Home buyers unfazed by loan curbs

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#1
Don't be ridiculous, how can our dear Singaporeans ever be put off by such light measures? Read the article - everyone is smiling and flush with cash and ready to (still) leverage to the hilt! Let the party continue!

The Straits Times
www.straitstimes.com
Published on Oct 07, 2012
Home buyers unfazed by loan curbs

Some condo showflats packed, business brisk a day after new limits on mortgages kick in

By Rachel Chang & Amanda Tan

Despite new restrictions on the length of home loans that took effect yesterday, house hunters did not stay away from condominium showflats islandwide.

At new launches like Riversails along the Punggol waterfront and Cityscape at Farrer Park, showrooms were packed and agents said that business was brisk.

At a 748-unit development in Bedok South called eCO, for example, at least 20 units were sold yesterday.

The Monetary Authority of Singapore (MAS) said on Friday that it was capping the length of a home loan at 35 years.

It also lowered the loan limits for those who take loans past 30 years, or which extend beyond the retirement age of 65.

Such buyers can take a loan of only 60 per cent of the property's value, down from 80 per cent, starting yesterday.

This means an upfront payment in cash of 40 per cent of the property's price.

If it is their second or more loan, the loan limit shrinks further to 40 per cent - they must fork out a cash down payment of 60 per cent of the property's value.

House hunters The Sunday Times spoke to yesterday said they were aware of the latest changes but they were undeterred.

Mr Ding Ming, 39, signed an option to purchase a two-bedroom unit at Riversails.

And because it is his second property in addition to his HDB flat, he could take only a 25-year loan - as a longer one would mean paying in cash a down payment of 60 per cent of the condominium's value.

"The rental from my HDB flat will cover it," said the engineer. "Anyway it's not a good idea to take too long a loan."

At Cityscape, technical manager Kenny Kam, 42, who was applying for a 30-year loan said he did not have any problem paying the required 40 per cent down payment.

"I have the liquidity, and it's better than putting the money in the bank because interest rates are so low," he said.

At the showrooms, the MAS announcement was a constant topic.

Agents were overheard assuaging buyers' fears that property prices may fall due to the measures.

"In 2010 and 2011, nothing happened," said one, referring to the cooling measures levied in the last two years by the Government.

Developers did not yet offer special perks or discounts to buyers to take the sting out of the new restrictions.

"This would be premature and too much of a knee-jerk reaction," said SLP International's research head Nicholas Mak. "I don't expect them to give perks and discounts until demand drops and puts them under pressure."

House hunters were sanguine, for the most part. At Skies Miltonia, Madam Wendy Tang, 44, who works in the education sector, said that she had always planned for a short-term loan "because I don't know what will happen in the future".

But there were some who breathed a sigh of relief that they had dodged the new rules.

Mr Clarence Wu, 45, was at the Riversails showroom with his family. He had purchased a three-bedroom unit two weeks ago at its soft launch, but was there to show his parents the unit he had chosen.

"If the announcement happened two weeks ago, I wouldn't buy because I would have to put too much cash down," said the forex trader, who also owns an HDB flat.

He took a 30-year loan for his new condo with a 20 per cent down payment; under the new rules, he would either have to take just a 20-year loan, or put down 40 per cent down payment in cash.

"I'm lucky I just escaped," he said with a smile.

rchang@sph.com.sg

tamanda@sph.com.sg
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#2
"It's only when the tide goes out that you learn who's been swimming naked."
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#3
I think it is damage control lah trying to use media "to soften the blow" Tongue
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#4
On a separate note, the reason why I don't invest in property is due to regulatory risk - the Government can clamp down on property any time and does so frequently (6 rounds over the last 3+ years). But for the stock market, it does not intervene and lets market forces decide on market prices.

One reason could be that housing is a political issue and is tied to marriage, birth rates and overall satisfaction, while the stock market is seen as being non-integral.
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#5
(07-10-2012, 10:10 AM)Musicwhiz Wrote: ...

He took a 30-year loan for his new condo with a 20 per cent down payment; under the new rules, he would either have to take just a 20-year loan, or put down 40 per cent down payment in cash.

"I'm lucky I just escaped," he said with a smile.
...

He thought that he is lucky to escape, but maybe he is unlucky to enjoy the benefit of the new rule (to pull him out from a disastrous) Tongue
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#6
I think the latest measure is going to have some real impact on marginal case of people hoping to speculate on low interest rate environment of 20% down only.

Exactly how big is this group? How about relatives that so often tells me so and so sons, daughters are buying again another property?

That perceived stability in property vs the never ending story that property is a better hedge than leaving your money in bank to rot away. Just look at how the gov had driven this at property tender and you know what I mean. If the tenderer fall short of certain benchmark, there will be no award - see UOL bid.

Singapore great asset enhancement on MRT line up north east - that is also another story for more reason to buy property too!!

What about HDB new record on 1mil or 750k for 2bedroom DBS hdb. This new measure is another sign to keep those people that dont have the means out of the market.

Indirectly, the gov is telling the marginal players its time to park your speculative money some where else but not property
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#7
(07-10-2012, 10:10 AM)Musicwhiz Wrote: "I have the liquidity, and it's better than putting the money in the bank because interest rates are so low," he said.

...........................

"In 2010 and 2011, nothing happened," said one, referring to the cooling measures levied in the last two years by the Government.

These words are really music to one's ears - The lull of low interest rates and ever rising (house) prices - is been slowly assumed to be the new norm, or people are starting to slowly forget history and extrapolate current scenarios into the infinite future.
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#8
This measure is really " Bo Lasa " ( No effect ). Just another wayang. You guys really think our dear 'someone' don't hope high land prices here ? How to cover the blackhole created by our top scholars who bought UBS, Barclay, citi Bank, and many other failed investments, since 97/98 in a big way. Someone talked about 'Golden Era' in 1996 before the big AFC .
Just look at the prices they went in and the prevalling prices of these stocks, and the many that had already gone under .
“risk comes from not knowing what you’re doing.”
I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
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#9
(07-10-2012, 01:44 PM)cfa Wrote: This measure is really " Bo Lasa " ( No effect ). Just another wayang. You guys really think our dear 'someone' don't hope high land prices here ? How to cover the blackhole created by our top scholars who bought UBS, Barclay, citi Bank, and many other failed investments, since 97/98 in a big way. Someone talked about 'Golden Era' in 1996 before the big AFC .
Just look at the prices they went in and the prevalling prices of these stocks, and the many that had already gone under .

How can it be "Bo Lasa" when the new measure impact on real $ on speculators. Tongue

$ is the most "Lasa" for speculators Tongue
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#10
(07-10-2012, 02:08 PM)CityFarmer Wrote:
(07-10-2012, 01:44 PM)cfa Wrote: This measure is really " Bo Lasa " ( No effect ). Just another wayang. You guys really think our dear 'someone' don't hope high land prices here ? How to cover the blackhole created by our top scholars who bought UBS, Barclay, citi Bank, and many other failed investments, since 97/98 in a big way. Someone talked about 'Golden Era' in 1996 before the big AFC .
Just look at the prices they went in and the prevalling prices of these stocks, and the many that had already gone under .

How can it be "Bo Lasa" when the new measure impact on real $ on speculators. Tongue

$ is the most "Lasa" for speculators Tongue

it will not deter the big time investors/speculators. Also our dear garmen on one hand while it trying show it's doing something to douse the red hot property market on the other hand they adding more fuel to it. If you read Saturday paper the population now 5.3m going to raise to 6m. So 700k new people comes in here going to stay where?

I think can expect more problems with public transport system also promises made after last election to restrict immigration has been forgotten already.
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