Tag Archives: Cooling measures

MAS: Still too early to ease cooling measures

Property developers and homeowners hoping that the cooling measures will be relaxed soon will have to wait longer after the Monetary Authority of Singapore (MAS) said it is still premature to ease the policies, reported Today Online.

“Property prices have softened somewhat, but like I said last year, in the context of the price increase that had occurred — 60 percent over three years — the softening we have seen is really not all that much. So, it’s still premature to consider removing any of the cooling measures that are in place,” explained MAS managing director Ravi Menon at a media briefing on Tuesday.

Private home prices started climbing steeply in mid-2009 before peaking in Q3 2013. The introduction of the Total Debt Servicing Ratio (TDSR) framework in June 2013 saw the market gradually decline.

Based on flash estimates by the Urban Redevelopment Authority (URA), prices of private units dipped 0.9 percent in Q2, or the seventh consecutive quarter of price falls since the 2013 peak. However, prices corrected by less than seven percent from their record high.

“It is fair from the point of view of a policy stance aimed at re-engineering home affordability. The property market cooling is happening in an orderly fashion, and it is prudent to allow this to continue,” said Barclays economist Leong Wai Ho.

Meanwhile, Century 21 chief executive Ku Swee Yong wasn’t surprised by Menon’s comments.

“Based on the still-strong reaction from developers to Government Land Sale tenders and the decent response to some of the new launches, this is probably not the correct time to be easing curbs,” he noted.

Menon’s views mirror that of Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam and National Development Minister Khaw Boon Wan.

Last October, Mr Tharman stated that “prices have some distance to go in achieving a meaningful correction”, while Mr Khaw mentioned it was not the right time to ease the cooling measures since there is still room for property prices to moderate.

Source – Propertyguru

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Focus less on COV, more on latest transacted price.

To reduce the FOCUS on Cash-Over-Valuation (COV) in negotiations during the sale of a flat, the Housing and Development Board (HDB) will only accept valuation requests from resale flat buyers after they have been granted an Option to Purchase by flat sellers. The latest change will take effect from 5pm March 10, 2014. revised hdb procedure

 Previously, sellers usually got a request for a valuation from HDB  first and then negotiated with buyers over how much more or less should be paid. The excess cash over valuation is known as the COV. Buyers and sellers  will now have to agree upon a price first before getting an official valuation and Housing and Development Board (HDB) will only accept valuation requests from resale flat buyers ( yes, only buyer and they have to pay for it ) after they have been granted an Option to Purchase by flat sellers. Under the new rules, buyers who are granted OTP will also have 21 calendar days, instead of 14 calendar days to exercise the OTP, to adjust to the new procedure. The aim is to  get negotiations to focus on recent transaction prices and reduce the focus on COVs. Currently, resale prices are published twice a month. With immediate effect, HDB will also publish daily prices of resale transactions as soon as they are registered.

While the balance between buyers and sellers has been re-titled, the market is still at very high price, is not at its optimal state, and thus it is premature to withdraw cooling measures, Mr Khaw said.

While it is still too early to gauge the impact of this latest policy, I guess the buyers now will tend to make an offer more conservatively  based on recent transaction prices range to avoid not being able to get the loan amount.

Source -  HDB, Straits Time

First annual decline in Resale Price Index (RPI) for HDB since 2005

Image

Average prices of HDB resale flats fell for the first time since 2005 last year. Data released by the Housing and Development Board (HDB) showed that the Resale Price Index  RPI fell 1.5 per cent from 204.8 ito 201.7 n then the last three months of the year 2013 .

Year
Quarter
Index
% Change from Previous Quarter
2013
IV
201.7
-1.5%
III
204.8
-0.9%
II
206.6
0.5%
I
205.5
1.3%
2012
IV
202.9
2.5%
III
197.9
2.0%
II
194.0
1.3%
I
191.6
0.6%
2011
IV
190.4
1.7%
III
187.2
3.8%
II
180.3
3.1%
I
174.8
1.6%
2010
IV
172.0
2.5%
III
167.8
4.0%
II
161.3
4.1%
I
155.0
2.8%
Source – HDB

The number of resale transactions for 2013 dropped 28 per cent to 18,100 — the lowest volume since 1997 since HDB started keeping records. Subletting transactions also fell by 3 per cent from 7,505 cases in Q3 of last year to 7,268 cases in the fourth quarter.

Resale Cases Registered between 1st Quarter and 4th Quarter 2013
Quarter
1-Room
2-Room
3-Room
4-Room
5-Room
Executive*
Total
1Q2013
1
159
1,362
1,523
962
328
4,335
2Q2013
3
185
1,640
1,922
1,070
415
5,235
3Q2013
2
172
1,377
1,670
969
339
4,529
4Q2013
1
132
1,251
1,524
784
309
4,001
Total
7
648
5,630
6,639
3,785
1,391
18,100

 

Source – HDB

Fall in HDB resale price is expected due to the many measures imposed by the government especially the mortgage servicing ratio of 30 per cent and also the maximum loan term of 25 years which I have mention in my previous blog entry in Aug 2013.  This measures reduce the buyers’ ability of getting a higher loan to buy a bigger flat. In addition, Singapore Permanent Resident Households need to wait three years from the date of obtaining SPR status, before they can buy a resale HDB flat. The impact of these policies announced recently on HDB resale prices has slowly surfaced. 

Median Cash Over Value or COV have also drop by quite a fair bit. Interestingly, look at Punggol’s figure in the table below. Average COV is $0 for 4 and 5 Room flats. Will COV continue to drop further this year? Will it draw more potential buyers back to the resale market? We shall see.

Median Cash-Over-Valuation (COV) for Resale Cases Registered in the 4th Quarter 2013
Town
1-Room
2-Room
3-Room
4-Room
5-Room
Executive
Ang Mo Kio
*
$10,000
$15,000
*
*
Bedok
*
$5,000
$15,000
$23,500
*
Bishan
*
$32,500
*
*
Bukit Batok
$7,000
$10,000
$20,000
*
Bukit Merah
*
*
$18,000
$30,000
$42,500
Bukit Panjang
*
$8,000
$3,000
$25,000
Bukit Timah
*
*
*
Central
*
*
*
*
Choa Chu Kang
*
$0
$5,000
*
Clementi
$8,000
$15,000
*
*
Geylang
*
$8,900
$15,000
*
*
Hougang
$5,000
$5,000
$10,000
*
Jurong East
$7,500
$10,000
*
*
Jurong West
*
$9,000
$5,000
$2,000
$20,000
Kallang/Whampoa
*
$10,000
$30,000
*
*
Marine Parade
*
*
*
Pasir Ris
*
$6,500
$8,500
$19,000
Punggol
$0
$0
*
Queenstown
*
$10,400
$37,900
*
Sembawang
*
$4,500
$8,000
*
Sengkang
*
*
$3,000
$5,000
*
Serangoon
$12,000
$15,000
*
*
Tampines
$6,500
$9,500
$10,000
$30,000
Toa Payoh
*
$9,300
$28,000
*
*
Woodlands
*
$8,000
$3,300
$6,000
$23,000
Yishun
$3,900
$7,000
$12,900
*

 

Source - HDB, Straits Time



Post you might be interested -
Cooling measures – Maximum tenure for HDB housing loans cut to 25 years
HDB COV $20000, lowest in 30 months, since 2011
More HDB resale with $0 COV
COV going south again
 


HDB resale prices fell 1.3% in Q4 2013

Both public and private housing prices in Singapore have finally come down after a series of Cooling measures.

HDB resale flat prices fell 1.3 percent in Q4 2013, according to flash estimates from the housing board. The sharpest drop since 2005.

The Housing & Development Board’s (HDB) resale price index (RPI) declined 1.3 per cent to 202.1 in the fourth quarter of last year over the preceding quarter, its flash estimates revealed on Thursday 2/1/2014. It is the second consecutive drop for the index in 2013.  resale flat prices fell 0.9 percent in Q3.

The recent falling resale prices can be due to various government’s cooling measures to cool the public housing market such as, reducing the Mortgage Servicing Ratio cap of 30 per cent and the maximum loan term of 25 years for HDB mortgage loans, three-year wait for new Permanent Residents before they can buy resale HDB flats, and allowing singles to buy two-room BTO flats in non-mature estates. Thus, reducing the resale demand.

I foresee 2014 to be a quiet year for the HDB resale market.

Resale Price Index from 1st Quarter 1990 to 4th Quarter 2013 (Flash Estimate) – HDB

Year
Quarter
Index
% Change from Previous Quarter
2013
IV (Flash Estimate)
202.1
-1.3%
III
204.8
-0.9%
II
206.6
0.5%
I
205.5
1.3%
2012
IV
202.9
2.5%
III
197.9
2.0%
II
194.0
1.3%
I
191.6
0.6%
2011
IV
190.4
1.7%
III
187.2
3.8%
II
180.3
3.1%
I
174.8
1.6%
2010
IV
172.0
2.5%
III
167.8
4.0%
II
161.3
4.1%
I
155.0
2.8%
2009
IV
150.8
3.9%
III
145.2
3.6%
II
140.2
1.4%
I
138.3
-0.8%
2008
IV
139.4
1.4%
III
137.5
4.2%
II
131.9
4.5%
I
126.2
3.7%
2007
IV
121.7
5.7%
III
115.1
6.6%
II
108.0
3.0%
I
104.9
1.3%
2006
IV
103.6
1.0%
III
102.6
-0.2%
II
102.8
1.0%
I
101.8
0.2%
2005
IV
101.6
0.4%
III
101.2
-0.4%
II
101.6
-4.8%
I
106.7
0.1%
2004
IV
106.6
1.0%
III
105.5
0.1%
II
105.4
1.2%
I
104.1
0.2%
2003
IV
103.9
1.2%
III
102.7
2.4%
II
100.3
2.1%
I
98.2
1.6%
2002
IV
96.7
0.0%
III
96.7
1.0%
II
95.7
0.2%
I
95.5
-0.8%
2001
IV
96.3
-1.4%
III
97.7
-2.0%
II
99.7
-1.6%
I
101.3
-3.4%
2000
IV
104.9
-2.2%
III
107.3
-2.2%
II
109.7
-1.3%
I
111.1
0.6%
1999
IV
110.4
2.2%
III
108.0
8.1%
II
99.9
1.4%
I
98.5
-1.5%
1998
IV
100.0
-3.5%
III
103.6
-4.3%
II
108.3
-4.2%
I
113.0
-7.1%
1997
IV
121.7
-6.0%
III
129.4
-4.1%
II
134.9
-1.0%
I
136.3
-0.4%
1996
IV
136.9
2.7%
III
133.3
6.0%
II
125.7
12.8%
I
111.4
9.3%
1995
IV
101.9
8.9%
III
93.6
5.9%
II
88.4
11.6%
I
79.2
4.5%
1994
IV
75.8
0.4%
III
75.5
5.6%
II
71.5
2.6%
I
69.7
2.8%
1993
IV
67.8
2.9%
III
65.9
20.3%
II
54.8
31.1%
I
41.8
5.6%
1992
IV
39.6
2.3%
III
38.7
2.1%
II
37.9
6.2%
I
35.7
2.9%
1991
IV
34.7
-0.6%
III
34.9
-0.9%
II
35.2
2.0%
I
34.5
1.2%
1990
IV
34.1
-1.4%
III
34.6
2.4%
II
33.8
0.6%
I
33.6

Click on picture to view full chart:

RPIChart4Q13FlashEstSmall
Source: Straits Time, HDB.
You may be interested – 

Singapore Property Market Cooling Measures

Below is a comprehensive view of the latest government policies related to the residential property market. These policies are often referred to as the ‘Property Market Cooling Measures‘.

Source : SRX

 

» Click to Calculate your Stamp Duty.

A Brief Summary of Cooling Measures

1. Additional Buyer’s Stamp Duty (ABSD)

Citizenship ABSD Rate on Primary
Home Purchase
ABSD Rate on Secondary
Home Purchase
ABSD Rate on Tertiary &
Subsequent Purchase
Singapore Citizens N/A 0% –> 7% 3% –> 10%
Permanent Residents 0% –> 5% 3% –> 10% 3% –> 10%
Foreigners1 and non-individuals 10% –> 15% 10% –> 15% 10% –> 15%

Note:1.Citizens of the USA, Switzerland, Liechtenstein, Norway, Iceland will be treated the same as Singapore Citizens due to FTA agreement.

2. Sellers’ Stamp Duty (SSD)

Residential Property Sold In Year 1 Year 2 Year 3 Year 4
SSD Rate since Feb 2010 Same as basic
Buyer Stamp Duty
N/A N/A N/A
SSD Rate since Aug 2010 Same as basic
Buyer Stamp Duty
2/3 of basic
Buyer Stamp Duty
1/3 of basic
Buyer Stamp Duty
N/A
SSD Rate since Jan 2011 16% 12% 8% 4%

3. Loan-to-Value (LTV) Ratio

Source: SRX / StreetSine

Policy Details

Effective Date Major Cooling Measures that Affect Residential Property Market
27 August, 2013 1. Singapore Permanent Resident Households need to wait three years from the date of obtaining SPR status, before they can buy a resale HDB flat.
2. Maximum tenure for HDB housing loans is reduced from 30 years to 25 years. The Mortgage Servicing Ratio (MSR) limit is reduced from 35% to 30% of the borrower’s gross monthly income.
3. Maximum tenure of new housing loans and re-financing facilities granted by financial institutions for the purchase of HDB flats (including DBSS flats) is reduced from 35 years to 30 years. News loans with tenure exceeding 25 years and up to 30 years will be subject to tighter LTV limits.
29 June, 2013 1. TDSR: Financial institutions are required to consider borrowers’ other outgoing debt obligations when granting property loans. His total monthly repayments of his debt obligations should not exceed 60 per cent of his gross monthly income.
2. In particular, MAS requires:
-borrowers named on a property loan to be the mortgagors of the residential property for which the loan is taken;
-“guarantors” who are standing guarantee for borrowers otherwise assessed by the financial institutions at the point of application for the housing loan not to meet the TDSR threshold for a property loan to be brought in as co-borrowers; and
-in the case of joint borrowers, that financial institutions use the income-weighted average age of borrowers when applying the rules on loan tenure.
12 January, 2013 1. ABSD: Citizens pay 7/10% on second/third purchase (from 0/3%); Permanent Residents (PR) pay 5/10% for first/second purchase (from 0/3%); foreigners and non-individuals now pay 15%.
2. LTV for second/third loan now 50/40% from 60%; non-individuals’ LTV now 20% (from 40%).
3. Mortgage Servicing Ratio (MSR) for HDB loans now capped at 35% of gross monthly income (from 40%); MSR for loans from financial institutions capped at 30%.
4. PRs no longer allowed to rent out entire HDB flat.
6 October, 2012 1. Mortgage tenures capped at a maximum of 35 years.
2. For loans longer than 30 years or for loans that extend beyond retirement age of 65 years: LTV lowered to 60% for first mortgage and to 40% for second and subsequent mortgages.
3. LTV for non-individuals lowered to 40%.
8 December, 2011 1. ABSD introduced for further cooling measures:
– Foreigners and non-individuals pay 10%, PRs buying second and subsequent property pay 3%, Singaporeans buying third and subsequent property pay 3%.
2. Developers purchasing more than four residential units and following through on intention to develop residential properties for sale would be waived ABSD
– To qualify, developers have to produce proof of development and sale within five years.
14 January, 2011 1. Holding period for imposition of SSD increased to four years from three.
2. SSD rates raised to 16%, 12%, 8% and 4% of consideration.
3. LTV lowered to 60% from 70% for second property.
4. LTV for non-individual residential purchasers capped at 50%.
30 August, 2010 1. Holding period for imposition of SSD increased to three years from one.
2. Minimum cash payments raised to 10% from 5% for buyers with one or more outstanding housing loans.
3. LTV lowered to 70% from 80% for second properties.
20 February, 2010 1. Introduction of SSD for residential property and land sold within one year of purchase.
2. LTV lowered to 80% from 90% on all housing loans except HDB loans.
14 September, 2009 1. Interest absorption scheme (deferment of instalments until TOP) and interest-only housing loans (interest payment only until TOP) were scrapped for all private properties.

Cooling measures – Maximum tenure for HDB housing loans cut to 25 years

THE BUSINESSTIMES – THE Singapore government will reduce the maximum tenure for public housing loans to 25 years from 30 years  in a series of measures to stabilise the resale market.

Cooling measures

Cooling measures

The mortgage servicing ratio limit will also be reduced from 35 per cent to 30 per cent of the borrower’s gross monthly income, the Ministry of National Development and the Housing & Development Board said in a statement on Tuesday, 27/8/2013.

“These measures are in line with those introduced by the Monetary Authority of Singapore (MAS) to encourage financial prudence among borrowers, which is especially important given that the current low interest rate environment is unlikely to be sustained,” according to the statement. < VERY BIG HINT that interest rate is going up soon. >

The MAS will reduce the maximum tenure of new housing loans and refinancing facilities granted by financial institutions for the purchase of HDB flats (including DBSS flats) to 30 years from 35 years. New loans with tenures exceeding 25 years and up to 30 years will be subject to tighter loan-to-value limits

Still can’t figure out how much it affect HDB buyers? Let’s take an example of a couple having a HDB loan of $400,000 for 30 years at a interest rate of 2.6%. Their current monthly installment will be around S$ 1,601.36.  But with the new cooling measures, buyer can only take a maximum of 25 years public housing loan instead of 30 years, their monthly installment will be S$ 1,814.68 instead. An $213.32 or 13% increase in monthly installment. Well the $213.32 is enough to pay for your monthly utilities bill. 

Meanwhile, with immediate effect , Permanent Residents (PR) who want to buy resale HDB flats will have to wait three years after receiving their PR status. Prior to this change, they could buy a flat as soon as they received PR status. This is indeed a big blow for PR holder. Will this measures push new PR holders to go to private residential market? Hmm , we shall see.

What’s very sure is that the HDB resale market will be damn COOL this 2 months due to the knee jerk effect.

Source – http://www.businesstimes.com.sg/breaking-news/singapore/maximum-tenure-hdb-housing-loans-cut-25-years-20130827

https://www.todayonline.com/singapore/hdb-shortens-homebuyers-loan-tenure-25-years

Prices continue to rise despite cooling

property-price-rise

property-price-rise

Despite numerous government attempts to cool the market, property prices in Singapore have continued to rise in many sectors during the second quarter of 2013.

The latest data from the Urban Redevelopment Authority (URA) showed prices for private homes in Singapore rose one percent quarter-on-quarter, having risen 0.6 percent during the previous three month period.

Non-landed private property prices in the core region declined by 0.2 percent quarter-on-quarter, however there was a significant 3.8 percent jump in prices outside the central region.

Rental prices for private homes were also on the rise during the second quarter – up 0.3 percent quarter-on-quarter but less than the 0.8 percent rise seen during Q1.

Resale prices for Housing Development Board (HDB) properties also continued to increase during the three months ending June 2013, up 0.5 percent from the first three months of the year.

Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam told Reuters earlier this month that the property market has shown signs of stabilising, but that the government would like to see some softening of prices.

Many analysts and market watchers predicted that prices would decline following January’s significant attempts by the government to cool the market, however this latest data suggests those efforts did not have the desired impact.

Source from : Propertyguru

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