07-10-2016, 10:40 AM
(This post was last modified: 07-10-2016, 11:20 AM by specuvestor.)
I am always for long term benefits of well-thought pragmatic macroprudential measures. But they forgot to mention one major diff: We cut foreign speculation with ABSD.
By Nisha Gopalan and Andy Mukherjee
(Bloomberg Gadfly) -- Ants don't attack two equidistant,
similarly tempting sugar lumps with the same fervor. One cube
gets devoured before interest in the other perks up. An
economist who has studied ants for years wonders if such herding
behavior could also explain the way investors treat comparable
assets.
Asia's property market offers a fertile ground for
entomological research. Property ants are piling into Hong Kong,
and ignoring Singapore. After moving up in tandem for years,
home prices in the two Asian cities began diverging earlier this
year. Despite broadly similar curbs aimed at tamping down
skyrocketing prices, Singapore continues to fall as Hong Kong
surges.
Why are cooling measures working in one city, but not the
other, especially when both have a 15 percent tax on foreign
buyers? The clampdown may even be slightly stricter in Hong
Kong, where the loan-to-value cap of 50 percent on homes priced
above HK$10 million ($1.3 million) is well below Singapore's 80
percent limit on a first mortgage of up to 30 years.
One answer to the puzzle: Singapore's curbs are all-
encompassing. Total debt servicing, including credit cards and
overdrafts, can't exceed 60 percent of a borrower's monthly
income. Add to that a glut of homes. Between 2014 and the end of
this year, UBS expects supply in Singapore to more than double
from the historical average to 51,000 units annually. In
contrast, Hong Kong is expected to produce an average of 19,800
units in 2015 and 2016, 35 percent more than the 2000-2014
average of 14,600, says Louisa Fok of UBS CIO Wealth Management.
That could partly explain the divergence: Singapore's home
vacancy rates are at their highest in 11 years and prices have
fallen 11 percent from their record in September 2013, while in
Hong Kong, the market unexpectedly resumed its rally in March.
Prices have almost quadrupled since the end of the 2003 SARS
outbreak.
Singapore home prices since September 2013
-11%
But ants' actions have consequences, especially with
extreme wealth inequality breeding popular angst. Affordability
is among the world's lowest in Hong Kong, which UBS says is at
risk of a bubble. The average skilled service worker needs to
work 18.5 years to be able to afford a 60-square-meter
apartment, compared with 11.8 years in Singapore.
--snip--
https://www.bloomberg.com/gadfly/article...-singapore
By Nisha Gopalan and Andy Mukherjee
(Bloomberg Gadfly) -- Ants don't attack two equidistant,
similarly tempting sugar lumps with the same fervor. One cube
gets devoured before interest in the other perks up. An
economist who has studied ants for years wonders if such herding
behavior could also explain the way investors treat comparable
assets.
Asia's property market offers a fertile ground for
entomological research. Property ants are piling into Hong Kong,
and ignoring Singapore. After moving up in tandem for years,
home prices in the two Asian cities began diverging earlier this
year. Despite broadly similar curbs aimed at tamping down
skyrocketing prices, Singapore continues to fall as Hong Kong
surges.
Why are cooling measures working in one city, but not the
other, especially when both have a 15 percent tax on foreign
buyers? The clampdown may even be slightly stricter in Hong
Kong, where the loan-to-value cap of 50 percent on homes priced
above HK$10 million ($1.3 million) is well below Singapore's 80
percent limit on a first mortgage of up to 30 years.
One answer to the puzzle: Singapore's curbs are all-
encompassing. Total debt servicing, including credit cards and
overdrafts, can't exceed 60 percent of a borrower's monthly
income. Add to that a glut of homes. Between 2014 and the end of
this year, UBS expects supply in Singapore to more than double
from the historical average to 51,000 units annually. In
contrast, Hong Kong is expected to produce an average of 19,800
units in 2015 and 2016, 35 percent more than the 2000-2014
average of 14,600, says Louisa Fok of UBS CIO Wealth Management.
That could partly explain the divergence: Singapore's home
vacancy rates are at their highest in 11 years and prices have
fallen 11 percent from their record in September 2013, while in
Hong Kong, the market unexpectedly resumed its rally in March.
Prices have almost quadrupled since the end of the 2003 SARS
outbreak.
Singapore home prices since September 2013
-11%
But ants' actions have consequences, especially with
extreme wealth inequality breeding popular angst. Affordability
is among the world's lowest in Hong Kong, which UBS says is at
risk of a bubble. The average skilled service worker needs to
work 18.5 years to be able to afford a 60-square-meter
apartment, compared with 11.8 years in Singapore.
--snip--
https://www.bloomberg.com/gadfly/article...-singapore
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward
Think Asset-Business-Structure (ABS)
Think Asset-Business-Structure (ABS)