Property Market Sentiments

[brattzz]

http://www.todayonline.com/business/prop...epage=true

fire sale happening already? $1850psf in D10

[egghead]

Don't forget to factor in ABSD

[greengiraffe]

http://www.businesstimes.com.sg/premium/...2-20140723

PUBLISHED JULY 23, 2014
PROPERTY
Developers' pessimism deepens in Q2
Rising construction costs, inflation, interest rates seen roiling market
BYMINDY TAN
tanmindy@sph.com.sg @MindyTanBT

application/pdf iconLosing groundapplication/pdf iconLooking ahead
DEVELOPERS are more pessimistic about the property market in the coming six months, citing rising cost of construction, inflation, and interest rates as factors that will likely have an adverse impact on market conditions.
The NUS-Redas Real Estate Sentiment Index Survey's Future Sentiment Index - which measures sentiments towards the market outlook over the next six months - fell to 3.4 in Q2 compared with 3.9 in Q1.
A score under five indicates deteriorating market conditions while scores above five indicate improving conditions.
Meanwhile, the Current Sentiment Index slipped marginally, from 3.7 in the last quarter to 3.6.
Taken on a year-on-year basis, the Composite Sentiment Index (which measures overall sentiment) was weaker at 3.5 in Q2 compared to 4.5 previously.
Looking ahead into the next six months, the key potential risks are rising inflation/interest rates as identified by 75.4 per cent of respondents and rising cost of construction (63.1 per cent).
Equally worrying is the excessive supply of new property launches and a slowdown in the global economy, which were identified by 53.8 per cent of respondents.
However, 31.7 per cent of developers surveyed said that they expect moderately more residential launches in the coming six months, while 29.3 per cent said that they expect residential launches to hold at the same level.
In terms of unit price change, 26.8 per cent of them anticipate that residential prices will hold in the next six months, up from 26.3 per cent in the previous quarter. Majority of developers still expect unit prices to be moderately less (63.4 per cent compared with 64.8 per cent previously).
Of the various property sectors, prime and suburban residential sectors were the worst performing segments according to the survey.
The prime residential sector showed a current net balance of -72 per cent and a future net balance of -69 per cent; while the suburban residential sector showed a current net balance of -63 per cent and a future net balance of -65 per cent in Q2.
The current and future net balance percentage is defined as the difference between the proportion of respondents who have selected positive options and the proportion who selected negative options.
On the flipside, office was the best performing sector, with a current net balance of +41 per cent and a future net balance of +32 per cent.
In light of the high transaction cost and high property prices, 77.8 per cent of respondents said there will likely be strong outflows of investments into overseas real state markets in the coming 12 months.
These markets include the United Kingdom, Australia, and Malaysia.

[greengiraffe]

http://www.straitstimes.com/news/singapo...s-20140725

Too early to relax property curbs, says MAS

Risks remain, it says; modest pick-up in overall economic growth expected
Published on Jul 25, 2014 7:57 AM


Monetary Authority of Singapore (MAS) managing director Ravi Menon says it is too soon to ease prperty cooling measures. -- PHOTO: LIM YAOHUI FOR THE STRAITS TIMES

By Yasmine Yahya Finance Correspondent

Property cooling measures of recent years are helping to rein in housing prices and household debt, but it is too soon to ease restrictions, a top official says.

Monetary Authority of Singapore (MAS) managing director Ravi Menon, speaking at the release of the MAS annual report yesterday, noted that housing prices have moderated but that risk factors are largely unchanged.

"Property prices remain at elevated levels... Prices have gone up 60 per cent in the past four years, and they've declined just 3.3 per cent in the past three quarters," he noted. "Global interest rates are still extremely low, and if you relax property measures in the current, very easy liquidity environment, it might set off another spiral of price increases."

Also, high-debt households are still cleaning up their finances and need time to pay off their loans.

Still, he said, property cooling measures have helped strengthen overall household balance sheets.

First, household debt growth has moderated. In the third quarter of 2011, for example, households took on 13 per cent more debt than they did in the same quarter of 2010. But in the first three months of this year, debt grew just 5.5 per cent.

Second, new housing loan borrowers are better placed to repay loans. Almost all new housing loans granted since the introduction of the total debt servicing ratio - designed to stop borrowers from overextending themselves - were within the 60 per cent limit.

The moderation in property prices, along with a fall in car prices, has seen MAS narrow its forecast range for headline inflation to 1.5 per cent to 2 per cent, from 1.5 per cent to 2.5 per cent before.

This comes amid a somewhat brighter economic outlook, with growth set for a modest pickup in the second half, Mr Menon said.

The economy is on track to grow 2 per cent to 4 per cent this year, with both major engines of world growth, the United States and China, holding up, he said.

Sectors relying on regional demand, including some financial services, business services and chemicals, should do well, he added. And those looking to the home market should stay resilient.

But the likes of electronic production will keep seeing slower growth as economic restructuring forces firms to face a new reality of higher labour costs, he said.

"What is happening now is the 'servicisation' of manufacturing, where production is shifted offshore but control centres continue to be located here."

Looking at the Middle East, Ukraine and Thailand, CIMB economist Song Seng Wun noted that external risks remain.

Even so, Singapore has fared well as a financial centre. Financial and insurance services grew 10.8 per cent last year.

MAS, which manages Singapore's foreign reserves, reversed a $10.6 billion loss to post an overall profit of $15.8 billion for the financial year. Stripping away the effect of currency translation, it made foreign investment gains of $10.6 billion, up slightly from $9.4 billion previously.

yasminey@sph.com.sg

[brattzz]

""Property prices remain at elevated levels... Prices have gone up 60 per cent in the past four years, and they've declined just 3.3 per cent in the past three quarters," he noted. "Global interest rates are still extremely low, and if you relax property measures in the current, very easy liquidity environment, it might set off another spiral of price increases."

Okay roger,

Wait out!!

[Curiousparty]

It is never the interest of Spore Govt to let property market crash.
What they are attempting to do is to stabilize the prices and let wage index catch up.
those who are waiting for major correction might be disappointed...

[grubb]

It is never the interest of Spore Govt to let property market crash.
What they are attempting to do is to stabilize the prices and let wage index catch up.
those who are waiting for major correction might be disappointed...

Find this an odd logic. I can invert and say it is never in the interest of any govt to allow property markets to crash, but crashes are still happening throughout the world. As much as the govt likes to reassure us of their competence, i don't think they are as clairvoyant as they seem. Investors who apply this logic and shift their goalpost of margin of safety might be the disappointed ones in the end.

[corydorus]

I just watched a program where South Korea is used as a classic example of controlling property price. Tax is 50% on gain for speculation.

Here's link i found on Korea property price in City Center. Is even below our lowest priced region.
http://www.numbeo.com/property-investmen...outh+Korea

SG$1 ~ KRW$826

No wonder their industry is so strong because talented resources are placed at the right place.
Not sure the assumption about not the interest of the Gov to let property crash. Since when our Gov need to get so low to rule ?

South Korea gov did let their property crash by heavy tax and huge supply.
When is the last time we heard about major labor outbreak in Korea ? 1990s ?

Cory

[specuvestor]

IIRC the price curb happened during the times of Roh, the president who committed suicide. Not easy to do what is right rather than what is popular

OTOH artificially suppressing cost with lower property prices, lower exchange rate or even importing cheaper foreign labour is also suppressing citizen's wealth creation and subsidising exports. Someone is paying the price.

As usual the key is balanced growth with the general populace benefiting. 中庸之道 is much harder to execute yet the right path to take

[specuvestor]

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