By the midday break, the Straits Times Index (STI) <.FTSTI> was up 3.26 points at 3,224.04. The total value of shares traded in the morning session was $838.8 million, up from $815.1 million on Wednesday.
Singapore will raise down payment requirements for second mortgages and extend the period homeowners must hold properties to avoid a sales tax as it steps up efforts to curb speculation after prices rose to a record.
Individuals with more than one mortgage can only borrow up to 60% of a property’s value, down from 70%, the government said in a statement yesterday. On loans to entities other than individuals it will be reduced to 50% from 60%. Sellers will now have to pay a stamp duty for all homes and land sold within four years of purchase, from three years.
Singapore will raise down payments for second mortgages and extend holding periods for properties starting tomorrow after home prices rose to a record last quarter, intensifying the nation’s efforts to curb speculation.
Individuals who hold more than one mortgage can only borrow up to 60% of a property’s value, versus 70% previously, the government said in a statement today, while loans to entities other individuals will be cut to 50% from 60%. A seller’s stamp duty will apply to all residential units and land sold within four years of purchase, from three years now.
CapitaLand, Singapore’s biggest developer, said government measures to curb property speculation are “incremental” and will help the real estate market development sustainably over the long term.
Singapore raised down payment requirements in August for second mortgages and imposed a stamp duty on homes held for less than three years to curb speculation after prices surged. It will sell 17 residential sites in the first half of 2011, matching the record land sales in the second half this year, it said yesterday.
With Singapore’s October mass-market private home sales reaching 15-month high, tougher initiatives to cool property market may be in store as previous measures have had little effect, says Royal Bank of Scotland, according to Dow Jones.
RBS adds, developers sold 981 mass-market homes in October, +74% on-month, +96% on-year, despite government’s recent move to increase minimum downpayment for home purchases. Overall October private home sales +16.1% on-month at 1,058 units; “we believe that harsh demand-side measures may be progressively implemented, including a higher downpayment requirement, a ban on sub-sales and a property gains tax.”
Flags risk of property bubble in Singapore following Fed’s recent quantitative easing plan. Prefers commercial property developers like Keppel Land (K17.SG), UOL (U14.SG) over residential developers.
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Singapore private home prices yet to reflect full impact of recent housing-market curbs, despite new official data showing price moderation, analysts say, according to Dow Jones.
According to government flash estimates, 3Q10 private home prices +3.1% on quarter vs +5.3% in 2Q10, +5.6% in 1Q10. CB Richard Ellis Research executive director Li Hiaw Ho attributes rise to strong sales momentum in July, August, but notes property market slowed down from September.
The Executive Condominium (EC) site at Punggol Drive / Punggol East (Punggol E2a) has drawn four bids from developers. The highest bid of $136,170,000 ($237 psf ppr) came from Qingdao Construction (Singapore). This is 2.2% higher than the second highest bid. However it is 23% lower than the price paid by ChoiceHomes Investments & CEL Development for another Executive Condominium site at Punggol Field / Punggol Road (Punggol E4) in June.
Singapore shares shrug off initial fatigue, with interest returning even to blue chips, which have been underperforming lower liners lately, says Dow Jones.
STI +0.6% at 3,114.02 midday vs down 0.3% at 3,084.89 earlier. Lower liners stronger, with FTSE ST Small Cap Index +1.2%, FTSE ST Mid Cap Index +1.1%. Overall volume robust at 1.98 billion shares worth $1.39 billion.
“Due to the curbs by the government on property investments, money and capital is being diverted to the stock market,” says trader; adds, “stay invested. A rising tide will lift all boats.”
Investors underestimating impact of Singapore government’s efforts to concurrently increase residential land supply, dampen housing demand, says UBS, according to Dow Jones.
UBS tips 30% fall in transaction volume, decline of up to 10% mass-market home prices by end-2011. Cites slowdown in growth of Singapore permanent residents (PRs), sharp increase in new supply of public-housing flats as key risks to overall residential demand.
“The mass-housing segment will be the hardest hit,” said Wilson Liew, an analyst at Kim Eng Holdings. “We’re expecting mass market prices to drop as much as 5% in the next 12 months.”
Impact of Singapore’s latest property-market curbs on housing loan demand will only be marginal since genuine buyers can still borrow up to 80% of a property’s value, with measures not affecting existing loans, says CIMB, according to Dow Jones.
Reduction in borrowing limit to 70% of value from 80% applies only to home owners with existing mortgages seeking to buy another property.
Latest measures by Singapore to cool housing market expected to result in lower sales volume in short term, but won’t have significant impact on home prices, says Citigroup, according to Dow Jones.
“With the wide spread between rental yields of mass-market properties at above 4% and mortgage rates as low as 1%, such properties remain a highly attractive investment vehicle for many seeking higher returns than bank deposits,” says Citi.
Singapore’s moves to rein in home prices not unexpected as past measures haven’t been successful, says NRA Capital chairman Kevin Scully, says Dow Jones.
Dow Jones expects government intervention to have positive impact on developers in strong cash position and seeking to replenish depleted land banks: “if these measures work and lead to a softening of prices, cash-rich property companies will have an opportunity to rebuild lower-cost land, which will put them in a good stead for the medium term.”
While Singapore’s booming property market will continue to raise concerns of more government tightening measures, any additional initiatives likely to target financially-stretched property investors, speculators rather than genuine home buyers, says OCBC Investment Research.
Guocoland, the developer controlled by Malaysian billionaire Quek Leng Chan, said China’s efforts to avert a property bubble has encouraged the company confidence to double its investment in the country, reported Bloomberg.
Guocoland, whose projects combine shopping malls, apartments, offices and hotels, said a year ago it planned to invest 33 billion yuan ($6.6 billion) in new commercial properties in China.
CapitaLand (C31.SG) off 2.7% at almost 3-week low of $3.99 in active trade as prospect of slower China home sales weighs, following Beijing’s latest measures to rein in property market, according Dow Jones.
China threatened US firms who sells weapons to Taiwan with sanctions, as Beijing ratcheted up the pressure in a ballooning crisis that will widen already deep rifts in their relationship. The Foreign Ministry, Defence Ministry and China’s Taiwan Affairs Office all piled in with their own dire
The Singapore government may roll out more policies to prevent property bubble, including lowering borrowing limit to 80% of home value from 90% currently, says Swiss investment bank UBS AG, according to Dow Jones.
It cites strong response of 32 bids from developers this week for small residential land parcel put up for sale by government, with the highest offer at $38 million.
UBS notes the government’s land sales programme for 1H10 expected to yield more than 3,000 units.
