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The Straits Times
Dec 9, 2011
Home prices may fall 30%, say analysts
Property stocks hammered, following stamp duty shocker
By Yasmine Yahya & Esther Teo
PROPERTY prices could fall by as much as 30 per cent next year as a result of the Government's latest move to cool the market, analysts have predicted.
This would be a chilling replay of what happened during the global financial crisis in 2008 and 2009, when home prices slid 25 per cent over 12 months.
These sobering warnings arrived yesterday amid a slew of analyst reports taking stock of the surprise measures to cool Singapore's property market announced on Wednesday night.
The curbs include an unprecedented extra stamp duty of 10 per cent on any foreigner buying a residential property here.
CIMB Research analysts called the Government's move a 'bazooka' that could shoot down property prices overall by 15 to 20 per cent over the next 12 months.
Goldman Sachs analysts see a 'state of paralysis' for the property market. Their prediction is for private home prices to slide 15 per cent over the next 18 months.
Standard Chartered Bank was the most bearish. A report by the bank last week had already envisioned prices dropping up to 30 per cent over three years. Now the bank expects the same fall to occur within one year.
Stock market investors reacted from the opening bell, sending property stocks into free fall. The worst hit were City Developments and Keppel Land, which lost more than 8 per cent, wiping hundreds of millions of dollars off the traded values of their companies by the end of the trading day. Inside their offices, these and other property developers went back to the drawing board. Some said they were caught off-guard by the measures, and were reviewing their next plan of action.
A City Developments spokesman said: 'The measures will have a dampening effect in the short term so we will have to re-assess the market situation and, if necessary, tweak our strategy.'
Some did not mince their words. A developer who declined to be named said that too many policies and the frequency of their shifts do not reflect well on Singapore as an investment destination.
'If the Government wants to target foreign buyers, then it should also look at the entire spectrum and specifically the increasing presence of foreign developers here who are driving up land prices.'
UBS analysts believe the next move from developers may be to offer a partial absorption or rebates of the additional buyer's stamp duty.
'Launches are likely to see delays as developers would have to spend more time building up a critical mass of buyer interest before having the confidence to launch a project,' they said in a report.
One of the first developers to be jolted into action was UOL Group. According to an internally circulated text message obtained by The Straits Times, it is offering agents a cash incentive of between $5,000 and $15,000 for each unit sold at its Archipelago project in Bedok from now till Sunday.
Those who had secured sales earlier made sure they did not lose them as buyers wavered. Yesterday, property agents were rushing around to make sure that options for deals were signed.
Analysts said anticipated transaction volume and price declines will not be uniform across the whole property market.
The high-end segment will be hit much harder than the mass market sector, as luxury homes tend to attract the highest proportion of foreign buyers.
Sales of private homes in the core central region, which includes prime areas such as Orchard Road and Newton, could plunge 40 per cent as a result of the new measures, said the chief executive of property agency PropNex, Mr Mohamed Ismail.
Foreigners and PRs accounted for 44 per cent of home sales in prime districts, such as Sentosa Cove and Districts 9, 10 and 11.
But the mass market property segment will not go unscathed.Though foreign buying activity in this segment is lower, the expectation of lower prices will cause Singapore buyers to also hold back.
'I would expect transaction volume to fall within the next 30 days as buyers hold back,' said Dr Chua Yang Liang, head of research at Jones Lang LaSalle South-east Asia.'If prices ease, buyers might return but this is also conditional on whether the economy improves.'
Mr Ismail expects mass market home prices to slide 10 to 15 per cent in the next six months.
National Development Minister Khaw Boon Wan touched on the measures in an entry on his blog yesterday, saying they 'will further strengthen, stabilise and sustain our property market'.
But investors who recently bought new properties will likely take some time to absorb the news. 'I am still shocked by what happened. Originally I wanted to hold on to the investment for four to five years, now it looks like I need to have longer staying power,' said a 32-year-old civil servant who wanted to be known only as Mr Lim.
He bought a two-bedroom, $1 million Bedok Residences unit about two weeks ago. 'In a way, I feel lucky that I chose a unit in a good location, which I think will be more resilient to price erosion.'
yasminey@sph.com.sg
esthert@sph.com.sg
------------------------------------------
The Straits Times
Dec 9, 2011
Rush to calm jittery buyers and sellers
By Esther Teo, Property Reporter & Cheryl Lim
DEVELOPERS and property agents were in damage control yesterday as they tried to stop home buyers backing out of deals while calming the nerves of sellers fearful about where prices will go in the wake of the stamp duty shock.
Some agents said they were rushing to issue options for Singaporeans and foreigners to purchase late into Wednesday night before the rules kicked in yesterday.
Others reported deals falling through in the first few hours after the surprise stamp duty measures were unveiled.
They have also been inundated with calls from clients concerned about how the measures might affect their decision either to buy or sell.
Mr Benjamin Tan, an agent with GPS Alliance, said most of his Indonesian clients have put their purchases on hold in projects such as The Interlace and The Palette. Savills agent Alfie Cai told The Straits Times: 'On Wednesday, I had about 10 clients and friends of clients calling me all the way till midnight.'
UOL Group is so keen to lock in sales in what could be a fast-softening market that it is offering agents big cash incentives to close deals at Archipelago in Bedok from now until Sunday, according to an internally circulated text message obtained by The Straits Times.
Agents will get $5,000 for sales of one- and two-bedders, $10,000 for each three- and four-bedroom unit sold and $15,000 for sales of four-bedroom and larger units. These are in addition to the usual commissions.
Several developers say that while launches already announced will go ahead as planned, they might reassess others depending on how the market reacts to the stamp duty over the coming weeks.
Mr Wong Heang Fine, chief executive of CapitaLand Residential Singapore, said no buyers at Bedok Residences, which was launched last month at about $1,350 per sq ft, have said they would not exercise their options.
As far as possibly putting some of its new launches on hold, Mr Wong said: 'It is early days yet and more time is needed to assess the real impact of the measures on our sales and marketing strategy.'
A City Developments (CDL) spokesman said 'the measures will have a dampening effect in the short term so we will have to reassess the market situation and, if necessary, tweak our strategy'.
CDL's recent launches were largely aimed at first-time buyers and upgraders so the firm sees 'limited downside', the spokesman said. Its business is also diversified, he added.
Roxy-Pacific executive chairman and chief executive Teo Hong Lim said the firm is likely to stick to plans to launch its Treescape project in Telok Kurau around Chinese New Year. 'Nobody can predict how the market will react. We have to read beyond the current measures; this is not a financial crisis,' he added.
But agents were much less sanguine in the light of analyst estimates of prices plunging as much as 30 per cent next year and sales volumes falling 20 per cent.
The prime and mid-prime segments - where foreigners accounted for nearly 25 per cent of transactions in the third quarter - are expected to be hit the hardest with some experts even calling the luxury market, where prices are already languishing below the previous peak, 'dead'.
Savills' Mr Cai noted that some of his foreign clients who were keen to buy are going to hold off until they get their permanent residency status.
The new rules are the toughest on foreign buyers and corporate entities who will now be slapped with an additional buyer's stamp duty of 10 per cent.
This is on top of the existing stamp duty of about 3 per cent. Permanent residents buying their second and subsequent homes and Singaporeans buying their third and subsequent homes will have to fork out an additional buyer's stamp duty of 3 per cent.
Dec 9, 2011
Home prices may fall 30%, say analysts
Property stocks hammered, following stamp duty shocker
By Yasmine Yahya & Esther Teo
PROPERTY prices could fall by as much as 30 per cent next year as a result of the Government's latest move to cool the market, analysts have predicted.
This would be a chilling replay of what happened during the global financial crisis in 2008 and 2009, when home prices slid 25 per cent over 12 months.
These sobering warnings arrived yesterday amid a slew of analyst reports taking stock of the surprise measures to cool Singapore's property market announced on Wednesday night.
The curbs include an unprecedented extra stamp duty of 10 per cent on any foreigner buying a residential property here.
CIMB Research analysts called the Government's move a 'bazooka' that could shoot down property prices overall by 15 to 20 per cent over the next 12 months.
Goldman Sachs analysts see a 'state of paralysis' for the property market. Their prediction is for private home prices to slide 15 per cent over the next 18 months.
Standard Chartered Bank was the most bearish. A report by the bank last week had already envisioned prices dropping up to 30 per cent over three years. Now the bank expects the same fall to occur within one year.
Stock market investors reacted from the opening bell, sending property stocks into free fall. The worst hit were City Developments and Keppel Land, which lost more than 8 per cent, wiping hundreds of millions of dollars off the traded values of their companies by the end of the trading day. Inside their offices, these and other property developers went back to the drawing board. Some said they were caught off-guard by the measures, and were reviewing their next plan of action.
A City Developments spokesman said: 'The measures will have a dampening effect in the short term so we will have to re-assess the market situation and, if necessary, tweak our strategy.'
Some did not mince their words. A developer who declined to be named said that too many policies and the frequency of their shifts do not reflect well on Singapore as an investment destination.
'If the Government wants to target foreign buyers, then it should also look at the entire spectrum and specifically the increasing presence of foreign developers here who are driving up land prices.'
UBS analysts believe the next move from developers may be to offer a partial absorption or rebates of the additional buyer's stamp duty.
'Launches are likely to see delays as developers would have to spend more time building up a critical mass of buyer interest before having the confidence to launch a project,' they said in a report.
One of the first developers to be jolted into action was UOL Group. According to an internally circulated text message obtained by The Straits Times, it is offering agents a cash incentive of between $5,000 and $15,000 for each unit sold at its Archipelago project in Bedok from now till Sunday.
Those who had secured sales earlier made sure they did not lose them as buyers wavered. Yesterday, property agents were rushing around to make sure that options for deals were signed.
Analysts said anticipated transaction volume and price declines will not be uniform across the whole property market.
The high-end segment will be hit much harder than the mass market sector, as luxury homes tend to attract the highest proportion of foreign buyers.
Sales of private homes in the core central region, which includes prime areas such as Orchard Road and Newton, could plunge 40 per cent as a result of the new measures, said the chief executive of property agency PropNex, Mr Mohamed Ismail.
Foreigners and PRs accounted for 44 per cent of home sales in prime districts, such as Sentosa Cove and Districts 9, 10 and 11.
But the mass market property segment will not go unscathed.Though foreign buying activity in this segment is lower, the expectation of lower prices will cause Singapore buyers to also hold back.
'I would expect transaction volume to fall within the next 30 days as buyers hold back,' said Dr Chua Yang Liang, head of research at Jones Lang LaSalle South-east Asia.'If prices ease, buyers might return but this is also conditional on whether the economy improves.'
Mr Ismail expects mass market home prices to slide 10 to 15 per cent in the next six months.
National Development Minister Khaw Boon Wan touched on the measures in an entry on his blog yesterday, saying they 'will further strengthen, stabilise and sustain our property market'.
But investors who recently bought new properties will likely take some time to absorb the news. 'I am still shocked by what happened. Originally I wanted to hold on to the investment for four to five years, now it looks like I need to have longer staying power,' said a 32-year-old civil servant who wanted to be known only as Mr Lim.
He bought a two-bedroom, $1 million Bedok Residences unit about two weeks ago. 'In a way, I feel lucky that I chose a unit in a good location, which I think will be more resilient to price erosion.'
yasminey@sph.com.sg
esthert@sph.com.sg
------------------------------------------
The Straits Times
Dec 9, 2011
Rush to calm jittery buyers and sellers
By Esther Teo, Property Reporter & Cheryl Lim
DEVELOPERS and property agents were in damage control yesterday as they tried to stop home buyers backing out of deals while calming the nerves of sellers fearful about where prices will go in the wake of the stamp duty shock.
Some agents said they were rushing to issue options for Singaporeans and foreigners to purchase late into Wednesday night before the rules kicked in yesterday.
Others reported deals falling through in the first few hours after the surprise stamp duty measures were unveiled.
They have also been inundated with calls from clients concerned about how the measures might affect their decision either to buy or sell.
Mr Benjamin Tan, an agent with GPS Alliance, said most of his Indonesian clients have put their purchases on hold in projects such as The Interlace and The Palette. Savills agent Alfie Cai told The Straits Times: 'On Wednesday, I had about 10 clients and friends of clients calling me all the way till midnight.'
UOL Group is so keen to lock in sales in what could be a fast-softening market that it is offering agents big cash incentives to close deals at Archipelago in Bedok from now until Sunday, according to an internally circulated text message obtained by The Straits Times.
Agents will get $5,000 for sales of one- and two-bedders, $10,000 for each three- and four-bedroom unit sold and $15,000 for sales of four-bedroom and larger units. These are in addition to the usual commissions.
Several developers say that while launches already announced will go ahead as planned, they might reassess others depending on how the market reacts to the stamp duty over the coming weeks.
Mr Wong Heang Fine, chief executive of CapitaLand Residential Singapore, said no buyers at Bedok Residences, which was launched last month at about $1,350 per sq ft, have said they would not exercise their options.
As far as possibly putting some of its new launches on hold, Mr Wong said: 'It is early days yet and more time is needed to assess the real impact of the measures on our sales and marketing strategy.'
A City Developments (CDL) spokesman said 'the measures will have a dampening effect in the short term so we will have to reassess the market situation and, if necessary, tweak our strategy'.
CDL's recent launches were largely aimed at first-time buyers and upgraders so the firm sees 'limited downside', the spokesman said. Its business is also diversified, he added.
Roxy-Pacific executive chairman and chief executive Teo Hong Lim said the firm is likely to stick to plans to launch its Treescape project in Telok Kurau around Chinese New Year. 'Nobody can predict how the market will react. We have to read beyond the current measures; this is not a financial crisis,' he added.
But agents were much less sanguine in the light of analyst estimates of prices plunging as much as 30 per cent next year and sales volumes falling 20 per cent.
The prime and mid-prime segments - where foreigners accounted for nearly 25 per cent of transactions in the third quarter - are expected to be hit the hardest with some experts even calling the luxury market, where prices are already languishing below the previous peak, 'dead'.
Savills' Mr Cai noted that some of his foreign clients who were keen to buy are going to hold off until they get their permanent residency status.
The new rules are the toughest on foreign buyers and corporate entities who will now be slapped with an additional buyer's stamp duty of 10 per cent.
This is on top of the existing stamp duty of about 3 per cent. Permanent residents buying their second and subsequent homes and Singaporeans buying their third and subsequent homes will have to fork out an additional buyer's stamp duty of 3 per cent.
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