for Changes in Housing Policies

Mr. Khaw Boon Wan, the new Minister for National Development

Newly sworn in Minister for National Development Mr. Khaw Boon Wan, former Health Minister who has replaced Mr. Mah Bow Tan has pledged in his final outgoing blog post as a Health Minister to make housing and HDB Singaporeans popular icon again.

I am only driven by one thought: housing is one of the greatest achievements of Singapore, and our pride. It is very sad to see it being hammered left, right and centre in the lead up to and during GE.

I am determined to make housing and HDB Singaporeans’ popular icon again.

Please help me, my friends.

It is going to be interesting to see what kind of policies will Mr. Khaw introduce since HDB forms up 80% of heartlander’s stay. It’s quite safe to say that any new changes that is going to be introduced into the system will be tough to adjust the current prices. Mr. Mah Bow Tan has tried increasing the supplies of flats, introduced harsher seller’s stamp duty rates during his course, but the median Cash Over Valuation (COV) hasn’t seem to revise downwards too much.

Of course supplies that has been introduced will take time on the system on the price action since they’re just in the pipes which hasn’t been built yet. Any changes done now will fiscally alter the prices once the supplies are in the market.

Also, should the policies be too drastic, foreign investors would probably slow or halt their investment portfolio in Singapore. If Mr. Khaw could just tilt his policies more to adjust the public housing woes for the mid-tier families instead of affecting the free market on private housing, it would be perfect.

New Statutory Group for Singapore Estate Agents

The verdict is finalized with actions taken by Singapore Government. Ministry of National Development will take the reigns over from Inland Revenue of Singapore to create a Council for Estate Agencies (CEA) as the licensing authority for real estate agents.

MND will introduce a Bill in Parliament in the second half of this year to set up the new Council and to establish the new regulatory framework.

I’ll just highlight the most important point which most fellow agents are keen to know,

Arrangements will be made to help existing estate agencies and agents transit to the new licensing and registration framework. For instance, they will be exempted from the new educational qualification criterion.

Those who have passed an industry examination will not be required to take a new examination.

Those who have not passed any existing industry examination will be given one year to pass the examination, and be given a provisional registration in the interim.

Existing agents who are undischarged bankrupts or have past criminal records will be considered for registration on a case-by-case basis.

So you’ll definitely need to sit in for either CES or CEHA before practicing. To read the article in details, check out AsiaOne.

Singapore Government Regulating Real Estate Agents Soon

I think this is unevitable, especially with many criticisms and suggestions coming from the public in the recent months after the case of two unethical agents flipping their marketing unit without taking care of the principle’s interest.

Whenever discussions and complains come directly at the press especially ST Forums, the statutory boards will be acting quickly on them, which is a good thing. Recently MND Minister Mah Bow Tan and Senior Minister of State for Finance Lim Hwee Hua has mentioned to Parliament on the review of unscrupulous agents.

Now what will the government come out with to regulate Realtors? Will they work closely with SAEA or IEA? Will CEHA be compulsory?

Before they really come out with something firm, I’d wish they have a talk with most major agencies on what should be enforced to still encourage room for the growth and healthy competition for the real estate market in Singapore.

Times are changing, and with regulatories stepping up to clean up the industry, only creame of the crop will be standing and giving their best to the customers they serve.

Rest assure things will happen really soon for Realtors in Singapore. A good thing isn’t it?