Property Market Sentiments

Quite frankly, I m not concern over Aussie property prices. Australia is too big a country to have widespread bubble. The bubble that we are seeing right now are largely the result of the pricing of new builts and perhaps in NSW where supply has been historically the issue. New builts are largely sold to locals and foreigners.

One thing that not many are aware is that Aussie has got a large rental base - not something that many can appreciate - some people rent for the rest of the lives. Hence, so long as population growth (both organically and via migration) sustained over the long term, housing price appreciation will be there for long term.

In any markets, there will always be ups and downs. However, in this age of information revolution, news can get exaggerated by a few times and hence many people get mis-informed.

GG

(31-07-2014, 11:45 AM)specuvestor Wrote: UK and Aussie property prices are what people should be worried about


Hong Kong, Singapore Pop Housing Bubbles London Can’t Handle (1)
2014-07-30 05:08:53.130 GMT


(Adds details on U.K. Labour Party proposals in 16th
paragraph.)

By Frederik Balfour
July 30 (Bloomberg) -- Take a look at the world’s dizzying
surges in the price of housing for 12 months at the end of June:
London, up 20 percent. Manhattan, 18 percent. Sydney, 15.4
percent.
Then there are Singapore and Hong Kong: down 3.7 percent
and 0.6 percent.
Prompted by concerns over potential property bubbles and
affordability for the middle class, the governments of the two
Asian cities have been reining in home prices by imposing
measures including mortgage caps, taxes on property flippers,
and levies on foreign buyers as high as 15 percent.
“Hong Kong has successfully cooled down the market in
terms of transactions and turnover,” said Raymond Yeung, senior
economist at Australia & New Zealand Banking Group Ltd. in Hong
Kong. “Singapore has been more effective.”
So could New York, London and other global cities facing
soaring housing prices pull off the same act?
Not really. Hong Kong and Singapore’s island geographies,
preponderance of public housing resulting in two-tier housing
markets and citizens willing to tolerate government directives
make the cities unique, according to academics and researchers.
London and New York have nowhere near the same level of control
over their economies and the behavior of their residents.

Having Clout

Singapore and Hong Kong, as a special administrative region
of China, have governments with policy-making power over their
entire geographic areas, where they are relatively free of
political opposition from neighborhood groups or borough
councils that stymie directives or mitigate their effectiveness.
The Asian cities control the land supply and are the biggest
landlords.
That allows them to implement decisive policy measures. For
example, in January 2013, the Monetary Authority of Singapore,
effectively the central bank and chief regulator, cut the
mortgage ratio allowable on purchases of second homes while more
than doubling minimum down payments from 10 percent to 25
percent. The banks had no choice but to follow.
“Imagine doing something like this in the U.S. where there
are 7,000 banks and many regulators,” said Sumit Agarwal, a
professor in economics, finance and real estate at the National
University of Singapore. “It’s a nightmare from the policy
point of view and would be impossible.”
Hong Kong and Singapore haven’t shied away from using taxes
to discriminate against foreign buyers -- something other
locales with surging prices have yet to do. Non-permanent
residents in both cities are subject to an additional 15 percent
tax when they buy property, except in Singapore where Americans
are exempted by treaty.

Free-Market

While such actions may seem contradictory to the cities’
stated free-market principles, “affordable housing is part of
the legitimacy of any government, and government has a role to
play in intervening in the market in periods where there are
extreme circumstances,” said Michael Klibaner, who heads
Greater China research at real estate firm Jones Lang LaSalle
Inc. in Hong Kong.
The U.K. government has tried some measures. After it
increased the stamp duty to 7 percent on high-value properties
in March 2012, price increases for homes valued from 5 million
pounds to 10 million pounds ($8.5 million to $17 million) slowed
from 9.7 percent to 5.8 percent in the subsequent year,
according to broker Knight Frank LLP.
Bank of England Governor Mark Carney announced another set
of measures last month, citing concerns over household
indebtedness and the threat of a property bubble. They limit
mortgages to less than 4.5 times a borrowers’ annual income and
require banks to refuse loans to those failing to prove they
could afford a 3 percentage-point rise in interest rates.

Stagnant Prices

They may be working. Prices in the capital stagnated in
July, the first month with no growth since December 2012.
Meanwhile, the opposition Labour Party has backed away from
a call for a flat tax on properties worth more than 2 million
pounds, instead suggesting taxes that rise the more expensive a
property is, if they win next year’s U.K. national election.
Labour’s Treasury spokesman, Ed Balls, writing in the
London Evening Standard newspaper, suggested a lower band for
homes valued at between 2 million pounds and 5 million pounds.
Further bands would go up to 10 million pounds and 20 million
pounds, with the top rate levied on properties above 20 million
pounds. The thresholds would increase in line with average house
prices.
Least likely to be deterred are well-heeled buyers from
Russia, the Middle East and Asia looking to park their money in
tony London neighborhoods, the ones who have helped drive up the
prices, said Matthew Pointon, a property economist at Capital
Economics Ltd. in London.
“Wealthy people who buy these houses just pay it,” said
Pointon, adding that the government isn’t interested in
discouraging the influx of money. “The government is always
very keen to portray London as open for business to the world.”

Preferential Treatment

Foreigners in Britain enjoy preferential tax treatment over
locals, as they are currently exempt from paying capital gains.
This benefit will cease when new legislation takes effect in
April bringing the U.K. into line with the U.S. and Australia
which charge capital gains on non-residents. (Hong Kong has no
capital gains tax while Singapore taxes non- residents.)
In Australia, foreigners bought a record 14 percent of new
properties in the first three months of the year, based on a
survey of property professionals by National Australia Bank Ltd.
In New York, there’s not much likelihood of foreign buyers
facing additional costs, said Jones Lang LaSalle’s Klibaner, a
native New Yorker.
“If you live in Manhattan, you aren’t going to blame the
government for bad policies or become a xenophobe because too
many rich Chinese and Russians are buying apartments on Central
Park,” he said. “When you want to get on the property ladder,
you start in Queens or Brooklyn or New Jersey.”

<Snip>

Hong Kong isn’t entirely without resistance. In June, an
angry mob forced its way into the Legislative Council to protest
a plan to relocate villages to make way for high rises.
“Governments in Hong Kong or the U.K. or China all have
the same dilemma,” said Hui, the Hong Kong Polytechnic
professor. “Home prices are high, and we all know we have to do
something. But when they announce measures against our interests
we tell them to do it in someone else’s backyard.”
Ultimately, markets may play a greater role in solving the
problem of rising prices once global interest rates start
rising. At that time, said ANZ’s Yeung, “the global housing
bubble, or boom, will come to an end.”

http://www.bloomberg.com/news/2014-07-29...andle.html

(31-07-2014, 01:03 PM)greengiraffe Wrote: Quite frankly, I m not concern over Aussie property prices. Australia is too big a country to have widespread bubble. The bubble that we are seeing right now are largely the result of the pricing of new builts and perhaps in NSW where supply has been historically the issue. New builts are largely sold to locals and foreigners.

One thing that not many are aware is that Aussie has got a large rental base - not something that many can appreciate - some people rent for the rest of the lives. Hence, so long as population growth (both organically and via migration) sustained over the long term, housing price appreciation will be there for long term.

In any markets, there will always be ups and downs. However, in this age of information revolution, news can get exaggerated by a few times and hence many people get mis-informed.

GG

I'm not sure if "too big a country to have widespread bubble" stands the historical test

Though I am positive in China because I believe the government is actively deflating the bubble rather than wait for the market to act, our difference is that I acknowledge there is a short term bubble in China.

Australia current account is going deficit again. Their status as reserve currency does help but a slow down in the resource sector and the inflow of hot money is not going to go unnoticed. As usual every well-informed person can see there is a bubble, but nobody knows when it is going to burst. That's the million $ question whether one is tempted (greed) to join the passing the buck game.

My mate bought a 10000sf house downunder for A$800k in 06. Round about the last peak.

Recently, he was lamenting to me that the value now is around A$850k. The only saving grace is the rising rental he saves owning the house. Netting off interests which is not cheap, he probably only make for the stay...

Bubble?

Aussie property can't make quick $ like in Asia.

(31-07-2014, 01:38 PM)specuvestor Wrote:

(31-07-2014, 01:03 PM)greengiraffe Wrote: Quite frankly, I m not concern over Aussie property prices. Australia is too big a country to have widespread bubble. The bubble that we are seeing right now are largely the result of the pricing of new builts and perhaps in NSW where supply has been historically the issue. New builts are largely sold to locals and foreigners.

One thing that not many are aware is that Aussie has got a large rental base - not something that many can appreciate - some people rent for the rest of the lives. Hence, so long as population growth (both organically and via migration) sustained over the long term, housing price appreciation will be there for long term.

In any markets, there will always be ups and downs. However, in this age of information revolution, news can get exaggerated by a few times and hence many people get mis-informed.

GG

I'm not sure if "too big a country to have widespread bubble" stands the historical test

Though I am positive in China because I believe the government is actively deflating the bubble rather than wait for the market to act, our difference is that I acknowledge there is a short term bubble in China.

Australia current account is going deficit again. Their status as reserve currency does help but a slow down in the resource sector and the inflow of hot money is not going to go unnoticed. As usual every well-informed person can see there is a bubble, but nobody knows when it is going to burst. That's the million $ question whether one is tempted (greed) to join the passing the buck game.

Maybe u can let us know where your mate stays That's not what most city dwellers are saying.

Prior to GFC Detroit doesn't feel expensive either

In any case, I don't think we have to wait too long for the cows to come home if US interest rate is indeed going to move up

(31-07-2014, 01:46 PM)greengiraffe Wrote: My mate bought a 10000sf house downunder for A$800k in 06. Round about the last peak.

Recently, he was lamenting to me that the value now is around A$850k. The only saving grace is the rising rental he saves owning the house. Netting off interests which is not cheap, he probably only make for the stay...

Bubble?

Aussie property can't make quick $ like in Asia.

[Image: medianprice_chartv2013.jpg]

EDIT: Source - http://reiwa.com.au/Research/Pages/Perth...chart.aspx

http://www.businesstimes.com.sg/premium/...k-20140801

PUBLISHED AUGUST 01, 2014
Price drop unlikely to derail longer-term property outlook
Analysts see little chance of a pullback in cooling measures given liquidity
BYLYNETTE KHOO
lynkhoo@sph.com.sg @LynetteKhooBT

Even with a potential 10-15 per cent drop in residential prices over the next two years, the longer-term outlook for the property market remains positive - PHOTO: ST
[SINGAPORE] Even with a potential 10-15 per cent drop in residential prices over the next two years, the longer-term outlook for the property market remains positive. And with global interest rates set to rise only next year, there is no pressing need for the Singapore government to lift its cooling measures now, according to market watchers at the Real Estate Developers' Association of Singapore (Redas) property market update seminar.
"There is no shortage of liquidity now, which is an issue, because everyone is waiting for that 10-15 per cent decline in property prices," said Song Seng Wun, executive director and regional economist at CIMB Research, noting that a lot of liquidity in Asia is now waiting on the sidelines.
This is keeping the government from lifting its cooling measures on the property market before the US Federal Reserve raises interest rates. The Fed hike, however, may come sooner than expected given the recent positive economic data in the US, Mr Song predicted.
For now, developers will have to contend with the double whammy of falling residential prices and rising land costs as a result of a reduction of residential land supply in the second half of the Government Land Sales programme.
Also speaking at the seminar, Chua Yang Liang, head of research for South-east Asia and Singapore at JLL, noted that the government has historically intervened in periods when the property price movement deviates from economic growth by a certain margin. He is expecting the government to step in when the gap between the change in the property price index and GDP growth is wider than two percentage points and deems a 10-15 per cent price correction by 2016 "an acceptable level".
In the absence of any further government intervention, home sale volumes are likely to stay tepid and this market adjustment could be prolonged, Dr Chua said.
Residential prices started to correct only in the third quarter of 2013 after the total debt servicing ratio was introduced, as earlier cooling measures had short-lived impact on residential sales by developers.
"In this environment," said Dr Chua, "unless you see a huge external shock that triggers a crisis of confidence, that triggers cashflow problems for businesses and households, the government is quite happy to keep the total debt servicing ratio in place. I don't think that is going to disappear."
"What will happen is that it may be tweaked. And how much it may be tweaked will depend on whether the economy is still generating jobs. Broadly speaking, we are seeing fundamentals still supporting the property market," he added, referring to rising wages and the full employment situation in Singapore.
Meanwhile, the office sector is holding up well with healthy business formations even though businesses are facing a tight labour market and wage inflation, property consultants at the seminar observed.
Toby Dodd, managing director at Cushman & Wakefield, said at the seminar that he expects office rents to rise in 2014 and 2015 and occupancy rates to improve on the back of tight supply of prime grade space in the next two years. He forecast that net demand would exceed 1.5 million square feet by end-2016, underpinned by economic growth and a positive business outlook. While he expressed optimism on the plan to decentralise commercial activities to regional centres outside the city centre, he stressed that it would require the right price offerings and discounts to draw tenants from the CBD to these new commercial clusters.

http://www.businesstimes.com.sg/premium/...m-20140807

PUBLISHED AUGUST 07, 2014
Leng Beng's elder son buys Jervois Rd GCB for S$18.8m
This works out to about S$1,247 psf for 15,073 sq ft of freehold land
BYKALPANA RASHIWALA
kalpana@sph.com.sg @KalpanaBT

Prime property: The bungalow at the confluence of Jervois Road and Tanglin Road is said to have six en suite bedrooms and a small swimming pool. The total built-up area is around 7,600 sq ft. Mr Sherman Kwek is said to be buying the property from a couple
[SINGAPORE] Sherman Kwek, chief investment officer of City Developments, has picked up a Good Class Bungalow for S$18.8 million. This works out to about S$1,247 per square foot on freehold land area of about 15,073 square feet.
Sitting on an elevated, triangular-shaped site near the confluence of Jervois Road and Tanglin Road, the two-storey bungalow is said to have six en suite bedrooms and a small swimming pool. The total built-up area is around 7,600 sq ft.
Mr Kwek, who is in his late 30s, is said to be buying the property from a couple. He exercised the option for the purchase last month.
Based on caveats information, this would be the fourth time the property is changing hands in the past 11 years. It was previously transacted in 2003, 2006 and 2007.

http://www.businesstimes.com.sg/premium/...k-20140812

PUBLISHED AUGUST 12, 2014
Little risk of home loans hitting local banks, says Maybank

Report comes amid sharp rise in housing non-performing loans at UOB in Q2
BYJAMIE LEE
leejamie@sph.com.sg @JamieLeeBT

Rivals DBS and OCBC, however, reported no stresses in their housing portfolio. This suggests a lack of systemic risk, said Mr Ng, adding that the market has probably overreacted to UOB's housing slippage - PHOTO: SPH
[SINGAPORE] Unlike the fabled three little pigs, the trio of local banks appear to have built houses of steel. The chance of a fallout via the banks' mortgage portfolios is slim, a Maybank report said yesterday, despite the sharp lift in housing non-performing loans (NPL) at UOB in the second quarter.
"Don't worry, not house of straws," said Maybank analyst Ng Wee Siang in a report yesterday.
Still, based on its stress test, taking factors such as a 30 per cent collapse in property prices, OCBC Bank's earnings would be hit the most of the three.
UOB recorded a lift in NPL from some housing loans in Singapore in the second quarter. This came from some weakness in payments from an isolated set of borrowers who had bought high-end properties for investment. UOB's NPL ratio was 1.2 per cent, unchanged from a year ago.

http://www.businesstimes.com.sg/premium/...t-20140812

PUBLISHED AUGUST 12, 2014
July private home resale volume flat

Resale prices fall to 21-month low, SRX data shows
BYLEE MEIXIAN
leemx@sph.com.sg @LeeMeixianBT

Resale volume in the private residential market remained flat last month, even as resale prices fell to a 21-month low - PHOTO: SPH
[SINGAPORE] Resale volume in the private residential market remained flat last month, even as resale prices fell to a 21-month low, data released yesterday by the Singapore Real Estate Exchange (SRX) showed.
Some 431 units changed hands during the month, compared with 427 in June. Year on year, sales have fallen 20.5 per cent; year to date, they are down 46.6 per cent.
Resale prices fell 1.3 per cent in July from the previous month, with the decline being broad-based, across all three regions.
The high-end condo segment was hardest hit. The city area (core central region or CCR) led the decline with a 4 per cent decrease.

http://www.businesstimes.com.sg/premium/...s-20140813

PUBLISHED AUGUST 13, 2014
NATIONAL REAL ESTATE CONGRESS
Time to review cooling steps, say property players
Participants urge caution while buying overseas assets
BYLYNETTE KHOO
lynkhoo@sph.com.sg @LynetteKhooBT

EVEN though the government has reiterated that it is not yet time to lift the property cooling measures, some real estate consultants are calling for a review of the earlier taxes imposed to rein in speculators, which they claim have an inflationary effect - PHOTO: SPH
EVEN though the government has reiterated that it is not yet time to lift the property cooling measures, some real estate consultants are calling for a review of the earlier taxes imposed to rein in speculators, which they claim have an inflationary effect.
Consultants felt that with the implementation of total debt servicing ratio (TDSR) to cap total borrowings at 60 per cent of gross monthly income, the additional buyer's stamp duty (ABSD) and the seller's stamp duty (SSD) have become less relevant.
Speaking at the National Real Estate Congress yesterday, Colliers International managing director Dennis Yeo advocated that the ABSD be lifted for Singapore citizens and the SSD to be scrapped.
"Nobody would question the reason behind the TDSR. But now with TDSR being in place for slightly over a year now, we then have to look at all the other earlier measures that were put in place to see whether they were conflicting or inflationary," he said. "We do not want prices to go out of control, but transaction costs add on to the price of the property."