So You Are Still Hoping For The Property Market To Go Down By Another 10%. Do You Know What It Takes?

Still hoping for property market to decline by another 10% -

With the eight rounds of cooling measures, the property market has retraced southward by 10% and showing signs of a bottom. If you are still hoping for it to go south by another 10% or even to 2009Q2 level, do you know what sort of events can cause it to happen?

Here are some hypothetical events that are essential to make that happen.

  • New cooling measure adding on top to the existing 8 cooling measures
  • Direct foreign investment withdrew – more companies leaving Singapore for another country, severe oversupply of properties to let
  • Singapore unemployment rises to double digit – more people unable to repay their mortgage
  • Fewer developers bidding for Government land sales resulting in lower successful bid for land prices
  • Sustained increase interest rates – unlikely but if it happens buyers will need to pay more for monthly mortgage
  • Fewer attractive new private condominium launch that cannot be missed – leading to oversupply of unsold properties
  • Smaller property developers reduce price point to reduce penalties from unsold completed units
  • Lower transaction volume from a reduction of qualified buyers or sellers
  • Rising tension and instability geopolitical situation in the south-east Asia region repelling investors to channel their funds elsewhere
  • When terror threats slip through Singapore’s multiple layers of firewalls
  • and many more.

Now, do you still think the property market can go south by another 10%?

If you think so, when would that happen? Share with me.

 

 

When ABSD becomes basic BSD

 

when absd becomes bbsd

We have heard countless times from different ministers on being too early to lift or even relax the property cooling measures, particularly the additional buyer’s stamp duty (ABSD) introduced in Jan 2013. What if the ABSD is here to stay and to merge with the existing buyer’s stamp duty (BSD)?

Perhaps when it is not an “additional” tax, buyers currently holding back will be more willing to embrace the new norm?

With the ever increasing sums needed for nation building, a steady stream of taxes is important to sustain Singapore’s growth as a nation. Social development has always been a big chunk of the nation’s spending at 52.9% in 2015, and as our population ages, more funds will be needed to cater for these social needs. Where do you think the money comes from?

 

Tax spending fy2014_2015.JPG
Source: IRAS – The Singapore tax system 

 

Furthermore, in order to remain competitive in attracting foreign businesses and high net worth individuals to Singapore, corporate and income tax have always been kept low and it will most likely to stay like this.

So where do you think the money have to come from? Road tax, cars COE, Property taxes, stamp duties.

Okay you see the point.

Let’s say only 15% of citizens have paid 7% for their second property after the introduction of ABSD. Within the next two years, another 30% – 50% will accept the fate to pay the 7%.

Sooner or later,  when half of Singaporeans have already paid the ABSD for their second property, it would somehow be seen as the new norm.

When the time comes, would it be easy to merge ABSD to the existing BSD?

And will there still be a mental barrier for buyers to wait further?

 

 

 

Keep Calm and Buy a Home – A Gentle Reminder

KEEP Calm and buy a home a gentle reminder

Four months ago, I wrote a post to encourage first timer home buyers and upgraders to keep calm and buy a home right after a statement mentioned by Minister Lawrence Wong in Parliament.

Today, we have yet another statement from managing director Mr Ravi Menon of Monetary Authority of Singapore (MAS) who says “It is too early for the Government to consider lifting the property cooling measures“.

If you have not taken action in the last four months, you could have already missed some good opportunities. From March to today, there were 8,284 private non-landed transactions and 8,404 HDB transactions.

Just by looking at the volume since march, many have already accepted that fact of cooling measures is going to stay for awhile longer and strategized their portfolio accordingly.

Total hdb transaction in 2016 0727

Total private non landed transaction in 2016 0727
Source: Squarefoot Research

If you are still hopeful for cooling measures to be lifted assuming that it is the only way for market to recover, you may be wrong. The market can still recover without lifting cooling measures.

 

Hence, a gentle reminder for first timer home buyers and upgraders, wait no further. And for current home owners who are hesitant to pay additional taxes for your second or third properties, do be informed that there are some entry prices in certain districts still looking attractive even after paying the taxes. If you are thinking of prime district, you have to check out Gramercy park.

Finally, there are many things in life we can delay or wait; wait for promotion, wait to win lottery, wait to go on holiday, wait for Mr or Ms Right, but there is one thing you cannot wait.

Your age.

How many more years can you wait before you realise you are not eligible to get the maximum loan tenure anymore?

 

 

 

 

Can Property Market Recover Without Lifting Cooling Measures?

Can Property Market Recover Without Lifting The Cooling Measures-

Certainly Yes! The aim of cooling measures is to stabilize the sky rocketing property prices in Singapore back in 2011/2012. In order to prevent a melt down when the market realizes that the rapid appreciation in property value is merely a hype, the government promptly kicked in the cooling measures.

In other words, cooling measures are here to stabilize the property market, not to crash it.

In other words, cooling measures are here to stabilize the property market, not to crash it.

So do you think property market can recover without lifting the cooling measures?

Here are some signs that the market is nearing the bottom:

prices drop slows with increasing volume.jpg

Source: Squarefoot research

  • In the new launch condominium market, several projects such as GEM Residence, Poiz Residence, OUE Twin Peaks sold well despite current restrictive loan environment.
    Let’s take OUE Twin Peaks as an example using the transaction data charts as follow.
    Average prices have fallen back to pre-cooling level, do you think it can break lower than that?
    With a total of 462 units and about 130 units are sold, do you think the deferred payment scheme can continue to sustain this increasing volume trend with 300+ units left to strategically launch in batches?

Transaction data OUE twin peak 22 07 2016.jpg

Source: 99.c0

  • URA property price index is starting to show a slower decline. This is a sign of entire market stabilizing and consolidating into a new equilibrium.
URA q2 PPI .jpg
Source: URA Q2 real estate statistic

In short, cooling measures are here to stabilize the property market such that it has a sustainable growth and today we are gradually seeing signs of prices hitting the bottom backed with strong volume. This could be an indicator that we are already at the bottom.

Let us continue to monitor the next few quarters. It is going to be exciting!

Finding the Right Balance

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The Ministry of National Development has just released the list of Government Land Sales for H2 2016 with the title “Finding the right balance”. Other than the exact locations of these sale sites (which can be found via the actual link below), a key take away for most investors or home owners is none other than the direction of property prices in the near future. Will the prices go up so I can hold awhile more before I sell? Or will the prices go down further so I can hold awhile more before I buy?

This release does give some insight to the general direction the government is planning for. Referring to the quote in the next paragraph, I infer that the state’s goal is to maintain current prices by managing supply carefully – hence achieving the right balance for a sustainable property market. What’s your take? Let me know how does this announcement affects your plans.

“We are mindful that excessive supply in a weak market can exacerbate a decline in prices. At the same time, insufficient supply can result in a future shortage and an unwarranted spike in housing prices when demand picks up.

So we will continue to monitor the market closely, and find the right balance to ensure sustainable housing prices and a stable property market.”

 

 

The Urban Redevelopment Authority (URA) announced the Government Land Sales (GLS) Programme for the second half of 2016 earlier today. In considering the land quantum for the 2H2016 GLS programme, we have taken into account several factors: First, the decline in the number of remaining unsold private homes, as well as the corresponding pick-up in […]

via Finding the right balance —