Coming Soon to Singapore: Relief for Home Buyers, Renters

By Leslie Shaffer

A flood of new homes is headed toward Singapore and it will carry with it a buyer’s market, analysts say.

Developers in Singapore are already offering discounts and freebies such as furniture vouchers and will probably give away more expensive “toys”–maybe even cars–as new properties begin hitting the market in force, says Chris Comer, CEO of Castlewood Group, developer of Nikki Beach properties in Asia.

Comer is a Singapore resident with global experience, including in Dubai, where he worked during the boom and bust of the past decade. He said the downturn could hit Singapore within the next 12 months, and “you’ll start to see properties resold for less than they paid for them” as investors try to cash out, he said.

“It’s going to be a renters’ market here for a very long time,” he said.

Not everyone sees a bubble bursting with such force, but other analysts are warning about the coming supply and declines in prices and rents.

Two weeks ago, Nomura estimated that more than 16,000 new private homes will be completed over the next three quarters, compared with 2,408 in the first quarter of this year and 9,853 all of last year. “Supply is likely to outstrip demand and vacancy (and rents) will likely come under more pressure in the coming quarters,” it said in a report.

Daiwa analyst David Lum also sees a glut coming. An estimated 86,000 private residential units were in the pipeline as of the end of last year–or 31% of existing private stock, he said in a report last month. That’s slightly higher than the most recent peak of 29% reached in 2008, but lower than the all-time high of 45% seen prior to the 1997 Asian financial crisis. Also coming is a wave of public housing due to hit the market in 2014-16, Lum said.

It all adds up to mass-market home prices falling 18% from the end of last year through end-2015, he said, and a 20% drop in the high-end segment.

http://blogs.wsj.com/moneybeat/2013/05/1...s-renters/

May have to wait for another few more years for the long over due situation to arise. 1st and foremost, interest rates must start to climb.

So far only US is showing some concrete signs of slow growth while others have just started copycatting QE.

Expect the unexpected. Prices though will remain stable from hereon after 7 rounds.

IMO, I think the anti-speculation measures will counter the massive $ printing exercise globally.

Not vested in Prop except HDB Flat
GG

(14-05-2013, 04:07 PM)yanziyang Wrote: By Leslie Shaffer

A flood of new homes is headed toward Singapore and it will carry with it a buyer’s market, analysts say.

Developers in Singapore are already offering discounts and freebies such as furniture vouchers and will probably give away more expensive “toys”–maybe even cars–as new properties begin hitting the market in force, says Chris Comer, CEO of Castlewood Group, developer of Nikki Beach properties in Asia.

Comer is a Singapore resident with global experience, including in Dubai, where he worked during the boom and bust of the past decade. He said the downturn could hit Singapore within the next 12 months, and “you’ll start to see properties resold for less than they paid for them” as investors try to cash out, he said.

“It’s going to be a renters’ market here for a very long time,” he said.

Not everyone sees a bubble bursting with such force, but other analysts are warning about the coming supply and declines in prices and rents.

Two weeks ago, Nomura estimated that more than 16,000 new private homes will be completed over the next three quarters, compared with 2,408 in the first quarter of this year and 9,853 all of last year. “Supply is likely to outstrip demand and vacancy (and rents) will likely come under more pressure in the coming quarters,” it said in a report.

Daiwa analyst David Lum also sees a glut coming. An estimated 86,000 private residential units were in the pipeline as of the end of last year–or 31% of existing private stock, he said in a report last month. That’s slightly higher than the most recent peak of 29% reached in 2008, but lower than the all-time high of 45% seen prior to the 1997 Asian financial crisis. Also coming is a wave of public housing due to hit the market in 2014-16, Lum said.

It all adds up to mass-market home prices falling 18% from the end of last year through end-2015, he said, and a 20% drop in the high-end segment.

http://blogs.wsj.com/moneybeat/2013/05/1...s-renters/

Property market was very depressed in Japan for many years despite almost zero interest rate.

Japan is a rapidly aging population with almost no immigration unlike Singapore. When we are looking at 6.9m or even 6.0m, there is still population growth that will underpin housing demand... that is the main difference...

On top of it, Singapore like London is a financial centre where hot money and whatever colour money will hide here for whatever purposes...

Hate to say this but until foreigners are only allow to buy newly constructed units only just like in Australia / Canada, they will still come in drives to buy and keep them empty...

GG

(14-05-2013, 06:11 PM)cfa Wrote: Property market was very depressed in Japan for many years despite almost zero interest rate.

(14-05-2013, 05:50 PM)greengiraffe Wrote: May have to wait for another few more years for the long over due situation to arise. 1st and foremost, interest rates must start to climb.

Agree. Ownes must 1st feel the pinch of inability of service the loan, then they are more willing to let go of the property at an "unable-to-resist-offer" price. Target date 2016.

Only when there is higher jobless rate like recession, will people force to let go at lower price else i doubt people will sell. So we may see cheaper new units.

With regard to the LTV limit loan, I have a few questions.

Assuming I purchase a private property worth 2M in 2013. With the current LTV limit, I borrow 1.2M and use 800k of my proceeds for the purchase

Lets say it is 2016 and a recession hits. The price of my property market value is now 1.6M. It means that I have to pay up the shortfall of 240k (60% of value 1.6M) to ensure that my LTV limit still adheres to 60%. here is my question. Assuming because of this recession, the govt relaxes the LTV limit to 80%. Is my loan now subjected to the new limit or still to the 2013 rule of 60% limit? Otherwise is it possible to refinance my 2013 housing loan with a new loan deal so that I will be able to enjoy the relaxed LTV limit of 80%?

Second part: because I was relatively young during the 1997-1998 Crisis which it hit Singapore, could anyone recount if it was easy for banks to turn a blind eye to the fact that your loan did not meet LTV limits so long you continued to service your debts/interests. The reason I am asking is because if banks are able to give you leeway in not covering up the shortfall, this means forced selling of properties would not happen, thus preventing a sudden collapse of property prices.

Thanks

(14-05-2013, 06:34 PM)NTL Wrote:

(14-05-2013, 05:50 PM)greengiraffe Wrote: May have to wait for another few more years for the long over due situation to arise. 1st and foremost, interest rates must start to climb.

Agree. Ownes must 1st feel the pinch of inability of service the loan, then they are more willing to let go of the property at an "unable-to-resist-offer" price. Target date 2016.

If developers sell their new units at cheaper price, resale market will be hit accordingly.

(14-05-2013, 07:05 PM)corydorus Wrote: Only when there is higher jobless rate like recession, will people force to let go at lower price else i doubt people will sell. So we may see cheaper new units.

Out of the 3 main factors that govern future house prices - interest rates, job security and demand/supply dynamics - it seems like for any sustained big correction in housing prices, at least 2 of the 3 factors (disadvantageous) must be present together at one time. In 2008, job security was at stake, but seemingly low interest rates and a sustained demand (opening of flood gates to PRs/foreigners in 2007/8/9) keep the correction really short-lived.

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(14-05-2013, 08:02 PM)cfa Wrote: If developers sell their new units at cheaper price, resale market will be hit accordingly.

Looking at how developers have bidded up prices of tendered land from the Gov in the last 2years - breakeven prices for mass-market at 500-700psf and upscale ones at 1000-1200psf (an engineering intuitive estimate of all the figures i have been seen), i do not know who will be the one carrying the baby in future - developers or buyers?

(14-05-2013, 08:01 PM)CY09 Wrote: With regard to the LTV limit loan, I have a few questions.

Assuming I purchase a private property worth 2M in 2013. With the current LTV limit, I borrow 1.2M and use 800k of my proceeds for the purchase

Lets say it is 2016 and a recession hits. The price of my property market value is now 1.6M. It means that I have to pay up the shortfall of 240k (60% of value 1.6M) to ensure that my LTV limit still adheres to 60%. here is my question. Assuming because of this recession, the govt relaxes the LTV limit to 80%. Is my loan now subjected to the new limit or still to the 2013 rule of 60% limit? Otherwise is it possible to refinance my 2013 housing loan with a new loan deal so that I will be able to enjoy the relaxed LTV limit of 80%?

Second part: because I was relatively young during the 1997-1998 Crisis which it hit Singapore, could anyone recount if it was easy for banks to turn a blind eye to the fact that your loan did not meet LTV limits so long you continued to service your debts/interests. The reason I am asking is because if banks are able to give you leeway in not covering up the shortfall, this means forced selling of properties would not happen, thus preventing a sudden collapse of property prices.

Thanks

Not sure about the 1st part of the question. As for 2nd part, what I know is if you are able to service the loan without delay (good paymaster), the bank will not touch you.

Actually although banks are able to force sell your ppty due to whatever reason, they are unwilling to do so as force sell value (FSV) is usually lower than market value (MV) even in a downturn. Banks are in the business of earning interest on you loans, not ppty agents. So as long as you repay your monthly installment, you should be fine.

Feel free to correct me if I am wrong.