Understanding SIBOR and SOR Based Home Loans in Singapore

By SUSAN TEO and PAUL HO

As a small, open economy that depends largely on imports for most of its needs, Singapore adopts an exchange rate policy, which curbs import-based inflation. Specifically, Singapore makes use of a managed float regime, whereby the Monetary Authority of Singapore (MAS) manages the Singapore dollar against a basket of currency of its main trading partners, but allows it to fluctuate between an undisclosed band. Thus the interest rate in Singapore is determined by world money markets. It follows closely the interest rate of the countries in the basket of currency, of which the US dollar makes up a main component. Consequently, there is a correlation between the US interest rates and that of Singapore's.

What is Singapore Inter-bank Offered Rate (SIBOR)?

SIBOR is the interest rate at which banks and financial institutions in Singapore borrow from each other. It is similar to the London Interbank Offered Rate (LIBOR). Set by the Association of Banks in Singapore, SIBOR is transparent and announced daily through the mainstream media. Many home loan packages offered in Singapore are pegged to SIBOR. SIBOR comes in different blends of 1-, 3-, 6- , 12-month. So the 1-, 3-, 6-, 12-month SIBOR are the interest rates for borrowing for 1, 3, 6 and 12 months, respectively. The longer the tenor the higher the rate is.

What is Singapore Swap Offer Rate (SOR)?

In contrast, SOR is the lending costs and the expected forward exchange rate between the US dollar and Singapore dollar. Upon maturity of the SOR tenor, there is a Forex conversion from US dollar to Singapore dollar, but there is no bid and spread, therefore the banks save money amongst themselves. As SOR can be interpreted as currency swaps between the US dollar and Singapore dollar, it has slightly more volatility compared to SIBOR and current movements impacts the trading volume of the SOR contracts. SOR is also set by the Association of Banks in Singapore and comes in different blends of 1-, 3-, 6- , 12-month.

What are SIBOR and SOR pegged home loans?

Floating (variable) interest rate loans in Singapore make use of SIBOR or SOR as the variable component in the interest rate. Most loan packages follow the 1- or 3-month SIBOR or SOR. The interest rate for the loan will be defined as spread + SIBOR or spread + SOR. What is spread? The margin that the financing institutions add to the loan is called the spread. Using a concrete example, for an interest rate of SIBOR + 1%, the +1% is the spread. The spread is usually revised upward, after the first few years of the loan start-date. As an example:

Bank X SIBOR Loan

Period	Interest Rate (p.a.)
First Year	0.75% + 1-Month SIBOR
Second Year	0.75% + 1-Month SIBOR
Third Year	0.75% + 1-Month SIBOR
Fourth Year	1.00% + 1-Month SIBOR
Thereafter	1.25% + 1-Month SIBOR

 

Advantages and Disadvantages of SIBOR and SOR

Contrary to popular belief, it is not always true that during a low interest rate environment, borrowers with a SOR-pegged package will necessarily enjoy lower rates than with a SIBOR-pegged loan. Although SOR and SIBOR are somewhat correlated, and the former tends to fluctuate more, the fluctuations of SOR can be above or below SIBOR. This is seen in Figure 1, 2 and 3, which show the most commonly used tenor of 1-month and 3-month.

Figure 1: 1-Month SIBOR/SOR for Jan 2012-Dec 2012

 Source: www.iCompareLoan.com

Figure 2: 3-Month SIBOR/SOR for Jan 2012-Dec 2012

 Source: www.iCompareLoan.com
 

Figure 3: 3-Month SIBOR/SOR for Dec 2006-Aug 2012

Source: www.iCompareLoan.com

Thus borrowers will be wise to focus on the spread instead. They should opt for packages with a reasonable spread throughout the loan duration. Summarising the features of both SIBOR and SOR:

• Shorter tenor SIBOR has usually lower rates than the longer tenor SIBOR (Because it is riskier and there is a higher opportunity cost for longer term lending)
• Shorter tenor SIBOR is usually more volatile than the longer tenor SIBOR
• SIBOR fluctuates less than SOR

Thus, more risk-averse borrowers may prefer SIBOR loans as they provide more stability. But what tenor of SIBOR should they choose? Recently, banks started offering 1-month SIBOR packages to borrowers. This means an increased administrative cost for the banks.

Figure 4: 1-Month and 3-Month SIBOR for Jan 1989-Dec 2012

Source: www.iCompareLoan.com

From Figure 4, a 1-month SIBOR is generally lower than a 3-month SIBOR as seen over the past 20 years, therefore borrowers may want to consider a 1-month SIBOR if the spread being offered is also attractive.

When to choose between 1-month SIBOR and 12-month SIBOR?

While a shorter tenor SIBOR may mean lower interest, but borrowers have to contend with greater instability as rates are revised at shorter intervals. For example, for a 1-month SIBOR the rate revision period can vary between 1 or 3 months, depending on the financing institutions. In contrast, with a 12-month SIBOR the borrowers may have to pay higher interest but the rate remains constant for 12 months.

Given the many factors to consider when deciding on the best loan package, the borrower may prefer to seek experts' advice, like the free professional help available at www.iCompareLoan.com or simply fill up an enquiry form at http://www.iCompareLoan.com/contact  

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Government Releases Four 99-year Lease Land Parcels in Mature Estates

By SUSAN TEO

On 15 November 2012, the Government announced the sale, under the Confirmed List, of two land parcels at Jurong West Street 41 (Parcel A) and Ang Mo Kio Avenue 2. The second land plot at Jurong West Street 41 (Parcel B), adjacent to Parcel A, is made available on the Reserve List. It is estimated to be able to accommodate 545 housing units on its 18,507.1 sq m land. All three sites are for private residential development.

Confirmed-list lands are put up for bidding on the market regardless of interest, whereas reserve-list sites go on sale only if there is 1) An offer that is at least 85% of the Chief Valuer's (CV) Estimated Market Value (EMV). The valuation will only be made after an offer is made; or 2) More than one offer within a reasonable period, by unrelated parties, that are close to EMV.

The fourth site is a mixed commercial and residential site at Yishun Ring Road. It will only be launched for sale by public tender on 27 November 2012.

Together, the four sites are expected to yield 2,045 housing units. With land sites at Ang Mo Kio Avenue 2 (18,477.5 sq m), Jurong West Street 41 (Parcel A) (22,358.2 sq m) and Yishun Ring Road (8,858 sq m) yielding 680, 545 and 160 units, respectively. Tenders for these sites will close at 12 noon on 8 January 2013, 15 January 2013 and 24 January 2013, respectively (All figures are from URA).

The main draw for the plot at Ang Mo Kio Avenue 2 is its proximity to the upcoming Mayflower MRT station at Ang Mo Kio Avenue 4. In addition, many good schools are in its vicinity, including CHIJ St Nicholas Girls' School.

For the two land parcels at Jurong West Street 41, the main attraction is their closeness to the commercial hub at Jurong Gateway and the vibrancy of the area as a future waterfront district where business and leisure meet. Major plans are already underway to develop the district. Another upside of the sites are their proximity to transport links, like Lakeside MRT Station.

In contrast, the land plot at Yishun Ring Road is situated at an area with limited redevelopment plans. Nevertheless, its plus points include having Yishun Town Centre and Yishun MRT station close by, and being a mixed commercial and residential site among predominantly HDB flats.  

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References

1. Chay, Felda, “Sale of 4 Suburban Sites to Yield 2,045 Private Homes”, The Business Times 16 Nov 2012, Web

<http://www.businesstimes.com.sg/premium/singapore/sale-4-suburban-sites-yield-2045-private-homes-20121116>

2. URA, “Government to Release Four Sites Estimated to Yield 2,045 Housing Units in November 2012 ”, 15 Nov 2012, Web

<http://www.ura.gov.sg/pr/text/2012/pr12-125.html>

3. URA, “Procedure for Reserve List System”, Web

<http://www.ura.gov.sg/sales/reservelist/procedurerl.html>

HDB Launches of New Flats for the Year

By SUSAN TEO

Last month, we saw HDB launching its final round of new flats for 2012, where 6,463 flats were rolled out. This brings the total flats supplied for the year to 27,084, a 7.5 percent increase from last year's 25,200 units.

This year's supply is the highest to date. Initially, supply was planned at 25,000 but strong demand and a brisk resale market caused HDB to increase the number.

Let us recap the six launches for the year.

In January, HDB made its first launch, with five Build-To-Order (BTO) projects in Choa Chu Kang, Punggol, Sengkang and Tampines. In total, 3,923 new flats were offered. Build-To-Order (BTO) scheme allows applicants to apply for their preferred location from pre-specified sites, HDB will then proceed to build the flats if demand is sufficient. This scheme came into effect in 2001, and is the main avenue in which new HDB flats are produced.

Second up, was the bumper launch in March that saw 4,153 units offered in eight BTO projects alongside 3,825 Sale of Balance Flats (SBF) in 26 towns and estates. Sale of Balance Flats (SBF) are “balance flats from earlier Build-To-Order (BTO) exercises; surplus Selective En-bloc Redevelopment Scheme (SERS) replacement flats; or repurchased flats” (“Sale of Balance Flats”).

Meanwhile, the launch in March also unveiled several new schemes and regulations. The new schemes were the Multi-Generation Priority Scheme (MGPS) and Ageing-in-Place Priority Scheme (APPS). Addition tweaks were also made to existing policies. This included raising the income ceiling for buyers of two-room flats in mature estates from S$2,000 to S$5,000, and meting out harsher penalty for buyers who cancel their flat booking. Flat buyers applying to live with their parents under “The Married Child Priority Scheme (MCPS)” also have their balloting chances increased to six for first-timers, and three for for second-timers - up from four and two, previously.




Under the Multi-Generation Priority Scheme (MGPS), married children and their parents who are applying for a studio apartment or a 2-room flat, will be given priority allocation, if they jointly apply for the flats near each other. For the Ageing-in-Place Priority Scheme (APPS), elderly flat owners will have double balloting chances when applying for a studio apartment in their current estate. If these seniors are also applying to live near their married child under MCPS, they will receive four balloting chances altogether.

Next up, was the launch in May when “4,627 new flats in three non-mature towns (Choa Chu Kang, Punggol, and Sengkang) and one mature town (Kallang/Whampoa)” (“HDB Launches 6 BTO Projects Offering 4,627 New Flats”) were rolled out.

In July, another 4,191 new flats were offered under seven Build-To-Order (BTO) projects. Enhancements to the Special CPF Housing Grant (SHG) were also made to enhance the financial assistance for lower-income households.

In September, another bumper launch was offered. This time, 7,055 flats, in both non-mature and mature towns, were put up for sales under the Build-to-Order (BTO) and Sale of Balance Flats (SBF) exercises. New schemes were also introduced. Under the Optional Component Scheme (OCS), opt-in are allowed for internal timber doors and (or) flooring. There is also a new opt-in scheme for the sanitary fittings in bathrooms. HDB also piloted an “open kitchen” concept for flats at Teck Ghee Parkview.

Finally, in November, BTO flats were released in two non-mature towns (Choa Chu Kang and Sengkang) and three mature towns (Bedok, Queenstown and Toa Payoh). The type of flats include studio apartments, 3-, 4-, and 5-room flats. With at least 85 percent to 95 percent of the flats earmarked for them, first-time applicants will enjoy priority balloting for all flat types except for studio apartments.  

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References

1. HDB, “2012 Record Year Of New Flats – November BTO Exercise”, 21 Nov 2012, Web

http://www.hdb.gov.sg/fi10/fi10296p.nsf/PressReleases/073889C114DCCD4C48257ABC0030957E?OpenDocument

2. HDB, “Release Of 3rd Quarter 2012 Public Housing Data”, 29 Oct 2012, Web

<http://www.hdb.gov.sg/fi10/fi10296p.nsf/PressReleases/372DE5CF8D38306548257AA60000A61E?OpenDocument>

3. HDB, “HDB Increased New Flat Supply For 2012 TO 27,000”, 27 Sep 2012, Web

<http://www.hdb.gov.sg/fi10/fi10296p.nsf/PressReleases/597ABC0F57FA037548257A860022A3F9?OpenDocument>

4. HDB, “HDB Launches 7 BTO Projects Offering 4,191 New Flats and Enhances Special CPF Housing Grant”, 31 Jul 2012, Web

<http://www.hdb.gov.sg/fi10/fi10296p.nsf/PressReleases/176CF92493B9089848257A4C0019D9BA?OpenDocument>

5. HDB, “HDB Launches 6 BTO Projects Offering 4,627 New Flats”, 30 May 2012, Web

<http://www.hdb.gov.sg/fi10/fi10296p.nsf/PressReleases/36C203C28D162D3948257A0E002CC65B?OpenDocument>

6. HDB, “Meeting Diverse Needs – HDB’s Bumper Launch of 8,000 Flats”, 28 Mar 2012, Web

<http://www.hdb.gov.sg/fi10/fi10296p.nsf/PressReleases/935903454CA92CFC482579CE00264F1E?OpenDocument>

7. HDB, “HDB Launches 5 BTO Projects Offering 3,923 New Flats”, 11 Jan 2012, Web

<http://www.hdb.gov.sg/fi10/fi10296p.nsf/PressReleases/B6004B60783746C9482579820001E7CB?OpenDocument>

8. HDB, “Another 4,200 New Flats Launched; 25,000 More to Come Next Year”, 4 Nov 2011, Web

<http://www.hdb.gov.sg/fi10/fi10296p.nsf/PressReleases/8D08706EB3498F78482579520005EAA4?OpenDocument>

9. HDB, “Build-to-Order (BTO)”, Web

<http://www.hdb.gov.sg/fi10/fi10321p.nsf/w/BuyingNewFlatModeBTO?OpenDocument>

10. HDB, “Sale of Balance Flats”, Web

<http://www.hdb.gov.sg/fi10/fi10321p.nsf/w/BuyingNewFlatSBF?OpenDocument>

11. NLB, “Singapore's Public Housing”, Web

<http://libguides.nl.sg/content.php?pid=81668&sid=606112>

A Brief Look at Shoebox (or Mickey Mouse) Apartments

By SUSAN TEO

Measuring 714.3 sq km, with a resident population of 5.3 millions (Department of Statistics), in the past few years, Singapore has seen the rise of shoebox (a.k.a. Mickey Mouse) units. Developers in the private residential market have decided that building apartments under 500 sq ft [Some defines any unit smaller than 50 sq m (equivalent to 538.2 sq ft) as shoebox.] is the best way to maximise land space (and profit) and meet the housing needs of the growing population in this tiny red dot. In 2009 and 2010 alone, 2000 of such apartments were sold, compared to under 1000 in the period from 2001 to 2008 (Ku, page 83). Meanwhile, by the end of 2015, 11,000 shoebox units are expected to be ready, “with 3,800 of these in suburban areas” (Teo).

But such cramped living spaces have ignited debate about the comfort level for occupiers. Indeed, it has even prompted outgoing CapitaLand CEO, Liew Mun Leong, to criticise shoebox units as “almost inhuman”. CapitaLand is also protesting against the construction of these apartments (Thakur and Amin). As if in agreement, the Government has intervened to limit the number of shoeboxes in areas outside of the central region. With effect from 4 November, the Urban Redevelopment Authority (URA) will impose a new rule that restricts the number of units that a developer of a non-landed private residential development in a suburban area can build (“New Rules 'Discourage' Shoebox Units Outside Central Area”).

Usually, shoebox units are priced higher on a per square foot (psf) basis compared to larger private apartments, but with a lower absolute price. For example, the price range of a shoebox apartment varies between S$500,000 to S$700,000; in contrast a larger apartment typically costs S$1 million and above. However, on a psf basis, the former can go for S$1,200 on average and the latter S$1,000. Nevertheless, sales for shoebox units has been healthy. For the third quarter of this year, these apartments account for16 per cent of total private property sales, according to the URA. So why the popularity of such cramped living conditions? According to a Straits Times article (“NUS EXPERT SERIES; The Rise and Rise of Shoebox Units”) by three NUS dons, they point out the attractiveness of shoebox units to certain segments of the population because of its lower absolute price. These segments are investors, young couples, retirees, people who are not qualified for subsidied HDB but find larger private housing unaffordable. However, experts are cautioning investors to think before they leap.

In a Straits Times article (Teo), it is reported that the mushrooming of shoebox apartments in suburban areas has led analysts to warn investors that the rental yields may not justify the hefty price tags. These shoebox apartments are priced similarly to those in the central areas, but the rental they could generate are likely to be lower. Currently, figures from the Singapore Real Estate Exchange (SRX) suggest that rentals rates are comparable in both areas, but as the supply of shoebox apartments and larger apartments proliferate in the suburban in the next few years, rental yield for the former are expected to dip.

Nevertheless, rental yields for shoebox apartments in October and November are holding up despite the slide in overall rentals. Figures show that average monthly rentals fell from S$3.88 psf in the third quarter to S$3.84 psf for the two months. But shoebox apartments showed a slight uptick from the 3Q2012 of S$6.61 psf to S$6.65 psf.


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References

1. Agarwal Sumit, Deng Yongheng and Sing Tien Foo, “NUS EXPERT SERIES; The Rise and Rise of Shoebox Units”, The Straits Times 12 Sep 2012, Print

2. Esther Teo, “It May Not Pay to Invest in Shoebox Units”, The Straits Times 8 Sep 2012, Print

3. Ku Swee Yong, Real Estate Riches: Understanding Singapore's Property Market in a Volatile Economy, Singapore: Marshall Cavendish Business, 2011, Print

4. Pooja Thakur and Haslinda Amin, “CapitaLand CEO Calls Shoebox Apartments Inhuman: Southeast Asia”, Bloomberg 24 May 2012, Web <http://www.bloomberg.com/news/2012-05-23/capitaland-ceo-calls-shoebox-apartments-inhuman-southeast-asia.html>

5. “Key Annual Indicators”, Department of Statistics, Web <http://www.singstat.gov.sg/stats/keyind.html>

6. “New Rules 'Discourage' Shoebox Units Outside Central Area”, Channel NewsAsia 4 Sep 2012, Web <http://www.channelnewsasia.com/stories/singaporelocalnews/view/1223909/1/.html>

7. Tan, Melissa, “Bright End to the Year for Property Market”, The Straits Times 8 Dec 2012, Print

Master Plan & Development of Punggol

By SUSAN TEO

Source: “HDB’s Punggol Waterway Clinches its First International Award for Environmental Sustainability”

When Sir Stamford Raffles first landed on Singapore some 200 years ago, Punggol, like the rest of the island was a sleepy, rural place where farming and fishing activities abound. One of the oldest settlements, it is there where the infamous 1942 Punggol Beach Massacre occurred. Fast-forward to the 1990s, and Punggol, famed for its seafood restaurants, has become the backwater in modern Singapore.

But, in August 1996, Punggol was awakened from its slumber when then-Prime Minister Goh Chok Toh unveiled plans to develop it into a waterfront town consisting of private and public housings, alongside water recreational facilities. The smooth development of the project, Punggol 21, however was stalled by the outbreak of the Asian financial crisis in 1997. In addition, in 2003, when financial woes beset the construction industry, the rolling out of new HDB flats in the area was delayed after construction firms went under (Leong). Indeed, some 560 flat buyers had to look for alternative housing after their flats could not be completed on schedule.

Coordination problems also plagued the development of Punggol. The Punggol LRT which was completed in 2004 (Ng), has its western loop, consisting of seven stations, remains closed till today because of a low population density in its vicinity – the upshot of the slow housing development there.

Despite the hiccup in development, the Government continues to plough on in its development plans. In 2007, PM Lee Hsien Loong, launched the Punggol 21-Plus project to build more housings and facilities there. The centrepiece was the 4.2km-long Punggol Waterway, known as My Waterway@Punggol, which he inaugurated in October 2011. The $225- million beautiful waterway, which features a host of waterfront activities, prompted some to proclaim it as the ‘Venice of Punggol’ (Cai). Indeed, it has been the recipient of two international awards this year: the “Grand Prize for Excellence in Environmental Engineering” and the “Global Superior Achievement Award”, presented by the American Academy of Environmental Engineers (AAEE) and the International Water Association, respectively. This makes Singapore the first Asian country to clinch these awards.

A year later, in October 2012, the Housing and Development Board (HDB) embarked on the second phase of development for Punggol. National Development Minister Khaw Boon Wan announced plans to create seven distinctive housing districts (Waterway East, Waterway West, Northshore District, Matilda District, Punggol Point District, Crescent District, and Canal District) there and to increase the number of apartments from the current 26,000 to 100,000. Developments for Waterway East and Waterway West are currently under way, while that for Northshore District and Matilda District will start within the next five years. Plans are also made to increase the educational, commercial and communities facilities there. Current green spaces are to be enhanced, with new ones to be added. (“HDB Embarks on Second Phase of Development for Punggol Town”).

Notwithstanding the comprehensive plans, Punggol still has some way to go before it can be a well-established waterfront town to rival Pasir Ris and Bedok. Both Pasir Ris and Bedok are self-contained towns where residents can not only call the place home, but also enjoy ample employment opportunities and recreational activities there (Lee). For Punggol, however, there is a clear imbalance between employment opportunities and residents population. In the next five years, the number of completed private homes are expected to soar from the current 114 units to 6,618; while HDB flats will jump from the present 18,000 to 35,000. But the supply of jobs is not expected to keep pace. Apart from the lack of jobs, Punggol also faces a shortage of retail amenity. Punggol Plaza is the only shopping mall in the area now. But come 2015, Waterway Point, a shopping mall next to Punggol MRT, will be completed.


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References

1. “HDB Embarks on Second Phase of Development for Punggol Town”, Channel NewsAsia 16 October 2012, Print

2. Cai Haoxiang, “’Venice of Punggol’ The Pride of Former Backwater”, The Straits Times 24 October 2011, Print

3. Lee Sze Teck, “Up and Coming vs Established”, The Business Times 27 September 2012, Print

4. Leong Pik Yin, “Punggol Flats Delayed”, The Straits Times 5 June 2003, Print

5. Ng Desmond, “7-Year Hitch”, The New Paper 22 August 2011, Print

6. HDB, “HDB Honours Industry Partners at HDB Awards 2012 and Unveils Next Chapter of Punggol’s Development”, 6 Oct 2012, Web
<http://www.hdb.gov.sg/fi10/fi10296p.nsf/PressRelease /BA653DC75539EF9C48257A9900218A56?OpenDocument>

7. HDB, “Punggol Waterway Wins Global Superior Achievement Award”, 15 Aug 2012 ,Web
<http://www.hdb.gov.sg/fi10/fi10296p.nsf/PressReleases/F238E309074C5A2148257A5B0009A7A7?OpenDocument>

8. HDB, “HDB’s Punggol Waterway Clinches its First International Award for Environmental Sustainability”, 27 Apr 2012, Web
<http://www.hdb.gov.sg/fi10/fi10296p.nsf/PressReleases/0B57ADF650ECCC98482579ED000F9CF5?OpenDocument>

SDP Proposes New Housing Policy: Non-open Market (NOM) Flats

By SUSAN TEO

The Singapore Democratic Party (SDP) - an opposition party in Singapore - has comes up with a new policy to address Singapore's housing affordability issue. In their whitepaper “Housing A Nation: Holistic Policies For Affordable Homes”, the SDP put forth a new category of housing in the public housing market: Non-open Market (NOM) Flats. These flats will exist alongside HDB flats, but the purpose of the former is to provide a more affordable housing option for Singaporeans who are not looking to reap capital gains from their homes. Below is the pricing scheme for NOM.



Under this scheme, the lower selling price is make possible because land cost is excluded. However, the restrictions for NOM flats include

• Flats can only be re-sold to HDB, after a Minimum Occupancy Period (MOP) of 5 years, “at the current price of an equivalent new NOM flat (less grants) minus the value of the consumed lease.” Thus no capital gains can be made.
• Only Singapore citizens are eligible to purchase these flats.
• Owners of flats are not allowed to own private property or HDB flats.
• Renting of flats is prohibited, except under extenuating circumstances.

According to SDP, NMO flats fulfill the function of housing as a social good. The rationale for having such flats being that it frees up financial resources.

SDP argues that due to Singapore's high housing prices, households have a huge mortgage liability. For example, with a monthly median household income of S$5,600, taking a 30-year loan for a five-room unit at an average price of S$380,000 will require installment payments of 25 percent of their income.

However, for a NMO flat, a household can expect to settle its housing loan in 9 to 15 years' time, using at most 20 percent of its income. This will allow households to utilise the savings for other purposes. The SDP believes that these savings will be channelled to other activities that can stimulate the economy. Singaporeans, in the process, will enjoy a higher living standard as they will not be burdened by huge mortgages.

In addition, under this scheme, current owners of HDB flats that have been bought directly from HDB will be given the option to convert their houses into NMO ones, within a year after NMO flats are launched. Owners will get to continue living in their houses while being refunded an amount based on a formula.

But, as with any other policy, flaws exist. A key shortcoming, pointed out by experts, is its socially divisive effect, as it creates a group (NMO flat owners) who cannot make capital gains from their properties versus a group who can. For a more detailed read of the comments by 4 experts, please go to Singapolitics.


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References

1. Singapore Democratic Party, “Housing A Nation: Holistic Policies For Affordable Homes”, Web <http://yoursdp.ucoz.org/_ld/0/7_Housing_a_Natio.pdf>

2. Singapore Democratic Party, “SDP Proposes Non-open Market Flats in Housing Policy”, 4 November 2012, Web
<http://yoursdp.org/news/sdp_proposes_non_open_market_flats_in_housing_policy/2012-11-04-5430>

3. Wong Tessa, “SDP's Non-Open Market flats: Experts Give Their Take”, The Straits Times: Singapolitics 6 November 2012, Web
<http://www.singapolitics.sg/news/sdps-non-open-market-flats-experts-give-their-take>

Understanding Public Rental Housing in the Little Red Dot

 By SUSAN TEO

During Parliament last month, National Development Minister Khaw Boon Wan addressed several issues related to HDB's (Housing Development Board) Public Rental Scheme, or PRS. This includes the ethnic quotas and waiting time for public rental flats. Mr Khaw reveals that HDB is reviewing its ethnic quotas for these flats as

“Currently, 60 per cent of its rental blocks have reached the limit allowed for Malay residents, which is 25 per cent per block,” said Mr Khaw.

For public housing in Singapore, an Ethnic Integration Policy (EIP) was introduced to ensure a balanced racial composition in each block and estate. This move was done to preserve racial harmony and social cohesion in multiracial Singapore, which has some 80% of the population residing in HDB flats.

In addition, Mr Khaw discloses that the average waiting time for rental flats has decreased to six months now. This is a marked improvement from the long waiting time of 21 months in 2008 when demand was at its height. Nevertheless, Mr Khaw hopes to see further reductions. To this end, HDB is churning out 57,000 units by 2015. The number of one-and two-room public rental flats stands at 49,300 units currently, an increase from the 45,500 two years ago.

Adding to the number of rental accommodation are two blocks of flats close to the now-defunct Tanjong Pagar rail station. These former dormitories, at Spooner Road, which once housed the staff of the rail station, will be spruced up and offered to low-income Singaporeans under the PRS and Interim Rental Housing (IRH) scheme. 208 one-and two-room units will be leased out under PRS, while 110 three-room flats will come under the IRH scheme.

Rentals are heavily subsidied under PRS and IRH schemes. Both these schemes are for low-income Singaporeans. The number of households under the IRH scheme stands at 1,500 in December 2011.

Under the PRS scheme, only one-and two-room units are available. Applicants must have a gross household income not exceeding S$1,500, subject to fulfillment of other requirements, before being eligible to apply for the flats under the Family Scheme or Joint Singles Scheme. This scheme is administrated by HDB with rentals varying between S$26 and S$275.   

In contrast, the IRH scheme is a transitional housing option for Singaporeans. These people could be waiting to buy a HDB flat, queuing for a rental unit or waiting out a 30-month debarment period before applying for a rental unit. Under current regulation, after the disposal of a HDB flat, former owners are barred from applying for a rental unit for a 30-month period.

IRH started in 2009 and was ran by private operators like EM Services, LHN Group and the Katong Hostel. It worked as a cross-model in which the operators lease the flats from HDB and rent out a number of them at subsidised rates to IRH tenants, with the rest being rented out at open market rates. Often, two households will co-share an IRH three-room flat.

However after a review in 2011, HDB refined the scheme by 1) limiting the role of operators to the management of the flats, 2) stretching the tenancy period from six months to twelve, renewable for up to two years, and 3) introducing guidelines for better matching of co-tenants.

Disputes between co-tenants in IRH flats are common. MPs often see IRH residents requesting for a change of co-tenant during their Meet-the-People sessions. Under this scheme, a tiny three-room unit is shared by two families, sometimes large ones, couple that with the different living habits of the two households and strained relationships result. Other concerns include safety issues related to living with complete strangers. The cramped living space also causes some voices to grouse about the lack of a conducive study environment for children living in IRH flats. 

Read more articles at  

PropertyBuyer.com.sg/articles
SingaporeHomeLoan.net/blog/  
iCompareLoan.com/resources/category/faq/

References

1. “2,000 More Rental Flats for Lower-income Families”, MyPaper 24 Oct 2012, Print

2. “Govt to Tweak Interim Rental Housing Scheme”, Channel NewsAsia 30 Dec 2011, Print

3. Chong, Melissa, “HDB to Build More Rental Flats to Reduce Waiting Time”, Channel NewsAsia 12 Nov 2012, Web
<http://www.channelnewsasia.com/stories/singaporelocalnews/view/1236789/1/.html>

4. Chia, Yan Min, “Flats near Former Rail Station in Tanjong Pagar for Rent”, The Straits Times 9 Oct 2012, Web
<http://www.straitstimes.com/breaking-news/singapore/story/flats-near-former-rail-station-tanjong-pagar-rent-20121009>

5. HDB, “Renting A Flat: Direct from HDB”, Web
<http://www.hdb.gov.sg/fi10/fi10323p.nsf/w/RentDirectHDBOverview?OpenDocument>

6. HDB, “HDB Reviewing Ethnic Quotas for Rental Flats”, Web
<http://www.straitstimes.com/breaking-news/singapore/story/hdb-reviewing-ethnic-quotas-rental-flats-20121114>

7.“Spooner Rd Flats Available for HDB Rental”, Channel NewsAsia 9 Nov 2012, Web
<http://www.channelnewsasia.com/stories/singaporelocalnews/view/1236240/1/.html>

Cash Premium Climbs Upwards

By SUSAN TEO

Cash-Over-Valuation (COV) is defined as “the difference between the resale price and the market value of the flat” (HDB) that is paid by the buyer upfront. While not compulsory for HDB resale transactions, it is common in most transactions. The amount is negotiable between the buyer and seller, however if the resale price is “at or below the market valuation of the flat, there is no need for buyer to pay any COV.” COV was legalised because of illegal 'under counter cash payment', but there have been calls to have it scrapped as some argue that it ratchets up resale prices. This has been refuted by HDB (HDB Speaks).

For this year, reports show that the median COV finally showed an uptick, after falling for three consecutive quarters. The Singapore Real Estate Report (SRX) for Q3 2012 reveals a 15 percent quarter-to-quarter increase, with the median COV for this quarter standing at $30,000 up from the second quarter of $26,000. As can be seen from Table 1 and Table 2, there has been a quarter-to-quarter decline across all four housing types from 4Q 2011 to 2Q 2012, with the exception of 5-room and executive flats in 2Q 2012.

Table 1: Overall (Average for the 26 Districts) Median COV

	3-Room	4-Room	5-Room	Executive
3Q 2011	$31,094	$40,245	$46,571	$56,363
4Q 2011	$28,341	$36,200	$41,800	$46,000
1Q 2012	$23,171	$30,070	$32,994	$37,767
2Q 2012	$22,950	$29,543	$35,145	$39,769
3Q 2012	$25,942	$33,430	$39,479	$40,700

Source: Compiled using data from HDB Median Cash-Over-Valuation (COV)

Table 2: Quarter-to-Quarter Percentage Change in Median COV

	3-Room	4-Room	5-Room	Executive
4Q 2011	-8.9	-10.1	-10.2	-18.4
1Q 2012	-18.2	-16.9	-21.1	-17.9
2Q 2012	-1.0	-1.8	6.5	5.3
3Q 2012	13.0	13.2	12.3	2.3

Source: Compiled using data from HDB Median Cash-Over-Valuation (COV)

Since HDB scrapped its practice of releasing overall nationwide COV figures and “overall median COV figures for different housing estates and flat types” (Chin) in July 2011, the public has to rely on the median COV for each housing type in the different districts. HDB had been providing the former since the second quarter of 2007, but decided to stop because it adds little informational value for house buyers and sellers in their sales decision.

Read more articles at  
PropertyBuyer.com.sg/articles
SingaporeHomeLoan.net/blog/  
iCompareLoan.com/resources/category/faq/  

References
1. Chin, Daryl, “HDB to stop releasing overall nationwide COV figures”, The Straits Times 23 July 2011, Print
2. Wong Wei Han, “COV Prices Rise After 9-month Decline”, TODAY (Singapore) 6 October 2012, Print
3. HDB, “Median Cash-Over-Valuation (COV) by Town and Flat Type”, Web
<http://www.hdb.gov.sg/fi10/fi10321p.nsf/w/BuyResaleFlatMedianCOV?OpenDocument>
4. HDB Speaks, “Why Can’t HDB Scrap the Practice of Paying Cash-Over-Valuation?” Web
<http://www.hdbspeaks.sg/fi10/fi10336p.nsf/cc/COV?OpenDocument>

Collective Property Sales in Singapore

by SUSAN TEO

Since the booming years of 2005 to 2007, en bloc deals in Singapore's real estate industry have not able to return to former levels. At its height in 2007, more than $12 billion worth of sales was closed with approximately 6,652 units being sold. The ensuing economic crisis in 2008 to 2009, unsurprisingly, witnessed a dip in transactions to under $1 billion. In the subsequent period of 2010 to 2011, the economy improved and collective sales picked up to reach about $2 billion.

In spite of the recovery, figures for 2012 suggest that collective sales may experience another slide. Year-over-year figures reflect a dip in transactions.

"Between January and June this year, the total transaction value of residential en-bloc properties fell to about S$250 million, from almost S$1.6 billion in the same period last year" (Wee Leng).

Property analysts have suggested various reasons for the low activity. These include the cooling measures rolled out by the Singapore\'s Government. In December 2011, an additional buyer's stamp duty (ABSD) was implemented. For developers, this means they have to pay a 10% ABSD if they fail to sell all units in the redeveloped site within three or five years of land acquisition. (ABSD is compulsory for residential land purchases, but developers are given a remission period of three years for projects with below 5 residential units or five years for projects with 5 or more units. During the stipulated time-frame, they will have to sell all units, or be subjected to ABSD with interest). Below is an illustration on what this entails for developers.

Impact on developer's profit (Simplified): -

Cost

• Land = $70 million
• Construction Cost = $30 million

Revenue (Selling Price)

• Price = $130 million

Gross Profit Margin

• Revenue – Cost = $130 million – $100 million = $30 million

• or $30 million / $100 million = 30%

But do note that developers usually borrow for land purchase and construction. In other words, they may only stump up $30 to $40 million of the $100 million required for the development.

Hence their equity is only

• Equity = $30 million

With an investment of $30 million (borrow $70 million), the return on equity is:

• Return on Equity (ROE) = Gross Profit / Equity

• ROE = $30 million / $30 million (Gross Mark-up) = 100%

With an additional ABSD of 10% being imposed on developers for exceeding 5 years in the sale of all units, the developer's returns will become (For simplicity, we did not include the interest on ABSD):

New Gross Profit Margin

• $30 million (Gross Margin) – $10 million (10% ABSD) = $20 million
• $20 million / $100 million = 20%

New Return on Equity will be:

• $20 million / $30 million = 66.67% (This is a huge drop of returns compared to the 100% previously)

Hence developers will bid for sites only if they think they can complete the development and sell all units within three or five years to avoid the ABSD, or if they can price in this ABSD and pass on the cost to the consumers.

However, because of the extra time required to pull down the existing developments on the acquired land, this causes developers to balk at en-bloc purchases. The ailing economy and the latest round of cooling measures implemented in October could serve as other deterring factors. Increasing Government Land Sales prices, escalating development charge rates and construction costs are the remaining factors.

Yet, en-bloc sales volume for the third quarter of 2012 showed signs of picking up – numbers surpass that for the first half of the year.

"On the collective sales front, nine transactions worth about $1 billion were concluded in 3Q2012. This value is higher than the total 15 deals worth $960 million concluded in 1H2012" (Tan).

The third-quarter residential transactions include: Chateau Eliza at Mount Elizabeth sold for S$92.2 million; Green Lodge at Toh Tuck Road sold for $191.9 million and Thomson View Condominium sold for $590 million. The exorbitant selling price of the latter is believed to have been propped by the upcoming Thomson MRT Line. However, these sales were closed before the new cooling measures were introduced this year. Together, with the sluggish economic outlook, one wonders if the impetus of the en-bloc activity will taper off. However the development of MRT lines could have an offsetting effect. Analysts have predicted more en-bloc sales of properties near upcoming MRT lines. 

References

1. Amy Tan, “Property Briefs: Home”, The Edge Singapore 8 Oct 2012, Print

2. Wee Leng, “Residential En-bloc Market on the Decline”, Channel NewsAsia 29 Jul 2012, Web

<http://www.channelnewsasia.com/stories/singaporelocalnews/view/1216442/1/.html>

3. Inland Revenue Authority of Singapore, “Remission (for ABSD)”, Web

<http://www.iras.gov.sg/irasHome/page.aspx?id=12822>

Singapore's Property Price Trend

by SUSAN TEO

This article takes a peek at the some of the latest property price trend in Singapore.

Most indicators suggest that prices continue to head north.

    The quarterly price index compiled by the Urban Redevelopment Authority (URA), showed that prices of private residential properties rose by 0.6 per cent in the third quarter of 2012; whereas the price increase was only 0.4 per cent in the second quarter of 2012.

    A similar upward trend was spotted in the National University of Singapore (NUS) Singapore Residential Price Index (SRPI), developed by the Institution of Real Estate Studies. Unlike the price index of URA, SRPI is a monthly index that only looks at the price movements of private non-landed residential properties. The URA price index, however, covers different categories of private properties. Specifically, for private non-landed residential properties, the URA index shows a price increase of 0.5 per cent for two consecutive quarters (ie. 2Q2012 and 3Q2012). SRPI reflected a 0.6 per cent increase for September 2012.

    Meanwhile for Singapore's public housing landscape, the HDB Resale Price Index showed a steady rise in HDB resale prices from the first quarter of this year; with numbers standing at 0.6, 1.3 and 2 per cent for the first, second and third quarters, respectively.

    Based on a study by a NUS don, Assoc Prof Tilak Abeysinghe, Singapore's real estate prices have been rising above the affordable level of a 4 per cent increase annually. This number is arrived at based on the lifetime incomes of Singaporeans.

    “The actual median price of both private and HDB units has risen by about 11 per cent a year since that time [sic mid-2006], higher than the trend price increase of about 8 per cent a year.” ("Inflated Housing Prices Should Ease")

    The continuous increase in real estate prices, coupled with quantitative easing policies in the US, Japan and Europe, have prompted the Governments in Singapore, Malaysia and Hong Kong to implement cooling measures to prevent property buyers from over-stretching themselves. For Singapore, on 6 October, the Monetary Authority of Singapore (Singapore's central bank) announced a lowering of the loan-to value ratio (LTV), for loan tenure that exceeds 30 years or extends beyond the age of 65, to 60 per cent for the first housing loan and 40 per cent for subsequent loans. The maximum loan tenure has also been capped at 35 years. This is the Singapore's Government sixth attempt at bringing down property prices since September 2009. It remains to be seen if this latest round of cooling measures will prove effective in reining in prices.

    On a more positive note, according to Assoc Prof Tilak Abeysinghe:

“As housing supply improves over the next few years and the immigrant population declines, we can expect house price inflation to fall to an affordable trend rate like 4 per cent” ("Inflated Housing Prices Should Ease")

    On a similar note, URA's latest figures for October revealed that sales volume for private residences have dipped. This is believed to be partly a result of the Government's newest cooling measures. Sales figures - excluding executive condominiums - showed a 26 per cent month-on-month decline. In absolute terms, 1,948 units were sold in October compared to 2,621 in the previous month.

    Looking ahead, more property launches are expected before the close of the year, but analysts are expecting sales to continue to moderate because of the festive mood, tighter loan regulations and as buyers take stock of development in the property market.

References

1. Assoc Prof Tilak Abeysinghe, "Inflated Housing Prices Should Ease", The Straits Times 4 Oct 2012 , Print

2. Teo, Esther, “New Private Home Sales Cool Rapidly in October”, The Straits Times 16 Nov 2012 , Print

3. HDB Resale Price Index, Web

<http://www.hdb.gov.sg/fi10/fi10321p.nsf/w/BuyResaleFlatResaleIndex?OpenDocument>

4. NUS Singapore Residential Price Index (SRPI), Web

<http://www.ires.nus.edu.sg/webapp/srpi/SRPI_Main.aspx>

5. URA, “Release of 3rd Quarter 2012 Real Estate Statistics”, 29 Oct 2012, Web

<http://www.ura.gov.sg/pr/text/2012/pr12-120.html>

Property Mortgage 101: Looking at HDB Loans and Flats

The Singaporean government has established the Housing and Development Board or HDB as an answer to the increasing problems on housing shortages. Housing opportunities are provided by HDB to help those who do not have much choice on properties. Singaporean citizens or those who have been granted permanent residency can avail of HDB loans. This Singaporean property loan can be used to get a flat for the borrower and his or her family. With an interest rate of 2.6%, HDB loans are viable options for those who want to get their own places. The 99-year lease hold also makes HDB flats one of the most permanent residential units that anybody can have.

HDB loans were originally based on the land value and construction cost of the unit. The small interest rate represents the profit that the government will make. Because of this, many think that they can make money off the flats by taking out HDB loans and leasing the unit to somebody else for a profit. Some buy flats then resell it at a higher cost. However, these are illegal acts according to strict HDB regulations. There exist rules on minimum years of residency in the unit before leasing or reselling the property. The flat may be confiscated by the government if they find out that you broke the agreement and guidelines of the loan.

The strict regulations on HDB loans have sparked debates on the issue of having flats as assets. There were issues before that the government wilfully constructed a small number of flats to increase the demand for these units, increasing the selling price of each flat. Most modern units have added features like extra small rooms or frills that do not necessarily add value to the flat but increased the construction price. This means that borrowers have to take out bigger HDB loans in order to get their hands on these flats. Without an increase in income, paying the loan has become difficult to some owners. Because of this inability to pay the home loan, forfeitures of units have begun to take place.

In order to make sure that HDB loans work for us, ensure also your capability to pay the loan. HDB flats can be difficult to maintain financially, making them more of liabilities than assets in the long run. Remember that the government controls the demand and supply of HDB flats. The regulations and costing can also change from time to time without necessarily informing the buyer and borrower. Because of this, you may end up paying more than what you have prepared for. A financial adviser will be able to help you get the education and protection you need so that you can make wise investments in the future. Your financial stability is still the most important aspect in making these decisions. While HDB loans are there as an option for us as potential home owners, make sure that you study each regulation and factor carefully before getting into an agreement with the lending institution.

Find out more at Singapore Home Loan website.

Or contact the loan experts at: -

+65-9782-8606 (SMS)

loans@propertybuyer.com.sg

Understand the difference between Option to purchase and offer to purchase

There is vast difference between an Offer to purchase and an Option to purchase. Investors who fail to recognise these will do so at their own peril.

Offer to purchase versus option to purchase

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There are many ways to buy a property in Singapore. There are many ways to prevent being cheated or having your money or safety compromised. Read more to understand how to make sure you do all the proper property buyer research and checks.

Safe property buying process

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Home loans for Indonesians up to 75% without proof of income in Singapore

Who should read about asset based lending?

For Indian citizens earning above 8k a month in SGD equivalent in their home country buying a property in Singapore or refinancing a property for Maximum Singapore dollar CASH, so that you can invest in better yield.

It is also extremely powerful for: -

Singaporeans earning a joint income above 8k a month and buying a second property, but who already has several financial commitment, this scheme is able to gracefully over-look the other commitments.

For Singaporeans buying their 1st property, and able to put down a 25% downpayment. The loan quantum available to them can be substantial, allowing them to leverage highly.

Singapore Banks Asset Based Lending Criteria

What about the criteria for Asset Based Lending Mortgage?

Most banks in Singapore lend based on criteria such as debt to servicing ratio. The usual debt servicing ratio is capped at 50% to 60%.

This 50% to 60% debt servicing ratio is what the bank would lend at the maximum, not a financial planning guideline.

Only some banks in Singapore will do asset based lending for your property with minimum income.

Asset based lending is rare. Banks see it as risky. Most often, banks need you to put assets under management (AUM) of $250,000 or 24 months of repayment amount (whichever is higher), plus income level.

Typical Singapore Asset Based Lending

Someone with a fully paid up property valued at $3.2m. He goes to the bank to borrow 50% of $3.2m. He gets $1.6m in cash for an equity term loan (Cash out). The bank will usually want to see proof of liquid assets of 24 months of the installment amount.

illustration of a scenario: -

Age of owner = 50 years old

Property valuation = $3,200,000

Loan to value = 50%

Loan tenor = 20 years

Interest rate = 1.5%

Loan amount = $1,600,000

Monthly Installment = $7,720

In this scenario, the owner would most likely be asked to show proof of 24 months of monthly repayment in liquid assets of $185,280.

A Better asset based lending loan structure in Singapore

This type of Asset Based Lending goes up to 70% or 75% of the loan-to-valuation.

This type of asset based lending with high Loan quantum is good for Singaporeans buying 2^nd or 3^rd properties. This structure is also good for Foreigners refinancing their paid up property for CASH OUT.

Scenario: Indonesian, 50 years old, paid up property, earns $25,000 SGD worth of income, but in his own country.

Property Valued at = $6,000,000

Status = Fully Paid up

Loan-to-value of = Can to up to 70% (up to 75% subject to approval)

Loan tenor = up to 25 years

Loan amount = $4,200,000

He will be eligible to borrow up to $4,216,000 based on his asset and some proof of income instead of $2,529,000.

Most rich people have a lot of money, but they like to borrow money, because using other people’s money is a way to grow rich. His borrowing quantum goes from $2.529m to $4.216m. Cash is freed up at cheap cost (housing loan borrowings are the cheapest form of borrowing) to invest in higher yielding assets.

Here are the facts of this loan

Age = up to 75 years old

Tenor = up to 40 years

Min Income of $8,000 joint income

Documents required for Asset based lending

NRIC = front and back copy. (For foreigners who are NON-PR, copy of passport)

Income = Proof of income via Company letter only (or alternative proof)

As long as income certified by Financial officer or Human Resource, it is recognized

OR

3 Months salary slip

OR

2 years of Notice of Assessment (NOA) – from IRAS.

Existing home loan balance (if any)

= 6 months to 12 months bank statement showing outstanding loan amount. (if fully paid, copy of title deed)

Option to purchase = Required for a New purchase of a completed property. (Not needed if

refinancing)

Contact : loans@propertybuyer.com.sg

Mobile (sms) : +65 9782 8606

Get Asset Based Lending home loan

Get Asset Based Lending Refinance Home Loan

If you are a Singapore Mortgage Broker, do contact us, we will avail this to you and your clients. (Only for Mortgage Broker and Consultants)

Master Lynn Yap's Prediction for Dragon year 2012

Master Lynn Yap's Prediction for Dragon Year 2012

How did you fare last year? Did you follow what Master Lynn taught? What are the things to look out for in the year of the dragon 2012?

Master lynn yap prediction for 2012

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WILL MONEY VELOCITY FURTHER SLOW DOWN DUE TO PROPERTY REGULATION IN SINGAPORE

WILL MONEY VELOCITY FURTHER SLOW DOWN DUE TO PROPERTY REGULATION IN SINGAPORE

Let’s just say the risk is not about whether it will Cool inflation, but rather whether it will totally put out the fire and Freeze the property market in Singapore.

Inflation is influenced by the following equation.
{MV = PQ} = (by Irving Fisher, 1911)

Where

• M is the total dollars in a Nation’s money supply (generally the M3 or M2)
• V is the number of times per year each dollar is spent (Velocity of money)
• P is the avg. price of all the goods and services sold during the year.
• Q is the quantity of Assets, goods and services sold during the year.

When M2 or M3 increase, where V and Quantity stays the same, then P increase. The rate of P’s increase is inflation.

Right now, we are seeing M2 or M3 increasing faster than GDP in many nations, while prices are fairly stable at ~5.4% (in 2011) in Singapore and production (Quantity) is rather stable, this means that V, the velocity of money has yet to pick up. In other words, people are not yet spending.

Once Velocity of money V picks up, in order to control price rise, Quantity will have to pick up dramatically as well. Not all quantity can be ramped up quickly enough.

[M2 or M3 increase] x [V] = [P] x [Q]

So by taking out Foreign M2, M3 as well as M2 in Singapore attributed to foreign ownership by imposing a 10% Additional buyer stamp duty, Singapore has effectively reduced the M2, M3 money supply from the property market.

In short, this policy may somewhat reduce inflation attributed from Housing. However it may not stop these money from being channeled to other parts of the economy, especially commercial properties.

USA M2 Money Supply


(Source: Wikipedia)


European M2 Money Supply



Australian M2 Money Supply



Singapore’s M2 Money Supply

S$ MILLION
END OF PERIOD M2
2010
Nov 401,429.3
Dec 403,078.2
2011
Jan 406,246.8
Feb 406,280.0
Mar 413,255.5
Apr 422,475.6
May 422,716.1
Jun 423,516.7
Jul 431,311.5
Aug 431,253.4
Sep 434,818.4
Oct 439,817.4
Nov P 442,144.4

AS you can see, M2 from Dec 2010 up till Nov 2011, has grown by 10%, this exceeds the GPD growth figures.

As there are ample funds in Singapore, interest rates can stay low, due to low velocity of money, once there is signs of up-trend, then we expect markets to rally very quickly and these money will be drawn down. And cost of funds will consequently go up.

Call Property Buyer Mortgage Consultants at 9782-8606 or email
loans@propertybuyer.com.sg to assess your Home Loan Financing Needs.