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Showing posts with label compare home loan singapore. Show all posts
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Sunday, April 13, 2014
Monday, September 9, 2013
Explaining a Flat Rate Loan
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Saturday, January 28, 2012
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.
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.
Saturday, September 24, 2011
WILL RAISING OF HDB INCOME CEILINGS TO AFFECT HOME PRICES?
WILL RAISING OF HDB INCOME CEILINGS TO AFFECT HOME PRICES?
Part 2
http://propertybuyer.com.sg/articles/singapore-property-investor-buyer/will-raising-of-hdb-income-ceilings-affect-home-prices/
Executive Condominium Supply launched and in the pipeline
Executive Condominium is a class of condominiums that are restricted by HDB’s rules on minimum occupation for 5 years and will only fully become a private estate after 10 years. These condominiums tend to be pricey on a relative scale compared to other condominiums which does not have any restrictions. Most newly wedded couples will most likely not be able to afford these type of housing looking at median incomes.
[caption id="attachment_373" align="alignnone" width="701" caption="HDB Executive Condominium launched - adding to supply"]
[/caption]
[caption id="attachment_375" align="alignnone" width="548" caption="Singapore HDB confirms sites for EC"]
[/caption]
http://www.hdb.gov.sg/fi10/fi10321p.nsf/w/BuyingNewFlatFlatsonOfferEC?
http://www.hdb.gov.sg/fi10/fi10321p.nsf/w/BuyingNewFlatFlatsonOfferEC?OpenDocument
http://www.facebook.com/pages/PropertyBuyercomsg/101354546624904
Continue to Part 3 - Raising of Income Ceiling to affect HDB home prices
Part 2
http://propertybuyer.com.sg/articles/singapore-property-investor-buyer/will-raising-of-hdb-income-ceilings-affect-home-prices/
Executive Condominium Supply launched and in the pipeline
Executive Condominium is a class of condominiums that are restricted by HDB’s rules on minimum occupation for 5 years and will only fully become a private estate after 10 years. These condominiums tend to be pricey on a relative scale compared to other condominiums which does not have any restrictions. Most newly wedded couples will most likely not be able to afford these type of housing looking at median incomes.
[caption id="attachment_373" align="alignnone" width="701" caption="HDB Executive Condominium launched - adding to supply"]
[/caption][caption id="attachment_375" align="alignnone" width="548" caption="Singapore HDB confirms sites for EC"]
[/caption]http://www.hdb.gov.sg/fi10/fi10321p.nsf/w/BuyingNewFlatFlatsonOfferEC?
http://www.hdb.gov.sg/fi10/fi10321p.nsf/w/BuyingNewFlatFlatsonOfferEC?OpenDocument
http://www.facebook.com/pages/PropertyBuyercomsg/101354546624904
Continue to Part 3 - Raising of Income Ceiling to affect HDB home prices
With HDB new raised income ceiling affect home prices?
With HDB new raised income ceiling affect home prices?
with permission from www.PropertyBuyer.com.sg
Part – One A
“The ceiling will go up from the current $8,000 to $10,000 for HDB’s build-to-order (BTO) flats, and from $10,000 to $12,000 for executive condominiums, Prime Minister Lee Hsien Loong announced in his National Day Rally speech last night.”
“Before the change, a couple’s combined income had to be below $8,000 a month for them to qualify to buy a BTO flat from the HDB, which is typically 20 to 30 per cent cheaper than a resale flat.” (PMO)
(PMO, pmo.gov.sg/content/pmosite/mediacentre/inthenews/primeminister/2011/August/HDB_raises_income_ceiling_to_10000.html)
The income ceiling for New HDB flats will be raised to: -
Income Ceiling Type of Flat
$10,000
Studio Apartment 3-room (mature towns/estates),
3-room (Premium) 4-room or 5-room flat
$5,000
3-room Standard (non-mature towns/estates)
$2,000
2-room
(HDB, http://services2.hdb.gov.sg/webapp/BP13EligCheck/BP13SHome?strSystem=CHECK)
HDB Property Supply In The PIPELINE
As we discussed in our last article, despite all the HDB launches in 2010 and the “NOISE”, if we look at the statistics these announced supply are hardly enough to meet even Singapore’s local domestic needs, not to mention providing for the massive influx of foreigners and new Permanent Residents (PR). Ministry of National development got their numbers quite wrong. In that, they have under-supplied HDB flats to the tune of even up to 100,000 units (based on our estimates)
The fact that there is not a long queue at BTO registration (As claimed by some minister as indication of people not needing a home) itself does not mean that there is no latent demand, from the between 22,000 to 25,000 marriages each year. (http://propertybuyer.com.sg/articles/singapore-property-investor-buyer/why-singapore-property-prices-go-crazy/) This probably reflects the various complicated paper work and bureaucratic costs imposed as well as the people not being able to afford the supply.
HDB Property Supply In The PIPELINE
As we discussed in our last article, despite all the HDB launches in 2010 and the “NOISE”, if we look at the statistics these announced supply are hardly enough to meet even Singapore’s local domestic needs, not to mention providing for the massive influx of foreigners and new Permanent Residents (PR). Ministry of National development got their numbers quite wrong. In that, they have under-supplied HDB flats to the tune of even up to 100,000 units (based on our estimates)
The fact that there is not a long queue at BTO registration (As claimed by some minister as indication of people not needing a home) itself does not mean that there is no latent demand as there are between 22,000 to 25,000 marriages each year. (http://propertybuyer.com.sg/articles/singapore-property-investor-buyer/why-singapore-property-prices-go-crazy/) This probably reflects the various complicated paper work and bureaucratic costs imposed as well as the people not being able to afford the supply of such HDB BTO flats.
Supply From Balance HDB Flats
Supply of HDB flats are from current balanced stocks are also in short supply.
There are not much supply from Balance flats as well. “The flats offered in the Sale of Balance Flats exercise are mostly under construction or near completion. Because of strong interest for such flats, the chances of getting a flat in the Sale of Balance Flats exercise are slim. Property Buyers who are not invited to select a flat can consider applying for a new flat under the BTO system, which is where HDB’s main supply for flats comes from.”
(http://www.hdb.gov.sg/fi10/fi10321p.nsf/w/BuyingNewFlatSBF?OpenDocument)
There are hardly any supply of balance units, so the only way to go will be to buy from the HDB Build-to-order (BTO) market.
(http://www.hdb.gov.sg/fi10/fi10321p.nsf/w/BuyingNewFlatModeBTO?OpenDocument)
That means that the current shortage of HDB supply will stay at least until some of the proposed Build-to-order flats are completed. And more of such BTO sites will need to be launched, sold and completed. And the time frame for that will be 2 to 4 years considering that it takes on average 2 years to complete a HDB building project.
HDB Property Supply From BTO Launches
Let’s take a look at the supply of HDB flats from Build-to-order to be launched. There are only 5,500 units of HDB flats (Remember, we estimate that there is a demand of 22,000 to 25,000 of housing needs due to household formation, i.e. marriages)
with permission from www.PropertyBuyer.com.sg
Part – One A
“The ceiling will go up from the current $8,000 to $10,000 for HDB’s build-to-order (BTO) flats, and from $10,000 to $12,000 for executive condominiums, Prime Minister Lee Hsien Loong announced in his National Day Rally speech last night.”
“Before the change, a couple’s combined income had to be below $8,000 a month for them to qualify to buy a BTO flat from the HDB, which is typically 20 to 30 per cent cheaper than a resale flat.” (PMO)
(PMO, pmo.gov.sg/content/pmosite/mediacentre/inthenews/primeminister/2011/August/HDB_raises_income_ceiling_to_10000.html)
The income ceiling for New HDB flats will be raised to: -
Income Ceiling Type of Flat
$10,000
Studio Apartment 3-room (mature towns/estates),
3-room (Premium) 4-room or 5-room flat
$5,000
3-room Standard (non-mature towns/estates)
$2,000
2-room
(HDB, http://services2.hdb.gov.sg/webapp/BP13EligCheck/BP13SHome?strSystem=CHECK)
HDB Property Supply In The PIPELINE
As we discussed in our last article, despite all the HDB launches in 2010 and the “NOISE”, if we look at the statistics these announced supply are hardly enough to meet even Singapore’s local domestic needs, not to mention providing for the massive influx of foreigners and new Permanent Residents (PR). Ministry of National development got their numbers quite wrong. In that, they have under-supplied HDB flats to the tune of even up to 100,000 units (based on our estimates)
The fact that there is not a long queue at BTO registration (As claimed by some minister as indication of people not needing a home) itself does not mean that there is no latent demand, from the between 22,000 to 25,000 marriages each year. (http://propertybuyer.com.sg/articles/singapore-property-investor-buyer/why-singapore-property-prices-go-crazy/) This probably reflects the various complicated paper work and bureaucratic costs imposed as well as the people not being able to afford the supply.
HDB Property Supply In The PIPELINE
As we discussed in our last article, despite all the HDB launches in 2010 and the “NOISE”, if we look at the statistics these announced supply are hardly enough to meet even Singapore’s local domestic needs, not to mention providing for the massive influx of foreigners and new Permanent Residents (PR). Ministry of National development got their numbers quite wrong. In that, they have under-supplied HDB flats to the tune of even up to 100,000 units (based on our estimates)
The fact that there is not a long queue at BTO registration (As claimed by some minister as indication of people not needing a home) itself does not mean that there is no latent demand as there are between 22,000 to 25,000 marriages each year. (http://propertybuyer.com.sg/articles/singapore-property-investor-buyer/why-singapore-property-prices-go-crazy/) This probably reflects the various complicated paper work and bureaucratic costs imposed as well as the people not being able to afford the supply of such HDB BTO flats.
Supply From Balance HDB Flats
Supply of HDB flats are from current balanced stocks are also in short supply.
There are not much supply from Balance flats as well. “The flats offered in the Sale of Balance Flats exercise are mostly under construction or near completion. Because of strong interest for such flats, the chances of getting a flat in the Sale of Balance Flats exercise are slim. Property Buyers who are not invited to select a flat can consider applying for a new flat under the BTO system, which is where HDB’s main supply for flats comes from.”
(http://www.hdb.gov.sg/fi10/fi10321p.nsf/w/BuyingNewFlatSBF?OpenDocument)
There are hardly any supply of balance units, so the only way to go will be to buy from the HDB Build-to-order (BTO) market.
(http://www.hdb.gov.sg/fi10/fi10321p.nsf/w/BuyingNewFlatModeBTO?OpenDocument)
That means that the current shortage of HDB supply will stay at least until some of the proposed Build-to-order flats are completed. And more of such BTO sites will need to be launched, sold and completed. And the time frame for that will be 2 to 4 years considering that it takes on average 2 years to complete a HDB building project.
HDB Property Supply From BTO Launches
Let’s take a look at the supply of HDB flats from Build-to-order to be launched. There are only 5,500 units of HDB flats (Remember, we estimate that there is a demand of 22,000 to 25,000 of housing needs due to household formation, i.e. marriages)
Saturday, July 30, 2011
Property Buyer spins off home loan consultancy to www.SingaporeHomeLoan.net
Property Buyer, a Singapore based property portal is soft launching its revamped site with additional search engine application dedicated to finding real estate properties within Singapore. The company also is transferring its home loan functions to its sister website SingaporeHomeLoan dot net while maintaining a mortgage section at http://www.propertyBuyer.com.sg/mortgage for continuity.
The same team of home loan consultants will continue to service loan inquiries from both websites (the change over will be transparent for users) and will continue to be branded, “Property Buyer Mortgage Consultants,” with expertise on property buying loan consulting activities for high net worth individuals as well as the generic property loan refinancing activities.
This split will allow the two websites to be more focused in developing their own growth path while maintaining a symbiotic inter-dependence on each other as people who need home loans may need to look at properties and vice-versa.
Focus Of Singapore Home Loan Website
The new focus of SingaporeHomeLoan dot net (Property Buyer Mortgage Consultants) will be around providing better tools and data around loan comparisons to facilitate buyers to make an informed financing decision.
After the re-organization, the brand “Property Buyer Mortgage Consultants” will be used by http://www.SingaporeHomeLoan.net to ensure continuity. Property Buyer is a research focused mortgage consultant that does research into property economics as well as issues and regulations affecting property prices.
Focus Of Property Buyer Website
Property Buyer website continues to be the flagship website for the company and will continue to have a loans consultancy section within it’s website at Property Buyer Mortgage. The split will enable Property Buyer to break free from having to work around a home loans focus and to concentrate on providing tools, developing products as well as functionality that helps buyers to make the property buying process simpler and less risky. With the re-organization, the website will develop more revenue sources for the website around the property and wealth related segment.
The Managing Director of Property Buyer says, “We are pleased with our increased market presence so far. Currently “Propertybuyer.com.sg has a three-month global Alexa traffic rank of 1,091,767. The site is relatively popular among users in the city of Singapore (where it is ranked #4,876).” (Alexa, 21st July 2011) The split is more psychological in nature, as it frees up creative space to develop tools, products and services that is relevant to each website’s needs. And therefore we can better meet customers and readers expectations. We can develop more business successes only if and when we provide what the market is looking for.”
About Property Buyer
Property Buyer Mortgage Consultants is a research-focused mortgage advisory that helps property buyers look through hundreds of loan packages to find the best package that fits their financial circumstances, not simply some cheap loan packages. Property Buyer (CoreConcept Systems Pte Ltd) is a registered mortgage broker in Singapore. (Business registration 200618162C) with it’s office at No. 8 Liang Seah Street, #02-01 Liang Seah Court, Singapore 189029. Property buyer is also probably the only mortgage consultant in Singapore that produces research, not simply FAQs.
About The Company
All the websites and brands belong to CoreConcept Systems Pte Ltd. The company is focused on using technology to innovate traditional business segments and to use web technologies to bring to market, products and services. The company’s other divisions provides Search Engine Optimization (both English language as well as Chinese languages), Social media marketing and consulting, management consulting as well as professional career coaching and entrepreneurial start-up programs.
PropertyBuyer Mortgage Consultant
Home Loan Calculator
+65-9782-8606
loans@propertybuyer.com.sg
The same team of home loan consultants will continue to service loan inquiries from both websites (the change over will be transparent for users) and will continue to be branded, “Property Buyer Mortgage Consultants,” with expertise on property buying loan consulting activities for high net worth individuals as well as the generic property loan refinancing activities.
This split will allow the two websites to be more focused in developing their own growth path while maintaining a symbiotic inter-dependence on each other as people who need home loans may need to look at properties and vice-versa.
Focus Of Singapore Home Loan Website
The new focus of SingaporeHomeLoan dot net (Property Buyer Mortgage Consultants) will be around providing better tools and data around loan comparisons to facilitate buyers to make an informed financing decision.
After the re-organization, the brand “Property Buyer Mortgage Consultants” will be used by http://www.SingaporeHomeLoan.net to ensure continuity. Property Buyer is a research focused mortgage consultant that does research into property economics as well as issues and regulations affecting property prices.
Focus Of Property Buyer Website
Property Buyer website continues to be the flagship website for the company and will continue to have a loans consultancy section within it’s website at Property Buyer Mortgage. The split will enable Property Buyer to break free from having to work around a home loans focus and to concentrate on providing tools, developing products as well as functionality that helps buyers to make the property buying process simpler and less risky. With the re-organization, the website will develop more revenue sources for the website around the property and wealth related segment.
The Managing Director of Property Buyer says, “We are pleased with our increased market presence so far. Currently “Propertybuyer.com.sg has a three-month global Alexa traffic rank of 1,091,767. The site is relatively popular among users in the city of Singapore (where it is ranked #4,876).” (Alexa, 21st July 2011) The split is more psychological in nature, as it frees up creative space to develop tools, products and services that is relevant to each website’s needs. And therefore we can better meet customers and readers expectations. We can develop more business successes only if and when we provide what the market is looking for.”
About Property Buyer
Property Buyer Mortgage Consultants is a research-focused mortgage advisory that helps property buyers look through hundreds of loan packages to find the best package that fits their financial circumstances, not simply some cheap loan packages. Property Buyer (CoreConcept Systems Pte Ltd) is a registered mortgage broker in Singapore. (Business registration 200618162C) with it’s office at No. 8 Liang Seah Street, #02-01 Liang Seah Court, Singapore 189029. Property buyer is also probably the only mortgage consultant in Singapore that produces research, not simply FAQs.
About The Company
All the websites and brands belong to CoreConcept Systems Pte Ltd. The company is focused on using technology to innovate traditional business segments and to use web technologies to bring to market, products and services. The company’s other divisions provides Search Engine Optimization (both English language as well as Chinese languages), Social media marketing and consulting, management consulting as well as professional career coaching and entrepreneurial start-up programs.
PropertyBuyer Mortgage Consultant
Home Loan Calculator
+65-9782-8606
loans@propertybuyer.com.sg
Tuesday, June 7, 2011
Invest in Singapore properties - Sixth Avenue and Lantana avenue landed property
Found anything you fancy?
Monday, January 17, 2011
PRoperty regulation in Jan 2011
PROPERTY BUYING REGULATION IN JANUARY 2011
By www.propertybuyer.com.sg
As the election is approaching, it is imperative to paper over the failure to keep property prices in check. The Singapore government is again resorting to brute force tactics to artificially cool the property market. The measures are an over-kill and ill conceived when the market is already showing signs of slowing down.
Just weeks ago, we mentioned that Quantitative Easing will likely lead to regulation risk to slow the market and sadly this has come so quickly and without warning.
The New Property Buying Rules Will Come Into Effect On The 14th January 2011.
1) Increasing the holding period for imposition of Seller’s Stamp Duty (SSD) from the current three years to four years;
2) Raising the Seller stamp duty SSD rates to 16 per cent, 12 per cent, 8 per cent and 4 per cent of consideration for residential properties which are bought on or after Friday, and are sold in the first, second, third and fourth year of purchase respectively;
3) Lower the Loan-To-Value (LTV) limit to 50 per cent on housing loans granted by financial institutions regulated by MAS for property purchasers who are not individuals
4) Lower the LTV limit on housing loans granted by financial institutions regulated by the Monetary Authority of Singapore from 70 per cent to 60 per cent for property purchasers who are individuals with one or more outstanding housing loans at the time of the new housing purchase. The measures will take effect on Friday.
(Source: Straits Times, http://www.straitstimes.com/BreakingNews/Singapore/Story/STIStory_623779.html)
ANALYSIS AND COMMENTARY ON PROPERTY BUYING REGULATION – SINGAPORE
The intention is to cool down the market and demonstrate to the Singaporean electorate that the government is really trying to do something to cool down the market and to show that regulation is starting to show results. Like we say previously, we hope they don’t over-react, but It seems that our hope is in vain. It could be that Q4, 2010 transacted prices are still moving up too quickly.
(We are still waiting for Q4, 2010 URA private property transacted prices to come out and we will be doing a research on it. We will first disseminate to all our ex-customers 3 to 4 weeks ahead of all others so that they get a head-start in decision making)
Trying to make property prices cheaper for Singaporeans and PRs
The supposed intention of the Singapore government is to try to make property prices not rise as fast. (We shall not go into who created the imbalance in the supply in the first place)
After much hard work digging (seems like median salary is not a favoured form of reporting statistics), we found the median salary statistics. Singapore’s median salary is only $2710 in June 2010.
This means that most Singaporeans will not be able to afford private properties. And since HDB flats is facing a severe supply shortage, the round of cooling is unlikely to have much effect given the extreme shortage of supply of HDBs. The segment of Singapore population most at risk is also the one most exposed to risks from over-priced HDB properties.
‘Boosted by the strong economic recovery, the median monthly income for Singaporeans in full-time employment rose by 4.2 per cent over the year to $2,710 in June. This is higher than the marginal growth of just half a per cent last year. According to the Ministry of manpower (MOM), the median income still rose by 1.8 per cent after factoring in inflation. The median income of part-timers also saw a significant increase of 13 per cent to $700 this year. Overall, the nominal median income for all employed residents rose by 3.3 per cent to $2,500.”
(Source: Reach.gov.sg, http://www.reach.gov.sg/YourSay/DiscussionForum/tabid/101/mode/1/Default.aspx?ssFormAction=[[ssBlogThread_VIEW]]&tid=[[947]])
Housing Benefit To Singapore Expatriates And Would Be Immigrants
The intention is to benefit the local population with some form of supposed lower property prices for HDBs, but instead it may cool the private property market. The new measures effectively will allow Expatriates in Singapore to own properties easily at 70% or 80% of loan to valuation (depending on the full regulatory statement from Ministry of National Development (MND) tomorrow on the 14th January 2011).
As most Singaporeans own their residential homes already, buying a second property will be a 40% downpayment and many cannot afford 40% downpayment. And most singaporeans earn only a median income of $2710, therefore most Singaporeans cannot afford private properties. Therefore, this paves the way for Singapore expats to buy their first property in Singapore without so much competition.
So Singapore expats, if you are looking to buy a property, whether the government intended or unintended to help you, this is the golden opportunity to consider to buy a property in Singapore now instead of renting (However please read Comparisons of buying versus renting property). Before their change the rules again and impose buying restrictions on Foreigners, this may be your last chance for 2011.
We anticipate that the next regulation may involve foreigners buying property in Singapore.
What If Property Buyers Want To Switch Properties Or Upgrade?
Property borrowers who can show evidence of Sale of property will not be subject to the new rules. If the Property buyer wants to buy another property, he must first sell his property, show a signed Sale and Purchase (S&P) agreement proving the sale of this property and then show the IRAS certificate showing that someone has bought his property and paid stamp duty on it.
Where the existing property is a HDB flat, he can show HDB’s approval letter to sell the flat, that HDB will issue within 2 weeks of the First Appointment. These borrowers will still be able to borrow at an 80 per cent LTV from financial institutions.
But the timings are extremely tight, 2 weeks for options to be exercised and another 2 weeks stamp duty to be paid. In this time, they must also apply for a home loan and show these to the banks to ensure that the bank can lend at 80%, (not all banks will lend in these cases, please check and confirm via approval in principle with banks at
loans@propertybuyer.com.sg or sms 9782 8606).
NOTE: we cannot be held responsible for the accuracy of this article and buyers please take all necessary precautions such as contacting us to ensure a loan can be obtained. Please read our terms and conditions.
Then they will need to complete the sale in 2 months instead of the usual 3 months in order to have a place to stay. Alternatively, buyers will need to drag out the sales completion date of the property they are selling.
Borrowers Without Any Outstanding Housing Loans Will Have A 80% Loan To Valuation Limit
These rules apply to housing loans granted by financial institutions for private residential properties, Executive Condominiums, HUDC flats and HDB flats (including DBSS flats).
Loans granted by HDB for HDB flats (including DBSS flats) will still have a LTV cap of 90 per cent.
By www.propertybuyer.com.sg
As the election is approaching, it is imperative to paper over the failure to keep property prices in check. The Singapore government is again resorting to brute force tactics to artificially cool the property market. The measures are an over-kill and ill conceived when the market is already showing signs of slowing down.
Just weeks ago, we mentioned that Quantitative Easing will likely lead to regulation risk to slow the market and sadly this has come so quickly and without warning.
The New Property Buying Rules Will Come Into Effect On The 14th January 2011.
1) Increasing the holding period for imposition of Seller’s Stamp Duty (SSD) from the current three years to four years;
2) Raising the Seller stamp duty SSD rates to 16 per cent, 12 per cent, 8 per cent and 4 per cent of consideration for residential properties which are bought on or after Friday, and are sold in the first, second, third and fourth year of purchase respectively;
3) Lower the Loan-To-Value (LTV) limit to 50 per cent on housing loans granted by financial institutions regulated by MAS for property purchasers who are not individuals
4) Lower the LTV limit on housing loans granted by financial institutions regulated by the Monetary Authority of Singapore from 70 per cent to 60 per cent for property purchasers who are individuals with one or more outstanding housing loans at the time of the new housing purchase. The measures will take effect on Friday.
(Source: Straits Times, http://www.straitstimes.com/BreakingNews/Singapore/Story/STIStory_623779.html)
ANALYSIS AND COMMENTARY ON PROPERTY BUYING REGULATION – SINGAPORE
The intention is to cool down the market and demonstrate to the Singaporean electorate that the government is really trying to do something to cool down the market and to show that regulation is starting to show results. Like we say previously, we hope they don’t over-react, but It seems that our hope is in vain. It could be that Q4, 2010 transacted prices are still moving up too quickly.
(We are still waiting for Q4, 2010 URA private property transacted prices to come out and we will be doing a research on it. We will first disseminate to all our ex-customers 3 to 4 weeks ahead of all others so that they get a head-start in decision making)
Trying to make property prices cheaper for Singaporeans and PRs
The supposed intention of the Singapore government is to try to make property prices not rise as fast. (We shall not go into who created the imbalance in the supply in the first place)
After much hard work digging (seems like median salary is not a favoured form of reporting statistics), we found the median salary statistics. Singapore’s median salary is only $2710 in June 2010.
This means that most Singaporeans will not be able to afford private properties. And since HDB flats is facing a severe supply shortage, the round of cooling is unlikely to have much effect given the extreme shortage of supply of HDBs. The segment of Singapore population most at risk is also the one most exposed to risks from over-priced HDB properties.
‘Boosted by the strong economic recovery, the median monthly income for Singaporeans in full-time employment rose by 4.2 per cent over the year to $2,710 in June. This is higher than the marginal growth of just half a per cent last year. According to the Ministry of manpower (MOM), the median income still rose by 1.8 per cent after factoring in inflation. The median income of part-timers also saw a significant increase of 13 per cent to $700 this year. Overall, the nominal median income for all employed residents rose by 3.3 per cent to $2,500.”
(Source: Reach.gov.sg, http://www.reach.gov.sg/YourSay/DiscussionForum/tabid/101/mode/1/Default.aspx?ssFormAction=[[ssBlogThread_VIEW]]&tid=[[947]])
Housing Benefit To Singapore Expatriates And Would Be Immigrants
The intention is to benefit the local population with some form of supposed lower property prices for HDBs, but instead it may cool the private property market. The new measures effectively will allow Expatriates in Singapore to own properties easily at 70% or 80% of loan to valuation (depending on the full regulatory statement from Ministry of National Development (MND) tomorrow on the 14th January 2011).
As most Singaporeans own their residential homes already, buying a second property will be a 40% downpayment and many cannot afford 40% downpayment. And most singaporeans earn only a median income of $2710, therefore most Singaporeans cannot afford private properties. Therefore, this paves the way for Singapore expats to buy their first property in Singapore without so much competition.
So Singapore expats, if you are looking to buy a property, whether the government intended or unintended to help you, this is the golden opportunity to consider to buy a property in Singapore now instead of renting (However please read Comparisons of buying versus renting property). Before their change the rules again and impose buying restrictions on Foreigners, this may be your last chance for 2011.
We anticipate that the next regulation may involve foreigners buying property in Singapore.
What If Property Buyers Want To Switch Properties Or Upgrade?
Property borrowers who can show evidence of Sale of property will not be subject to the new rules. If the Property buyer wants to buy another property, he must first sell his property, show a signed Sale and Purchase (S&P) agreement proving the sale of this property and then show the IRAS certificate showing that someone has bought his property and paid stamp duty on it.
Where the existing property is a HDB flat, he can show HDB’s approval letter to sell the flat, that HDB will issue within 2 weeks of the First Appointment. These borrowers will still be able to borrow at an 80 per cent LTV from financial institutions.
But the timings are extremely tight, 2 weeks for options to be exercised and another 2 weeks stamp duty to be paid. In this time, they must also apply for a home loan and show these to the banks to ensure that the bank can lend at 80%, (not all banks will lend in these cases, please check and confirm via approval in principle with banks at
loans@propertybuyer.com.sg or sms 9782 8606).
NOTE: we cannot be held responsible for the accuracy of this article and buyers please take all necessary precautions such as contacting us to ensure a loan can be obtained. Please read our terms and conditions.
Then they will need to complete the sale in 2 months instead of the usual 3 months in order to have a place to stay. Alternatively, buyers will need to drag out the sales completion date of the property they are selling.
Borrowers Without Any Outstanding Housing Loans Will Have A 80% Loan To Valuation Limit
These rules apply to housing loans granted by financial institutions for private residential properties, Executive Condominiums, HUDC flats and HDB flats (including DBSS flats).
Loans granted by HDB for HDB flats (including DBSS flats) will still have a LTV cap of 90 per cent.
Saturday, December 11, 2010
Invest in Singapore Property and impact of QE2 Quantitative Easing
Invest in Singapore Property and impact of QE2 Quantitative Easing
Article contributed by: www.PropertyBuyer.com.sg
On the 3rd Nov, 2010, the federal reserve announced a US$600 billion bond buying. Quantitative Easing is euphemism for printing more money without a corresponding increase in economic output.
Since the last time, we highlighted in 2008, “The additional funding requirements total more than US$1 trillion (US$ 1000 billion) The concern is, how are they going to raise US$1 trillion in 2009? Bill Gates is worth around US$55 billion just to provide a benchmark. If they cannot raise this cash through increased taxes, (since both presidential candidates have declared they are not raising taxes), they will have to borrow from sovereign sources such as Japan, China, South Korea, Saudi Arabia who traditionally buys US treasury bonds. But going from an average borrowing of US$200-300 billion a year to US$1 trillion? This is an additional whopping US$ 700 to US$ 800 billion. Who’s buying? Even the sovereign funds do not have that much funds considering that much of their funds are already in US treasury bonds, Euro bonds and other investments. The US government may make up the short-fall through increasing money supply temporarily. If this increase of money supply is temporary, inflationary pressures may be controllable, if not, such increase in money supply is surely inflationary. In other words, inflationary pressure tends to force interest rates hike in the USA. ” (Source: http://www.propertybuyer.com.sg/articles/compare-singapore-home-loans-/Global-Economy-Credit-Crisis-and-Interest-Rates/)
So it has come true and it comes in the form of a US$600 billion fund to buy back long term treasury securities (Bonds with long maturity).
———————————————————————-
By Property Buyer Singapore Mortgage Consultants and Broker
Not Simply Cheap, but what Fits. We Research, You Save!
Tel: 6100 – 0608
SMS: 9782 – 8606
Email: loans@propertyBUYER.com.sg
———————————————————————-
Why Does Federal Reserve Want To Print US$600 Billion To Buy Back Treasury Securities?
The US federal government is in budget deficit since Republican Ronald Reagan came to power. Within 8 years he has single-handedly squandered America’s wealth. US turned from a net creditor nation into a net debtor nation. Since 2004 to 2008, the US government has been running consistent budget deficits in the US$ 200 to US$ 400 billion range. All these monies need to be financed by individuals, corporations from within America and sovereign states from outside of America.
Lately in 2010, the expected US federal government deficit is likely to be US$1.171 trillion with a total of US$14.078 trillion of debt. “The total deficit for fiscal year 2009 was $1.42 trillion, a $960 billion increase from the 2008 deficit.”
(source: http://en.wikipedia.org/wiki/2010_United_States_federal_budget)
The largest holders of US debt as at Nov 2010 are: -
(source: http://www.cnbc.com/id/29880401/The_Biggest_Holders_of_US_Government_Debt?slide=16)
1. Federal Reserve and Intra-governmental holdings – US$5.345 trillion
2. Other investors and Savings bonds – US$1.266 trillion
3. China – US$868.4 billion
4. Japan – US$836.6 billion
5. Mutual Funds – US$648.6 billion
6. Pension Funds – US$643.8 billion
7. State and Local Governments – US$534.7 billion
8. United Kingdom – US$448.4 billion
9. Depository Institutions – US$273.7 billion
10. Insurance Companies – US$260.6 billion
11. Oil exporters – US$226.6 billion
12. Brazil – US$165 billion.
13. Caribbean Banking Centres – $159.1 billion
14. Hong Kong – US$137.8 billion
15. Taiwan – US$130.2 billion
Looking at foreign governments, China, Japan, UK, Oil exporter countries, Brazil, Hk and Taiwan held US$2.813 trillion in US federal debt. The Federal Reserve and various government actually hold the most of the federal government debt.
“From December 2008 to March 2010, the Fed bought $1.7 trillion of Treasury and mortgage-backed securities.” (Source: AP, http://www.msnbc.msn.com/id/39954647) that explains the high federal reserve holdings.
Looking at foreign governmental reserves (Source: http://en.wikipedia.org/wiki/List_of_countries_by_foreign_exchange_reserves): -
1. PROC (China) - 2.4543 Trillion USD Sep 2010
2. Japan - 1.050235 Trillion USD Jun 2010
3. Eurosystem - 753.642 billion Sep 2010
4. Russia - 501.1 billion Oct 2010
5. Saudi Arabia - 410.3 billion Dec 2009
6. India - 300.21 billion Nov 2010
7. Republic of Korea - 293.35 billion Oct 2010
8. Brazil - 287.206 billion Nov 2010
9. Hong kong - 266.100 billion Sep 2010
10. Switzerland - 249.556 billion Aug 2010
11. Singapore - 221.398 billion Oct 2010
With the budget shortfall of US$1.17 trillion, this is the amount that must be borrowed in 2010. So this large amount is unlikely to find supporters amongst foreign sovereign funds. So a large part of this debt needs to be absorbed internally or by foreign corporations and mutual funds.
In any one year, there would be demand on US Treasury debt, but putting out such a large amount would totally overrun all or any potential lenders or buyers of the Treasury securities. In order to fully reach this borrowing quantum, the coupons being offered will have to rise in order to meet the dwindling demand.
If the coupons being issued is the 30 years treasury bonds, then this would raise long term interest rates. And it may also hit shorter tenor treasury bonds indirectly.
So the natural way to NOT saturate this demand for US dollar treasury bonds is to not issue so many, but since the US runs a huge deficit, it has to issue treasury bills.
In this case, the US federal government issues more currency (Print more money) to the tune of US$600 billion and use this money to buy back longer tenor treasury bills. This has the effect of freeing up money into the economy.
Intention 1 – Reduce Long Term Interest Rates To Facilitate Recovery
The intentions are to reduce long term interest rates. Like we mentioned previously, the US federal government cannot set interest rates and then do nothing about it, else a black market will form. They can set target interest rates and then put the money where the mouth is so as to achieve that.
Intention 2 – Print More Money To Reduce The Currency Exchange Rate
This is to devalue the US dollar versus trading partners so that it provides a competitive edge to the US exporters. The other side of it is also to reduce the imports and reduce the trade deficit.
Intention 3 – Pump Cash Into The Market
The third intention is to pump cash into the US market. With this money being used to redeem treasury bonds, money goes into the hands of bond holders.
Could The US Government Achieve The Desired Effect?
Throughout history, countless countries and countless times have economies defaulted or devalued their currency in order to get out of trouble. Since most debt are in US dollars, devaluing the dollar devalues the debts as well. So it is no big deal when this happens if the situation is dire.
As we stressed previously, the interest rates do not just go to the rate the Federal Reserve wants it to go. Businesses need funding and are willing to bid for the funds at a rate they can afford. The only way interest rates can go down is for the Federal Reserve to flood the money market with money in excess of borrowing demands therefore reducing rates.
Federal Reserve should reduce interest rates long enough so that the US economy has a chance to recover.
However there are major risks such as inflation within the US as purchasing power drops. This could hurt US consumers hard and hurt consumption if inflation becomes serious. It could have the opposite effect of what the US federal reserve wants, instead of stimulating the economy, it ends up killing the economy.
On The Money Printing (Quantitative Easing)
On top of that, it pumps US$600 billion into the market, of which at least 60% (www.propertyBuyer.com.sg’s guesstimates by looking at the 15 largest holder of Treasury bills) are expected to stay within the US and begin to re-inflate the economy judging by the composition of bond holders. The global economy is inter-connected, leakage is expected in an open economy such as the US. Thus some portion of this money is expected to find it’s way into other countries.
We believed that the US economy should be able to hold out a few months even without this round of US$600 billion of quantitative easing even while the Bureau of Economic Analysis has been publishing report of a weakening US economy.
By some possibility, the US economy could even recover without any of this quantitative easing. So we see this as election economics. This is pump priming to make sure that unemployment reduces to an acceptable level in 2 years, ready for the next presidential election.
We have no opinion about the US presidential elections, but for the good of the world economy, we need a strong USA until some other country takes over as the engine of growth and consumption. So between war mongering Republicans and Democrats, Democrats are the lesser of the two evils.
On US Currency Devaluation (By Default)
The US dollar will naturally weaken due to this extra money supply. This extra money supply will with returned to the holders of such treasury bonds and until they are withdrawn will end up in the banking system as deposits.
The availability of such deposits will enable banks to lend out more money. As the USA practices fractional reserve (reference: http://en.wikipedia.org/wiki/Fractional-reserve_banking), by making available this US$600 billion, the broad money supply could by multiplied by up to 10 times, if it is fully leveraged. The US sets it’s fractional reserve at 10% of deposits, but for depository institutions (smaller banks or thrifts) having less than $55.2m the reserve requirement is reduced thereby leading to more leverage potentially.
“A cash reserve ratio (or CRR) is the percentage of bank reserves to deposits and notes. The cash reserve ratio is also known as the cash asset ratio or liquidity ratio. In the United States, the Board of Governors of the Federal Reserve System requires zero percent (0%) fractional reserves from depository institutions having net transactions accounts of up to $10.7 million.[3] Depository institutions having over $10.7 million, and up to $55.2 million in net transaction accounts must have fractional reserves totaling three percent (3%) of that amount.[3] Finally, depository institutions having over $55.2 million in net transaction accounts must have fractional reserves totaling ten percent (10%) of that amount.[3] However, under current policy, these numbers do not apply to time deposits from domestic corporations, or deposits from foreign corporations or governments, called “nonpersonal time deposits” and “eurocurrency liabilities,” respectively. For these account classes, the fractional reserve requirement is zero percent (0%) regardless of net account value.[3]”
(Source: http://en.wikipedia.org/wiki/Reserve_requirement)
Printing US$600 billion and pouring it into narrow money supply M1 is quite a lot and could cause the market to re-inflate definitely. But much of these money will likely end up in Broad money supply. And because of the complicated way in which currency is created using Fiat money (money issued by central banks and sovereign nations as legal tender. It is based on faith in the country’s ability to repay the note), then the effects of how much devaluation it should do to the US currency will be very hard to compute.
And most people, even very seasoned economists will be hard pressed to predict or calculate how much the US dollar should depreciate given this excess currency. Given that it is so complex, the large majority of the people may trade one way or the other given the sentiments therefore rendering the best economist speechless. Therefore, the extend of the US dollar depreciation will be largely a matter of sentiment and consumer and business confidence level of the US economy as a whole. Hence the whole currency may stay under-valued or over-valued for extended periods of time.
When the market goes down, the market always predict that it will always go down. But when the market sentiment improves, the US dollar may yet appreciate in a few years. But nobody knows.
ON JOB CREATION AND US EXPORTS BY CURRENCY DEVALUATION
The US export sector is only US$ 1.057 trillion (year 2009) out of the total economy of around US$14 trillion. By devaluing it’s currency, even if it increases it’s exports by US$300 billion (illustration), it is expected that job creation will be marginal. Dropping $300 billion into a population base of 300million is like dropping US$1000 per person. Assuming that 70% of this extra US$300 billion GDP goes into wages, the rest taxes and profits. This is just an extra US$210 billion in national income. US domestic economy is in the magnitude of US$9 trillion range, therefore it may only have limited impact. And not to forget, by dropping the currency value, it can be a zero sum game as components and raw materials that are imported and necessary for finished products will cost more too.
On Economic Leakage Of This US$600 Billion Quantitative Easing
We estimate that easily up to 30 to 40% of this money could end up in other countries. So excess US cash will not all stay within the US boundaries. But US$180 to US$240 billion money inflow is not a big deal for the world, unless it is concentrated within a few countries.
Also, with quantitative easing, the US dollar is expected to fall in value thereby mitigating the impact of inflow of such money. Unless for countries whose currencies are pegged to the US dollars. In such a scenario, it makes sense for the other countries to alter the exchange rates in view of the true and reduced value of the US dollar, but that is not the only way.
In addition to the leakage coming from the Quantitative Easing (Printing money), low interest rates environment will also export credit to the rest of the world. In view of anemic economic growth in the US, some smart money will search for higher yielding assets overseas. This leakage will form what is known as a Carry Trade in which investors acquire cheap funding in USD and immediately transfer this money into foreign assets with a higher yield. It will be extremely hard to estimate this impact as we mentioned earlier in the article, quantitative easing leads to increase in broad money supply and due to fractional reserve system, there could be a large multiplier effect by making available funds to borrowers. Such money may be the more scary force.
Such HOT money or Smart money will find it’s way into the more open economies of the world.
China has already raised the reserve ratio for it’s banks to 17.5% to 18% (Source: http://www.chinadaily.com.cn/china/2010-11/10/content_11530809.htm), so any potential extra hot money is partially buffeted.
More countries who are likely to receive such hot monies may impose some form of regulation either on the banking side or on the housing side or on the stock market side. Let us just hope that these countries do not over-react and kill the market.
Some countries may impose rules making it harder for foreign companies to own properties or for foreign individuals to buy properties.
Some of these HOT money will arrive into some countries causing some form of inflation which may force the local governments to act.
How Much Is Expected Of This US$600 Billion To Come To Singapore?
However, for Singapore’s case, the strengthening of the Singapore Dollar versus the US dollar will mitigate to some extent these money inflows.
International Financial centers around the world will usually get a bigger share of this money.
“The main forex trading center is London, but New York, Tokyo, Hong Kong and Singapore are all important centers as well. “ (Source: http://en.wikipedia.org/wiki/Foreign_exchange_market) therefore these centers could also see an influx of funds. Other major financial, trading or commodity centers may also see an influx of short term investments.
If part of these US$600 billion quantitative easing funds is withdrawn and immediately transferred to Singapore markets, then surely Forex markets liquidity will suddenly rise will be the first to get this funding followed by equities.
What Is The Likely Effect Of Singapore Property Prices?
Some funds may start to buy up commercial properties, retail malls, offices buildings and industrial centers in Singapore. Individuals and some smaller funds may engage in carry trade leading to HOT money buying up shares. However we cannot then assume that Singapore’s economy as a whole will be fine, in fact higher risks awaits in 2011 on the economic front as global consumption has not yet recovered.
Equity Has An Impact On Property Sentiments.
It is important that landed properties in Singapore is still restricted to Singaporeans and Singapore PR, a prestige class of property assets otherwise foreign funds can corner the Singapore Property market.
The existing super rich may seek to become Permanent Resident to get into the landed market in Singapore buying up good class bungalows.
The other classes of properties such as Condominiums and apartments are all subject to the usual speculative forces. Cluster landed developments may see renewed interests.
There are currently no rules against foreigners purchasing property in Singapore therefore some funds may flow towards this sector.
It is very hard to estimate what effects such funds may impact on Singapore property market, but in case there is more statistic showing asset price inflation, we guess that the regulators can reduce the leverage by reducing the lending loan to valuation percentage.
Singapore Banks also have quotas limiting the percentage of loans they are allowed to make for investment properties, therefore limiting access to credit.
Whichever way the funds go, whatever effects it may have on the Singapore properties, if you are buying a residential property to stay in, do so at your own affordability and do not try to guess too much which direction it is heading.
POSSIBLE SCENARIOS FOR SINGAPORE INVESTMENTS
If inflation can be maintained in Singaore and controlled despite US currency devaluation. The US economy recovers and starts to resume it’s role and help global consumption. We would have survived another scare. However a more multi-polar world will emerge with China taking a larger share of the world’s economy. China Yuan will also become more dominant. However China still has some way to go before it’s export driven economy can upgrade, therefore China will continue to make sure that any currency increase vis-Ã -vis the US dollar will be moderate so as to allow time for China’s industries to upgrade.
What is almost certain is, the world’s economy will enter a period of higher risk and volatility. Growth and bust cycles may become shorter and the likelihood of anyone losing their jobs is higher.
In the short term however, equities may see increased volatility including sharp rallies and immediate pull backs. There is a likelihood that equities will rally and if sustained, will lead to improving property sector sentiments. The average P/E of Singapore equities may increase, leading to it being more overvalued as fundamentals have yet to catch up.
If such a scenario holds true, the property prices going up is not due to fundamentals but due to increased liquidity. Therefore property buyers will be faced with even elevated risks. You can check out Property buying versus renting in our article section.
And don’t rule out the US returning to the forefront of the global economy yet.
Article contributed by: www.PropertyBuyer.com.sg
On the 3rd Nov, 2010, the federal reserve announced a US$600 billion bond buying. Quantitative Easing is euphemism for printing more money without a corresponding increase in economic output.
Since the last time, we highlighted in 2008, “The additional funding requirements total more than US$1 trillion (US$ 1000 billion) The concern is, how are they going to raise US$1 trillion in 2009? Bill Gates is worth around US$55 billion just to provide a benchmark. If they cannot raise this cash through increased taxes, (since both presidential candidates have declared they are not raising taxes), they will have to borrow from sovereign sources such as Japan, China, South Korea, Saudi Arabia who traditionally buys US treasury bonds. But going from an average borrowing of US$200-300 billion a year to US$1 trillion? This is an additional whopping US$ 700 to US$ 800 billion. Who’s buying? Even the sovereign funds do not have that much funds considering that much of their funds are already in US treasury bonds, Euro bonds and other investments. The US government may make up the short-fall through increasing money supply temporarily. If this increase of money supply is temporary, inflationary pressures may be controllable, if not, such increase in money supply is surely inflationary. In other words, inflationary pressure tends to force interest rates hike in the USA. ” (Source: http://www.propertybuyer.com.sg/articles/compare-singapore-home-loans-/Global-Economy-Credit-Crisis-and-Interest-Rates/)
So it has come true and it comes in the form of a US$600 billion fund to buy back long term treasury securities (Bonds with long maturity).
———————————————————————-
By Property Buyer Singapore Mortgage Consultants and Broker
Not Simply Cheap, but what Fits. We Research, You Save!
Tel: 6100 – 0608
SMS: 9782 – 8606
Email: loans@propertyBUYER.com.sg
———————————————————————-
Why Does Federal Reserve Want To Print US$600 Billion To Buy Back Treasury Securities?
The US federal government is in budget deficit since Republican Ronald Reagan came to power. Within 8 years he has single-handedly squandered America’s wealth. US turned from a net creditor nation into a net debtor nation. Since 2004 to 2008, the US government has been running consistent budget deficits in the US$ 200 to US$ 400 billion range. All these monies need to be financed by individuals, corporations from within America and sovereign states from outside of America.
Lately in 2010, the expected US federal government deficit is likely to be US$1.171 trillion with a total of US$14.078 trillion of debt. “The total deficit for fiscal year 2009 was $1.42 trillion, a $960 billion increase from the 2008 deficit.”
(source: http://en.wikipedia.org/wiki/2010_United_States_federal_budget)
The largest holders of US debt as at Nov 2010 are: -
(source: http://www.cnbc.com/id/29880401/The_Biggest_Holders_of_US_Government_Debt?slide=16)
1. Federal Reserve and Intra-governmental holdings – US$5.345 trillion
2. Other investors and Savings bonds – US$1.266 trillion
3. China – US$868.4 billion
4. Japan – US$836.6 billion
5. Mutual Funds – US$648.6 billion
6. Pension Funds – US$643.8 billion
7. State and Local Governments – US$534.7 billion
8. United Kingdom – US$448.4 billion
9. Depository Institutions – US$273.7 billion
10. Insurance Companies – US$260.6 billion
11. Oil exporters – US$226.6 billion
12. Brazil – US$165 billion.
13. Caribbean Banking Centres – $159.1 billion
14. Hong Kong – US$137.8 billion
15. Taiwan – US$130.2 billion
Looking at foreign governments, China, Japan, UK, Oil exporter countries, Brazil, Hk and Taiwan held US$2.813 trillion in US federal debt. The Federal Reserve and various government actually hold the most of the federal government debt.
“From December 2008 to March 2010, the Fed bought $1.7 trillion of Treasury and mortgage-backed securities.” (Source: AP, http://www.msnbc.msn.com/id/39954647) that explains the high federal reserve holdings.
Looking at foreign governmental reserves (Source: http://en.wikipedia.org/wiki/List_of_countries_by_foreign_exchange_reserves): -
1. PROC (China) - 2.4543 Trillion USD Sep 2010
2. Japan - 1.050235 Trillion USD Jun 2010
3. Eurosystem - 753.642 billion Sep 2010
4. Russia - 501.1 billion Oct 2010
5. Saudi Arabia - 410.3 billion Dec 2009
6. India - 300.21 billion Nov 2010
7. Republic of Korea - 293.35 billion Oct 2010
8. Brazil - 287.206 billion Nov 2010
9. Hong kong - 266.100 billion Sep 2010
10. Switzerland - 249.556 billion Aug 2010
11. Singapore - 221.398 billion Oct 2010
With the budget shortfall of US$1.17 trillion, this is the amount that must be borrowed in 2010. So this large amount is unlikely to find supporters amongst foreign sovereign funds. So a large part of this debt needs to be absorbed internally or by foreign corporations and mutual funds.
In any one year, there would be demand on US Treasury debt, but putting out such a large amount would totally overrun all or any potential lenders or buyers of the Treasury securities. In order to fully reach this borrowing quantum, the coupons being offered will have to rise in order to meet the dwindling demand.
If the coupons being issued is the 30 years treasury bonds, then this would raise long term interest rates. And it may also hit shorter tenor treasury bonds indirectly.
So the natural way to NOT saturate this demand for US dollar treasury bonds is to not issue so many, but since the US runs a huge deficit, it has to issue treasury bills.
In this case, the US federal government issues more currency (Print more money) to the tune of US$600 billion and use this money to buy back longer tenor treasury bills. This has the effect of freeing up money into the economy.
Intention 1 – Reduce Long Term Interest Rates To Facilitate Recovery
The intentions are to reduce long term interest rates. Like we mentioned previously, the US federal government cannot set interest rates and then do nothing about it, else a black market will form. They can set target interest rates and then put the money where the mouth is so as to achieve that.
Intention 2 – Print More Money To Reduce The Currency Exchange Rate
This is to devalue the US dollar versus trading partners so that it provides a competitive edge to the US exporters. The other side of it is also to reduce the imports and reduce the trade deficit.
Intention 3 – Pump Cash Into The Market
The third intention is to pump cash into the US market. With this money being used to redeem treasury bonds, money goes into the hands of bond holders.
Could The US Government Achieve The Desired Effect?
Throughout history, countless countries and countless times have economies defaulted or devalued their currency in order to get out of trouble. Since most debt are in US dollars, devaluing the dollar devalues the debts as well. So it is no big deal when this happens if the situation is dire.
As we stressed previously, the interest rates do not just go to the rate the Federal Reserve wants it to go. Businesses need funding and are willing to bid for the funds at a rate they can afford. The only way interest rates can go down is for the Federal Reserve to flood the money market with money in excess of borrowing demands therefore reducing rates.
Federal Reserve should reduce interest rates long enough so that the US economy has a chance to recover.
However there are major risks such as inflation within the US as purchasing power drops. This could hurt US consumers hard and hurt consumption if inflation becomes serious. It could have the opposite effect of what the US federal reserve wants, instead of stimulating the economy, it ends up killing the economy.
On The Money Printing (Quantitative Easing)
On top of that, it pumps US$600 billion into the market, of which at least 60% (www.propertyBuyer.com.sg’s guesstimates by looking at the 15 largest holder of Treasury bills) are expected to stay within the US and begin to re-inflate the economy judging by the composition of bond holders. The global economy is inter-connected, leakage is expected in an open economy such as the US. Thus some portion of this money is expected to find it’s way into other countries.
We believed that the US economy should be able to hold out a few months even without this round of US$600 billion of quantitative easing even while the Bureau of Economic Analysis has been publishing report of a weakening US economy.
By some possibility, the US economy could even recover without any of this quantitative easing. So we see this as election economics. This is pump priming to make sure that unemployment reduces to an acceptable level in 2 years, ready for the next presidential election.
We have no opinion about the US presidential elections, but for the good of the world economy, we need a strong USA until some other country takes over as the engine of growth and consumption. So between war mongering Republicans and Democrats, Democrats are the lesser of the two evils.
On US Currency Devaluation (By Default)
The US dollar will naturally weaken due to this extra money supply. This extra money supply will with returned to the holders of such treasury bonds and until they are withdrawn will end up in the banking system as deposits.
The availability of such deposits will enable banks to lend out more money. As the USA practices fractional reserve (reference: http://en.wikipedia.org/wiki/Fractional-reserve_banking), by making available this US$600 billion, the broad money supply could by multiplied by up to 10 times, if it is fully leveraged. The US sets it’s fractional reserve at 10% of deposits, but for depository institutions (smaller banks or thrifts) having less than $55.2m the reserve requirement is reduced thereby leading to more leverage potentially.
“A cash reserve ratio (or CRR) is the percentage of bank reserves to deposits and notes. The cash reserve ratio is also known as the cash asset ratio or liquidity ratio. In the United States, the Board of Governors of the Federal Reserve System requires zero percent (0%) fractional reserves from depository institutions having net transactions accounts of up to $10.7 million.[3] Depository institutions having over $10.7 million, and up to $55.2 million in net transaction accounts must have fractional reserves totaling three percent (3%) of that amount.[3] Finally, depository institutions having over $55.2 million in net transaction accounts must have fractional reserves totaling ten percent (10%) of that amount.[3] However, under current policy, these numbers do not apply to time deposits from domestic corporations, or deposits from foreign corporations or governments, called “nonpersonal time deposits” and “eurocurrency liabilities,” respectively. For these account classes, the fractional reserve requirement is zero percent (0%) regardless of net account value.[3]”
(Source: http://en.wikipedia.org/wiki/Reserve_requirement)
Printing US$600 billion and pouring it into narrow money supply M1 is quite a lot and could cause the market to re-inflate definitely. But much of these money will likely end up in Broad money supply. And because of the complicated way in which currency is created using Fiat money (money issued by central banks and sovereign nations as legal tender. It is based on faith in the country’s ability to repay the note), then the effects of how much devaluation it should do to the US currency will be very hard to compute.
And most people, even very seasoned economists will be hard pressed to predict or calculate how much the US dollar should depreciate given this excess currency. Given that it is so complex, the large majority of the people may trade one way or the other given the sentiments therefore rendering the best economist speechless. Therefore, the extend of the US dollar depreciation will be largely a matter of sentiment and consumer and business confidence level of the US economy as a whole. Hence the whole currency may stay under-valued or over-valued for extended periods of time.
When the market goes down, the market always predict that it will always go down. But when the market sentiment improves, the US dollar may yet appreciate in a few years. But nobody knows.
ON JOB CREATION AND US EXPORTS BY CURRENCY DEVALUATION
The US export sector is only US$ 1.057 trillion (year 2009) out of the total economy of around US$14 trillion. By devaluing it’s currency, even if it increases it’s exports by US$300 billion (illustration), it is expected that job creation will be marginal. Dropping $300 billion into a population base of 300million is like dropping US$1000 per person. Assuming that 70% of this extra US$300 billion GDP goes into wages, the rest taxes and profits. This is just an extra US$210 billion in national income. US domestic economy is in the magnitude of US$9 trillion range, therefore it may only have limited impact. And not to forget, by dropping the currency value, it can be a zero sum game as components and raw materials that are imported and necessary for finished products will cost more too.
On Economic Leakage Of This US$600 Billion Quantitative Easing
We estimate that easily up to 30 to 40% of this money could end up in other countries. So excess US cash will not all stay within the US boundaries. But US$180 to US$240 billion money inflow is not a big deal for the world, unless it is concentrated within a few countries.
Also, with quantitative easing, the US dollar is expected to fall in value thereby mitigating the impact of inflow of such money. Unless for countries whose currencies are pegged to the US dollars. In such a scenario, it makes sense for the other countries to alter the exchange rates in view of the true and reduced value of the US dollar, but that is not the only way.
In addition to the leakage coming from the Quantitative Easing (Printing money), low interest rates environment will also export credit to the rest of the world. In view of anemic economic growth in the US, some smart money will search for higher yielding assets overseas. This leakage will form what is known as a Carry Trade in which investors acquire cheap funding in USD and immediately transfer this money into foreign assets with a higher yield. It will be extremely hard to estimate this impact as we mentioned earlier in the article, quantitative easing leads to increase in broad money supply and due to fractional reserve system, there could be a large multiplier effect by making available funds to borrowers. Such money may be the more scary force.
Such HOT money or Smart money will find it’s way into the more open economies of the world.
China has already raised the reserve ratio for it’s banks to 17.5% to 18% (Source: http://www.chinadaily.com.cn/china/2010-11/10/content_11530809.htm), so any potential extra hot money is partially buffeted.
More countries who are likely to receive such hot monies may impose some form of regulation either on the banking side or on the housing side or on the stock market side. Let us just hope that these countries do not over-react and kill the market.
Some countries may impose rules making it harder for foreign companies to own properties or for foreign individuals to buy properties.
Some of these HOT money will arrive into some countries causing some form of inflation which may force the local governments to act.
How Much Is Expected Of This US$600 Billion To Come To Singapore?
However, for Singapore’s case, the strengthening of the Singapore Dollar versus the US dollar will mitigate to some extent these money inflows.
International Financial centers around the world will usually get a bigger share of this money.
“The main forex trading center is London, but New York, Tokyo, Hong Kong and Singapore are all important centers as well. “ (Source: http://en.wikipedia.org/wiki/Foreign_exchange_market) therefore these centers could also see an influx of funds. Other major financial, trading or commodity centers may also see an influx of short term investments.
If part of these US$600 billion quantitative easing funds is withdrawn and immediately transferred to Singapore markets, then surely Forex markets liquidity will suddenly rise will be the first to get this funding followed by equities.
What Is The Likely Effect Of Singapore Property Prices?
Some funds may start to buy up commercial properties, retail malls, offices buildings and industrial centers in Singapore. Individuals and some smaller funds may engage in carry trade leading to HOT money buying up shares. However we cannot then assume that Singapore’s economy as a whole will be fine, in fact higher risks awaits in 2011 on the economic front as global consumption has not yet recovered.
Equity Has An Impact On Property Sentiments.
It is important that landed properties in Singapore is still restricted to Singaporeans and Singapore PR, a prestige class of property assets otherwise foreign funds can corner the Singapore Property market.
The existing super rich may seek to become Permanent Resident to get into the landed market in Singapore buying up good class bungalows.
The other classes of properties such as Condominiums and apartments are all subject to the usual speculative forces. Cluster landed developments may see renewed interests.
There are currently no rules against foreigners purchasing property in Singapore therefore some funds may flow towards this sector.
It is very hard to estimate what effects such funds may impact on Singapore property market, but in case there is more statistic showing asset price inflation, we guess that the regulators can reduce the leverage by reducing the lending loan to valuation percentage.
Singapore Banks also have quotas limiting the percentage of loans they are allowed to make for investment properties, therefore limiting access to credit.
Whichever way the funds go, whatever effects it may have on the Singapore properties, if you are buying a residential property to stay in, do so at your own affordability and do not try to guess too much which direction it is heading.
POSSIBLE SCENARIOS FOR SINGAPORE INVESTMENTS
If inflation can be maintained in Singaore and controlled despite US currency devaluation. The US economy recovers and starts to resume it’s role and help global consumption. We would have survived another scare. However a more multi-polar world will emerge with China taking a larger share of the world’s economy. China Yuan will also become more dominant. However China still has some way to go before it’s export driven economy can upgrade, therefore China will continue to make sure that any currency increase vis-Ã -vis the US dollar will be moderate so as to allow time for China’s industries to upgrade.
What is almost certain is, the world’s economy will enter a period of higher risk and volatility. Growth and bust cycles may become shorter and the likelihood of anyone losing their jobs is higher.
In the short term however, equities may see increased volatility including sharp rallies and immediate pull backs. There is a likelihood that equities will rally and if sustained, will lead to improving property sector sentiments. The average P/E of Singapore equities may increase, leading to it being more overvalued as fundamentals have yet to catch up.
If such a scenario holds true, the property prices going up is not due to fundamentals but due to increased liquidity. Therefore property buyers will be faced with even elevated risks. You can check out Property buying versus renting in our article section.
And don’t rule out the US returning to the forefront of the global economy yet.
Monday, August 9, 2010
Singapore's Macro Economy
Singapore's Macro Economy
Singapore economy is coming from a low base since the recession but still showed high GDP growth. The real strength of the economy is still uncertain. The GDP of Singapore would be pretty much the same. However, the increasing expatriates and immigrants needing housing, schools, food, services, etc, their massive immigration, has been affecting the growth of the overall nominal GDP values.
The condition implies that we would be expecting a slow rate ascent of the real property prices towards the end of 2010. However, the risks of the property buyers will continue to increase. A property buyer planning to purchase a property still needs to make a good decision based on research and other information.
A Singapore property investor looking for real estate property to invest should wait a few more years to experience a market flooded with properties developed by the government of Singapore. The government has been trying to develop properties in relation to their present massive land sales program. There is no speculation of a market crash since the Singapore government could always resort to bring in more foreigners to boost demand for housing, which will support high land prices.
Singapore economy is coming from a low base since the recession but still showed high GDP growth. The real strength of the economy is still uncertain. The GDP of Singapore would be pretty much the same. However, the increasing expatriates and immigrants needing housing, schools, food, services, etc, their massive immigration, has been affecting the growth of the overall nominal GDP values.
The condition implies that we would be expecting a slow rate ascent of the real property prices towards the end of 2010. However, the risks of the property buyers will continue to increase. A property buyer planning to purchase a property still needs to make a good decision based on research and other information.
A Singapore property investor looking for real estate property to invest should wait a few more years to experience a market flooded with properties developed by the government of Singapore. The government has been trying to develop properties in relation to their present massive land sales program. There is no speculation of a market crash since the Singapore government could always resort to bring in more foreigners to boost demand for housing, which will support high land prices.
Friday, August 6, 2010
Invest in singapore property: Risks involved in market swings
Invest in Singapore property: Risks involved in market swings
The high-end properties as well as the mid to high-end properties risks largely depends on the demonstrated price volatility during market swings. The Singapore mass market condominiums are presently facing the challenge of a market affordability risks. With the present elevated market price levels, a new benchmark for prices could be formed provided the employment figures remain stable. The new prices could hold up for awhile depending on the employment factors. The HDB supports the condition of the mass market condominium. The HDB is the basis for mass market condominium pricing. The HDB is currently experiencing shortage of supply.
Availability of housing loan services
The only limitation that an individual may face is the availability of housing loan services that ignores cash down payment or owner’s cash equity part. Normally, housing loans require owner’s cash equity. The owner’s cash equity will serve as the down payment for the purchase of the property. The fact that the savings and cash holdings are not homogeneous across all income groups of the country, it would be impractical and misleading to use the national savings as a guide. To simplify the analysis, the cash down payment funding portion is ignored in the following computation.
Sample computation using condominiums such as Shenton Way
• 76 Shenton – between $1,900 - $2,400 psf.
• The Sail @ Marina Bay - between $2,000 - $3,300 psf
• International Plaza - $1,100 range
• Icon - $1,600 - $1,700 psf
• Some parts of China town, Tiong bahru, etc….
• Leonie Hill, Leonie Studio - $1,500 to $1,900
• Grange residences - $2,500 to $2,800 psf
• Ardmore park - $3,000 - $3,600 psf
• Balmoral - $1,500 - $1, 800 psf
• Cyan Bukit timah (New development) - $1,800 - $2,400 psf
• Aspen heights - $1,400 - $1,600 psf
• Rivergate - $1,600 to $1,900 psf
• 5th Avenue Condominium - $1,200 to $1,400 psf
Singapore BANKS CREDIT stance
Banks have generally been more careful in managing their loan portfolios, investments, and loan or credit facility offers. Banks such as Citibank that were greatly affected during the worldwide recession or sub-prime crisis are aggressively introducing the credit facility package Sibor with trend showing about + 0.5% ascending to 0.9% in June 2010. HSBC responded with the competition and started to campaign aggressively for their credit facilities. The Bank of East Asia eventually entered offering consumers the residential housing loan packages. This time, the banks learn to lend more freely and aggressively to regular households.
The high-end properties as well as the mid to high-end properties risks largely depends on the demonstrated price volatility during market swings. The Singapore mass market condominiums are presently facing the challenge of a market affordability risks. With the present elevated market price levels, a new benchmark for prices could be formed provided the employment figures remain stable. The new prices could hold up for awhile depending on the employment factors. The HDB supports the condition of the mass market condominium. The HDB is the basis for mass market condominium pricing. The HDB is currently experiencing shortage of supply.
Availability of housing loan services
The only limitation that an individual may face is the availability of housing loan services that ignores cash down payment or owner’s cash equity part. Normally, housing loans require owner’s cash equity. The owner’s cash equity will serve as the down payment for the purchase of the property. The fact that the savings and cash holdings are not homogeneous across all income groups of the country, it would be impractical and misleading to use the national savings as a guide. To simplify the analysis, the cash down payment funding portion is ignored in the following computation.
Sample computation using condominiums such as Shenton Way
• 76 Shenton – between $1,900 - $2,400 psf.
• The Sail @ Marina Bay - between $2,000 - $3,300 psf
• International Plaza - $1,100 range
• Icon - $1,600 - $1,700 psf
• Some parts of China town, Tiong bahru, etc….
• Leonie Hill, Leonie Studio - $1,500 to $1,900
• Grange residences - $2,500 to $2,800 psf
• Ardmore park - $3,000 - $3,600 psf
• Balmoral - $1,500 - $1, 800 psf
• Cyan Bukit timah (New development) - $1,800 - $2,400 psf
• Aspen heights - $1,400 - $1,600 psf
• Rivergate - $1,600 to $1,900 psf
• 5th Avenue Condominium - $1,200 to $1,400 psf
Singapore BANKS CREDIT stance
Banks have generally been more careful in managing their loan portfolios, investments, and loan or credit facility offers. Banks such as Citibank that were greatly affected during the worldwide recession or sub-prime crisis are aggressively introducing the credit facility package Sibor with trend showing about + 0.5% ascending to 0.9% in June 2010. HSBC responded with the competition and started to campaign aggressively for their credit facilities. The Bank of East Asia eventually entered offering consumers the residential housing loan packages. This time, the banks learn to lend more freely and aggressively to regular households.
Thursday, August 5, 2010
Mass Market versus High End Market Condominiums in Singapore
Mass Market versus High End Market Condominiums in Singapore
By Shirley Tan of www.singaporehomeloan.net
Expensive amenities such as the port access, private lift lobbies, golf clubs, infinity pools, and private lift lobbies could add to the value of the high-end property. Super high ceilings, security services, and near to expatriates’ schools are the common services offered by high-end properties targeting the foreign investors. Expatriates would be more attracted and comfortable if the residential rights and special immigration policies are not too strict. This will also contribute to the demand for high-end properties on a certain country. The highest, tallest, most luxurious, and other superlatives attributes place these high-end properties as one of the best places to live worldwide.
An increase of the high-end properties prices singapore would also influence and create an increase for the properties below the high-end properties. This trend may greatly affect all other related sectors of the country. If the high-end market price increases were highly selective, then maybe it would not affect the whole country. This situation may result to a widening gap of the mass market and the high-end luxury market prices. The mass market and the high-end market properties have totally different attributes and offered amenities. The offered attributes and amenities contributed to the big difference of their prevailing market prices.
An increase of the high-end properties prices would also influence and create an increase for the properties below the high-end properties. This trend may greatly affect all other related sectors of the country. If the high-end market price increases were highly selective, then maybe it would not affect the whole country. This situation may result to a widening gap of the mass market and the high-end luxury market prices. The mass market and the high-end market properties have totally different attributes and offered amenities. The offered attributes and amenities contributed to the big difference of their prevailing market prices.
The properties belonging to the category of the mass market are more affordable and a bit cheaper than those properties belonging to the high-end market. Mass market properties could create more demand because of its affordability. It also highly supports the general income conditions. The high-end market cannot be as flexible as the mass market in terms of pricing because it has its own set of characteristics and high-end services that the properties in the mass market do not have (Source: Singapore Ministry of Manpower, aggregated from Central Provident Fund board). Mass market could easily create a demand than the high-end market.
By Shirley Tan of www.singaporehomeloan.net
Expensive amenities such as the port access, private lift lobbies, golf clubs, infinity pools, and private lift lobbies could add to the value of the high-end property. Super high ceilings, security services, and near to expatriates’ schools are the common services offered by high-end properties targeting the foreign investors. Expatriates would be more attracted and comfortable if the residential rights and special immigration policies are not too strict. This will also contribute to the demand for high-end properties on a certain country. The highest, tallest, most luxurious, and other superlatives attributes place these high-end properties as one of the best places to live worldwide.
An increase of the high-end properties prices singapore would also influence and create an increase for the properties below the high-end properties. This trend may greatly affect all other related sectors of the country. If the high-end market price increases were highly selective, then maybe it would not affect the whole country. This situation may result to a widening gap of the mass market and the high-end luxury market prices. The mass market and the high-end market properties have totally different attributes and offered amenities. The offered attributes and amenities contributed to the big difference of their prevailing market prices.
An increase of the high-end properties prices would also influence and create an increase for the properties below the high-end properties. This trend may greatly affect all other related sectors of the country. If the high-end market price increases were highly selective, then maybe it would not affect the whole country. This situation may result to a widening gap of the mass market and the high-end luxury market prices. The mass market and the high-end market properties have totally different attributes and offered amenities. The offered attributes and amenities contributed to the big difference of their prevailing market prices.
The properties belonging to the category of the mass market are more affordable and a bit cheaper than those properties belonging to the high-end market. Mass market properties could create more demand because of its affordability. It also highly supports the general income conditions. The high-end market cannot be as flexible as the mass market in terms of pricing because it has its own set of characteristics and high-end services that the properties in the mass market do not have (Source: Singapore Ministry of Manpower, aggregated from Central Provident Fund board). Mass market could easily create a demand than the high-end market.
Tuesday, August 3, 2010
MRT and condo price fluctuation
MRT and condo price fluctuation
Article contributed by: Property Buyer Singapore Home Loan Consultants
Singapore is Digging everywhere in building MRT stations
Property Buyer Singapore Home loan consultants investigates the effects of MRT on Singapore property prices.
There are a total of 78 stations in operation (As at today) and many more being built. (Wikipedia).
How many properties are located within 1km radius of MRT? And 2km of MRTs?
How will property prices go up or down?
Is having the MRT convenient? Do you feel convenient or it is really convenient?
Is there readily too much availability of private condominiums claiming to be near MRT?
Before you get excited about being close to MRT, have you thought of the Over-crowding in MRT trains?
Will distance away from city centre be no longer important?
Will prices rise because of a MRT station or prices rise because of sub-urban developments?
Estimation of how many properties are within 1km of MRTs
SMRT stands for Singapore Mass Rapid Transit. A public train system.
According to Wikipedia, there are 78 MRT stations in Singapore. Based on a 1km radius coverage, the area is Pi x Radius x Radius.
3.1416 x 1km x 1km= 3.14 sq km
Based on 78 MRTs, area coverage = 78 x 3.14 sq km = 245 sq km.
Singapore's total size is 710.3sq km.(Singstat, http://www.singstat.gov.sg/stats/keyind.html)
Go to google map and open up a Singapore map, you will easily see that in the heart of Singapore is the Mac-Ritchie and Pierce reservoir water catchment area and there are other areas reserved for military use. There is a scale on the bottom left of the screen. You can roughly calculate that the size of those non populated areas may be around 100sq km in total.
WHAT IS THE SIZE OF SINGAPORE'S ACCESSIBLE AREAS?
So Singapore’s accessible areas are 710.3 – 50 – 50 = 610.3 square kilometres.
So 78 MRT stations will cover 245 sq km out of 610.3sq km. If we assume that all accessible areas are populated evenly, the 78 MRT stations already cover 40.14% of the accessible land area in Singapore.
In other words , if we draw a 1km area around each MRT station, we will end up with those areas covering 40.14% of singapore's usable land.
There are many properties across singapore, it would be easy to assume that properties are spread out fairly evening throughout the Singapore geography.
If we make the above statement, therefore roughly 40.14% of all properties in Singapore are within 1km of an MRT station.
How many number of units of Private housing is 40.14%?
Wow, that is a lot of properties that are near to an MRT station.
So there are some 250,334 (URA Q2, 2010) units of Condominium and apartments property units and many hundreds thousands of HDB flats.
40.14% of that is some > 100,494 of choices of private property on the market that is potentially near to MRT stations.
Technically you have some 100,000 units of private property to choose from. Even if these properties are not put up for sale all at once. Each year, there would be a turn-over of 3 to 6% which amounts to 3,000 to 6,000 of buy and sell activities on these private properties.
DOES STAYING NEAR TO MRT REALLY MEAN SO MUCH?
Let’s look at the travelling time and the number of train one must get off and get back on in order to get from one place to the other.
Is distance to your place of work no longer important if you have MRT near your home?
Is distance to your children’s school no longer important if you have MRT?
It's worth not to get carried away by MRT. The overall lifestyle needs and distances from all your lifestyle needs are important too.
MRT needs to maximize share holder return - Over-Crowding is the least of their worry
So many far away places are now covered by MRT. Does it mean that it is more valuation property? Yes to an extent, but that still does not address the distance issue.
Sentiments?
What are the effects of MRT on prices of Singapore properties?
If people start to realise that being near to a MRT station is no magic pill and neither is it a paradise, they will not bid as much.
For those properties which are far away from town, being near to an MRT will command a good premium, while those farther away will have likely lesser value.
For those properties which are near to city centres or near town, being near to MRT should have a smaller premium as access becomes more varied and not singularly dependent on the MRT.
To Summarise The Effects of MRT on Properties
For Far away locations
Near to MRT means easy access. Alternative modes of access not great.
Not near to amenities
Not near to working place
Not near to business centres
Not near to schools, etc.
So perhaps access to MRT gives a greater premium compared to those in the same area without MRT within easy reach.
For Central and Prime locations
Access to amenities – Good
Near to many places
Near to shopping areas
Near to schools
Near to business centres
Modes of transport varied and plentiful (such as Bus, train, taxis, etc) and distances near.
Such locations do not significantly (perhaps should not) be affected by whether there is MRT or not.
Will Premiums shrink for those properties near to MRT?
The premiums one pays to properties which are near to MRTs will shrink over-time. Singapore Property Buyer may need to focus on your own lifestyle core needs, rather than what is good to have in order not to overpay.
Those very far locations touting MRT as a feature should generally not be valued higher than those that are nearer to city centres or with good locations (but without MRT) except when there is HYPE. (people who buy into Hype may lose out)
At some stage developers want you to think that distances doesn't matter as long as there are MRTs. Now If you will only imagine how you will squeeze with all the people on the super crowded and not very regular frequency MRT train . Getting to town is no mean feat, then the choice will always be LOCATION and smooth connectivity as a priority, be it railway, MRT, bus, boat, car or whatever transport.
Contact Property Buyer Mortgage Consultants for your Home Loans and Refinance needs at sms / text 9782 8606.
Article contributed by: Property Buyer Singapore Home Loan Consultants
Singapore is Digging everywhere in building MRT stations
Property Buyer Singapore Home loan consultants investigates the effects of MRT on Singapore property prices.
There are a total of 78 stations in operation (As at today) and many more being built. (Wikipedia).
How many properties are located within 1km radius of MRT? And 2km of MRTs?
How will property prices go up or down?
Is having the MRT convenient? Do you feel convenient or it is really convenient?
Is there readily too much availability of private condominiums claiming to be near MRT?
Before you get excited about being close to MRT, have you thought of the Over-crowding in MRT trains?
Will distance away from city centre be no longer important?
Will prices rise because of a MRT station or prices rise because of sub-urban developments?
Estimation of how many properties are within 1km of MRTs
SMRT stands for Singapore Mass Rapid Transit. A public train system.
According to Wikipedia, there are 78 MRT stations in Singapore. Based on a 1km radius coverage, the area is Pi x Radius x Radius.
3.1416 x 1km x 1km= 3.14 sq km
Based on 78 MRTs, area coverage = 78 x 3.14 sq km = 245 sq km.
Singapore's total size is 710.3sq km.(Singstat, http://www.singstat.gov.sg/stats/keyind.html)
Go to google map and open up a Singapore map, you will easily see that in the heart of Singapore is the Mac-Ritchie and Pierce reservoir water catchment area and there are other areas reserved for military use. There is a scale on the bottom left of the screen. You can roughly calculate that the size of those non populated areas may be around 100sq km in total.
WHAT IS THE SIZE OF SINGAPORE'S ACCESSIBLE AREAS?
So Singapore’s accessible areas are 710.3 – 50 – 50 = 610.3 square kilometres.
So 78 MRT stations will cover 245 sq km out of 610.3sq km. If we assume that all accessible areas are populated evenly, the 78 MRT stations already cover 40.14% of the accessible land area in Singapore.
In other words , if we draw a 1km area around each MRT station, we will end up with those areas covering 40.14% of singapore's usable land.
There are many properties across singapore, it would be easy to assume that properties are spread out fairly evening throughout the Singapore geography.
If we make the above statement, therefore roughly 40.14% of all properties in Singapore are within 1km of an MRT station.
How many number of units of Private housing is 40.14%?
Wow, that is a lot of properties that are near to an MRT station.
So there are some 250,334 (URA Q2, 2010) units of Condominium and apartments property units and many hundreds thousands of HDB flats.
40.14% of that is some > 100,494 of choices of private property on the market that is potentially near to MRT stations.
Technically you have some 100,000 units of private property to choose from. Even if these properties are not put up for sale all at once. Each year, there would be a turn-over of 3 to 6% which amounts to 3,000 to 6,000 of buy and sell activities on these private properties.
DOES STAYING NEAR TO MRT REALLY MEAN SO MUCH?
Let’s look at the travelling time and the number of train one must get off and get back on in order to get from one place to the other.
Is distance to your place of work no longer important if you have MRT near your home?
Is distance to your children’s school no longer important if you have MRT?
It's worth not to get carried away by MRT. The overall lifestyle needs and distances from all your lifestyle needs are important too.
MRT needs to maximize share holder return - Over-Crowding is the least of their worry
So many far away places are now covered by MRT. Does it mean that it is more valuation property? Yes to an extent, but that still does not address the distance issue.
Sentiments?
What are the effects of MRT on prices of Singapore properties?
If people start to realise that being near to a MRT station is no magic pill and neither is it a paradise, they will not bid as much.
For those properties which are far away from town, being near to an MRT will command a good premium, while those farther away will have likely lesser value.
For those properties which are near to city centres or near town, being near to MRT should have a smaller premium as access becomes more varied and not singularly dependent on the MRT.
To Summarise The Effects of MRT on Properties
For Far away locations
Near to MRT means easy access. Alternative modes of access not great.
Not near to amenities
Not near to working place
Not near to business centres
Not near to schools, etc.
So perhaps access to MRT gives a greater premium compared to those in the same area without MRT within easy reach.
For Central and Prime locations
Access to amenities – Good
Near to many places
Near to shopping areas
Near to schools
Near to business centres
Modes of transport varied and plentiful (such as Bus, train, taxis, etc) and distances near.
Such locations do not significantly (perhaps should not) be affected by whether there is MRT or not.
Will Premiums shrink for those properties near to MRT?
The premiums one pays to properties which are near to MRTs will shrink over-time. Singapore Property Buyer may need to focus on your own lifestyle core needs, rather than what is good to have in order not to overpay.
Those very far locations touting MRT as a feature should generally not be valued higher than those that are nearer to city centres or with good locations (but without MRT) except when there is HYPE. (people who buy into Hype may lose out)
At some stage developers want you to think that distances doesn't matter as long as there are MRTs. Now If you will only imagine how you will squeeze with all the people on the super crowded and not very regular frequency MRT train . Getting to town is no mean feat, then the choice will always be LOCATION and smooth connectivity as a priority, be it railway, MRT, bus, boat, car or whatever transport.
Contact Property Buyer Mortgage Consultants for your Home Loans and Refinance needs at sms / text 9782 8606.
Friday, July 30, 2010
Risks involved in Singapore property market swings
Risks involved in Singapore property market swings
By Shirley Tan - Property Buyer Singapore Mortgage Consultants
The high-end properties as well as the mid to high-end properties risks largely depends on the demonstrated price volatility during market swings. The mass market condominiums are presently facing the challenge of a market affordability risks. With the present elevated market price levels, a new benchmark for prices could be formed provided the employment figures remain stable. The new prices could hold up for awhile depending on the employment factors. The HDB supports the condition of the mass market condominium. The HDB is the basis for mass market condominium pricing. The HDB is currently experiencing shortage of supply.
Availability of housing loan services
The only limitation that an individual may face is the availability of housing loan services that ignores cash down payment or owner’s cash equity part. Normally, housing loans require owner’s cash equity. The owner’s cash equity will serve as the down payment for the purchase of the property. The fact that the savings and cash holdings are not homogeneous across all income groups of the country, it would be impractical and misleading to use the national savings as a guide. To simplify the analysis, the cash down payment funding portion is ignored in the following computation.
Sample computation using condominiums such as Shenton Way
* 76 Shenton – between $1,900 – $2,400 psf.
* The Sail @ Marina Bay – between $2,000 – $3,300 psf
* International Plaza – $1,100 range
* Icon – $1,600 – $1,700 psf
* Some parts of China town, Tiong bahru, etc….
* Leonie Hill, Leonie Studio – $1,500 to $1,900
* Grange residences – $2,500 to $2,800 psf
* Ardmore park – $3,000 – $3,600 psf
* Balmoral – $1,500 – $1, 800 psf
* Cyan Bukit timah (New development) – $1,800 – $2,400 psf
* Aspen heights – $1,400 – $1,600 psf
* Rivergate – $1,600 to $1,900 psf
* 5th Avenue Condominium – $1,200 to $1,400 psf
Singapore BANKS CREDIT stance
Banks have generally been more careful in managing their loan portfolios, investments, and loan or credit facility offers. Banks such as Citibank that were greatly affected during the worldwide recession or sub-prime crisis are aggressively introducing the credit facility package Sibor with trend showing about + 0.5% ascending to 0.9% in June 2010. HSBC responded with the competition and started to campaign aggressively for their credit facilities. The Bank of East Asia eventually entered offering consumers the residential housing loan packages. This time, the banks learn to lend more freely and aggressively to regular households.
By Shirley Tan - Property Buyer Singapore Mortgage Consultants
The high-end properties as well as the mid to high-end properties risks largely depends on the demonstrated price volatility during market swings. The mass market condominiums are presently facing the challenge of a market affordability risks. With the present elevated market price levels, a new benchmark for prices could be formed provided the employment figures remain stable. The new prices could hold up for awhile depending on the employment factors. The HDB supports the condition of the mass market condominium. The HDB is the basis for mass market condominium pricing. The HDB is currently experiencing shortage of supply.
Availability of housing loan services
The only limitation that an individual may face is the availability of housing loan services that ignores cash down payment or owner’s cash equity part. Normally, housing loans require owner’s cash equity. The owner’s cash equity will serve as the down payment for the purchase of the property. The fact that the savings and cash holdings are not homogeneous across all income groups of the country, it would be impractical and misleading to use the national savings as a guide. To simplify the analysis, the cash down payment funding portion is ignored in the following computation.
Sample computation using condominiums such as Shenton Way
* 76 Shenton – between $1,900 – $2,400 psf.
* The Sail @ Marina Bay – between $2,000 – $3,300 psf
* International Plaza – $1,100 range
* Icon – $1,600 – $1,700 psf
* Some parts of China town, Tiong bahru, etc….
* Leonie Hill, Leonie Studio – $1,500 to $1,900
* Grange residences – $2,500 to $2,800 psf
* Ardmore park – $3,000 – $3,600 psf
* Balmoral – $1,500 – $1, 800 psf
* Cyan Bukit timah (New development) – $1,800 – $2,400 psf
* Aspen heights – $1,400 – $1,600 psf
* Rivergate – $1,600 to $1,900 psf
* 5th Avenue Condominium – $1,200 to $1,400 psf
Singapore BANKS CREDIT stance
Banks have generally been more careful in managing their loan portfolios, investments, and loan or credit facility offers. Banks such as Citibank that were greatly affected during the worldwide recession or sub-prime crisis are aggressively introducing the credit facility package Sibor with trend showing about + 0.5% ascending to 0.9% in June 2010. HSBC responded with the competition and started to campaign aggressively for their credit facilities. The Bank of East Asia eventually entered offering consumers the residential housing loan packages. This time, the banks learn to lend more freely and aggressively to regular households.
Thursday, June 24, 2010
Invest in singapore property: Can single person use CPF to buy property?
Invest in Singapore property: Can single person use CPF to buy property in Singapore?
by www.PropertyBuyer.com.sg Singapore mortgage consultants
Text (sms) : 9782 8606
We know that this topic is often asked and searched. The fact that many of our customers ask this question goes to show that this knowledge is not easily searched and found. In fact the answer can be found at CPF's website. So let us broadcast the message a bit wider.
" Q: I am single. Can I jointly use my CPF to buy a property under Residential Properties Scheme (RPS) with my friend/cousin?
A: Yes. You can use your CPF jointly with your friend/cousin to buy the property so long as both of you are single, divorced with Decree Nisi Absolute/Final Judgment(divorce) or widowed and not using CPF for any existing properties currently."
(Source: http://mycpf.cpf.gov.sg/CPF/News/InTouch/NL_082005.htm and http://ask-us.cpf.gov.sg/hybrid/Themes/CPF/related.asp?MesId=6169998&FolderID=0&Selected=2&CSRId=&SourceId=0)
If in doubt, please always check with CPF board and/or your lawyer prior to any property purchase, as regulations do change. We cannot be held responsible for any losses or damages arising from reading this article.
If you do not want to engage a lawyer and still want to find out prior to a property purchase, you can contact us at: -
go to --> http://www.PropertyBUYER.com.sg/contactus.php
Tel: 6100 0608
Sms: 9782 8606
Email: loans@propertyBUYER.com.sg
by www.PropertyBuyer.com.sg Singapore mortgage consultants
Text (sms) : 9782 8606
We know that this topic is often asked and searched. The fact that many of our customers ask this question goes to show that this knowledge is not easily searched and found. In fact the answer can be found at CPF's website. So let us broadcast the message a bit wider.
" Q: I am single. Can I jointly use my CPF to buy a property under Residential Properties Scheme (RPS) with my friend/cousin?
A: Yes. You can use your CPF jointly with your friend/cousin to buy the property so long as both of you are single, divorced with Decree Nisi Absolute/Final Judgment(divorce) or widowed and not using CPF for any existing properties currently."
(Source: http://mycpf.cpf.gov.sg/CPF/News/InTouch/NL_082005.htm and http://ask-us.cpf.gov.sg/hybrid/Themes/CPF/related.asp?MesId=6169998&FolderID=0&Selected=2&CSRId=&SourceId=0)
If in doubt, please always check with CPF board and/or your lawyer prior to any property purchase, as regulations do change. We cannot be held responsible for any losses or damages arising from reading this article.
If you do not want to engage a lawyer and still want to find out prior to a property purchase, you can contact us at: -
go to --> http://www.PropertyBUYER.com.sg/contactus.php
Tel: 6100 0608
Sms: 9782 8606
Email: loans@propertyBUYER.com.sg
What do Conveyance lawyers in Singapore do?
What do Conveyance lawyers in Singapore do?
The lawyer's role in property buying includes but not limited to the following:
The lawyer's role is to review the contracts and terms of purchase. Such as reviewing an Offer to purchase, Option to purchase or a sales and purchase agreement. (Many times, this important process is skipped as people go straight to the show room and sign contracts blindly after listening to property agents without adequate legal advice.)
Conduct title searches on the property which you are buying to make sure that the titles are unencumbered or unchallenged and can be delivered to you upon completion of the purchase of the property.
Check against government policies or regulations which may adversely affect the value of the property that you are buying. Such enquiries may include checks with URA, BCA, SLA, LTA or more.
Once all checks are complete, a caveat on the property title is lodged. This Caveat is then published and made available to the public. This serves to inform the public that you have a vested interest or claim in the property which has the corresponding property title. During this period, if there are other claims or counter claims on the property title, they must be raised at that time. Lodging a caveat increases the protection to the buyer from future legal challenges on the legality of the sale process.
Given that properties are large commitments. Most people will use a bank loan to finance a property buying. During this stage, (you would have already completed exercising option to purchase and already signed a bank's letter of offer for a Singapore bank loan.) your lawyer will liaise with your bank's lawyer to ensure smooth disbursement of the agreed home loan mortgage on your property. Sometimes, the bank's lawyer is also your lawyer. This lawyer will assist in coordinating to disburse your loan. The bank's lawyer will check against terms in the bank's letter of offer and compliance to matters of material facts and report such matters accordingly to the banks prior to funds disbursement.
Liaising with CPF Board (or Lawyers on CPF board). If you intend to utilize Central provident fund (CPF) - A Singapore's version of pension fund, your lawyer will check and ensure that the CPF funds are ready for drawdown in order to complete the property purchase within the completion time-lines. Sometimes, your lawyer may also be a lawyer on CPF panel of lawyers, that makes things potentially easier and faster (but CPF has internal processes for disbursing funds, these things still takes time).
Your lawyer will be responsible for liaising with the Bank and the CPF Board (or their lawyers) to ensure that your Housing Loan and your CPF Funds are in place and ready for drawdown to order to complete the purchase within the agreed completion period.
Completion of sale. This is a legal term which refers to all the payment of the agreed and contracted property sale price where you have fully paid all monies to the seller. The seller hands over to you the signed conveyance of title called the "Instrument of transfer" which effectively transfers the ownership of the titles from the seller to the buyer and hence the ownership of the property from sellers to buyers. At this stage, your Singapore bank loan is fully disbursed. Or in the case of a building under construction, whatever monies which should be paid during this stage of construction is disbursed.
Property Buyer Mortgage Consultants are experienced in the property buying process and can act as Property Buyer advisors to guide buyers into avoiding dishonest property agents.
Property Buyer Singapore Mortgage Consultants do NOT receive commission from Property transactions of Buying and Selling.
About Property Buyer Mortgage Consultants
Tel : 6100 0608
SMS (text) : 9782 8606
Contact us : http://www.propertyBUYER.com.sg/contactus.php
Email us : loans@propertyBUYER.com.sg
The lawyer's role in property buying includes but not limited to the following:
The lawyer's role is to review the contracts and terms of purchase. Such as reviewing an Offer to purchase, Option to purchase or a sales and purchase agreement. (Many times, this important process is skipped as people go straight to the show room and sign contracts blindly after listening to property agents without adequate legal advice.)
Conduct title searches on the property which you are buying to make sure that the titles are unencumbered or unchallenged and can be delivered to you upon completion of the purchase of the property.
Check against government policies or regulations which may adversely affect the value of the property that you are buying. Such enquiries may include checks with URA, BCA, SLA, LTA or more.
Once all checks are complete, a caveat on the property title is lodged. This Caveat is then published and made available to the public. This serves to inform the public that you have a vested interest or claim in the property which has the corresponding property title. During this period, if there are other claims or counter claims on the property title, they must be raised at that time. Lodging a caveat increases the protection to the buyer from future legal challenges on the legality of the sale process.
Given that properties are large commitments. Most people will use a bank loan to finance a property buying. During this stage, (you would have already completed exercising option to purchase and already signed a bank's letter of offer for a Singapore bank loan.) your lawyer will liaise with your bank's lawyer to ensure smooth disbursement of the agreed home loan mortgage on your property. Sometimes, the bank's lawyer is also your lawyer. This lawyer will assist in coordinating to disburse your loan. The bank's lawyer will check against terms in the bank's letter of offer and compliance to matters of material facts and report such matters accordingly to the banks prior to funds disbursement.
Liaising with CPF Board (or Lawyers on CPF board). If you intend to utilize Central provident fund (CPF) - A Singapore's version of pension fund, your lawyer will check and ensure that the CPF funds are ready for drawdown in order to complete the property purchase within the completion time-lines. Sometimes, your lawyer may also be a lawyer on CPF panel of lawyers, that makes things potentially easier and faster (but CPF has internal processes for disbursing funds, these things still takes time).
Your lawyer will be responsible for liaising with the Bank and the CPF Board (or their lawyers) to ensure that your Housing Loan and your CPF Funds are in place and ready for drawdown to order to complete the purchase within the agreed completion period.
Completion of sale. This is a legal term which refers to all the payment of the agreed and contracted property sale price where you have fully paid all monies to the seller. The seller hands over to you the signed conveyance of title called the "Instrument of transfer" which effectively transfers the ownership of the titles from the seller to the buyer and hence the ownership of the property from sellers to buyers. At this stage, your Singapore bank loan is fully disbursed. Or in the case of a building under construction, whatever monies which should be paid during this stage of construction is disbursed.
Property Buyer Mortgage Consultants are experienced in the property buying process and can act as Property Buyer advisors to guide buyers into avoiding dishonest property agents.
Property Buyer Singapore Mortgage Consultants do NOT receive commission from Property transactions of Buying and Selling.
About Property Buyer Mortgage Consultants
Tel : 6100 0608
SMS (text) : 9782 8606
Contact us : http://www.propertyBUYER.com.sg/contactus.php
Email us : loans@propertyBUYER.com.sg
Sunday, October 18, 2009
Invest in Singapore Properties: Property investor review Oct 2009
Singapore property investor - buyer review Oct 2009
Singapore property investor
Singapore Q3, 2009 figures showed that "Singapore's economy grew 0.8% in the three months to September from a year ago". (Source: AFP)
Singapore is technically out of recession with two consecutive quarters of positive growth in Q2 and Q3.
"A clear but modest recovery is under way globally, at least for the next three or four quarters," but "One-off factors such as restocking activities and fiscal stimulus measures will continue to support growth in the near term."
"Manufacturing, which accounts for almost a quarter of Singapore's GDP, grew 8.3 percent in third quarter from a year ago and expanded 34.9 percent on a quarterly basis. The services industry shrank 2.4 percent on the year but expanded 9.5 percent on a quarterly basis. The construction sector surged 12.4 percent year-on-year but fell 0.6 percent from the previous three months." (Source: AFP)
These one off inventory restocking factors are what we are afraid were the primary reasons of Q3, 2009 recovery.
Singapore gets out of recession BUT Singapore property market cools.
We think that the Singapore government didn't expect that their positive media spin, easy credit largely kicked started by DBS and short term constriction of property supply (by property developers) has led to an almost 10 to 20% rise in valuation within one quarter. The Singapore government has therefore had to imposed anti-speculative measures recently in September for fear of a property bubble building up.
But the anti-speculative measures were imposed at a time when the market is already showing signs of slower volumes. It is strange, people buy when there are no fundamentals and slow down in buying when economic fundamentals improve.
Singapore economy recovers with Q3 figures up yet again
Q3, 2009 Singapore economic figures have improved, this means that the economy has firmed up a little and on the path to a slow recovery.
There is a likelihood that this is a recovery that is built for the ramp up to Q4 Christmas sales demand and re-stocking of inventories activities.
But the recovery (growth of Gross domestic product GDP) is likely to be a recovery without job growth at least for the short term.
Unemployment rate may still trend upwards while GDP growth resumes. In all likelihood, the recovery will likely be very mild and fraught with uncertainties and risks.
Possible risks to Singapore property market in 2010
1. Run out of stimulus funding in the US and elsewhere may lead to economy dropping back again.
2. China's stimulus funding (for their own domestic economy) is showing signs of fatigue. China's exports have also dropped. There are worries of stimulus funding being wasted on useless projects just to stimulate the economy.
3. Massive inflation. (The US Federal reserve has kept interest rates at 0.25% while it relied massively on foreign governments to lend it money (by buying it's treasury bonds) to fund it's massive deficit of around US$1 Trillion. The global community has started to lose confidence in the US. USD has started to fall relative to other currencies. The US may be forced to raise rates to attract lending. Other countries may not be interested to lend US the money and see the value of their lending fall.
The options are dire for the USA.
The US may continue to offer low rates and print more money without an actual offset through borrowings or it must raise rates.
Raising rates now will kill a still weak economy. Printing more money will infuriate America's lenders and lead to a cascade of USD falling + interest rates hikes.
Any upswing is likely to be moderate as developers have massive Singapore property supply in the years 2011 through 2015.
Possible positive factors to Singapore property market in 2010
Singapore must hold it's election latest by around June 2011. The economy must hold up well for the PAP to win another election.
Apart from the economy recovering (although very slowly), casinos are also ready in 2010. Media spin: The state controlled press' recent reports have always picked up and accentuated the positives (whether rightly or wrongly), despite the generally very weak economy. The press can single-handedly improve consumer sentiments. These can work in your favour or against you.
Improved sentiments may lead to more aggressive lending by banks, leading to the market over-heating. (remember, banks are usually pro-cyclical, they lend when markets are hot and they cut lending when everyone needs money). Singapore home loans rate may rise, but banks may sacrifice their margins to offer attractive rates which could stimulate the housing market. You will then be able to compare Singapore home loans across many banks who are very eager to lend you money.
Invest in Singapore properties now?
Generally we think that anytime is a good time to look for a property. It's a matter of getting the right price. There are good deals and bad deals in all economic cycles.
For Singapore property investors, now is a good time to look at Singapore property investments. The quieter property market means that there is less hype and more rational sellers. There is a much higher likelihood to get a better deal if you are careful and do your research before buying a properly. If you can find a property with consistent good yield at a good price, you may be able to use sentiments to your advantage when the hype builds up again in 2010 nearing election.
Holding power is still very important during this time as the economic fundamentals have not fully recovered and cash is still king.
Should Singapore property investor simply consider economic fundamentals?
As a Singapore property buyer - investor who wants to also profit from not just fundamentals but also sentiments. It is then important to recognise the sentiments in play.
For example, despite the fact that the market is really not as positive than it really is, but due to the SPIN from the media and other factors, that can work in your favour or against you. But also bear in mind that the media is something you have no control over.
For example, Singapore Aspen heights condo was trading at $1000 psf for units over 1300 sq feet in May 2009 and by July and August the prices have moved to around $1200 psf.
If any economic shocks occur, the property prices could fall. If you bought a property at $1200 psf and it drops back to 1000 psf, that would wipe out your 20% downpayment.
SUMMARY OF SINGAPORE PROPERTY MARKET Q3, Q4 2009
Going forward, economic recovery is going to be slow and bumpy. There exists much uncertainty and risks on the downside as well as some potential upside domestic surprises. Overall economy has stabilized with reduced risks of major economic shocks. There could also be a risk of the economy slipping back into the red, but this should be viewed as an opportunity to cheery pick.
Potential property market bubble curbed. Singapore government's land sales with it's more favourable terms and longer time to completion means developers are likely to bid higher.
Higher land prices are likely to translate higher selling prices (if there is holding power). Incomes are not recovering as fast, therefore the most likely outcome is smaller housing units selling at higher prices.
More and more property developers are likely to launch smaller size units to achieve their margins and meet the budget of the Singapore population. This could potentially lead to oversupply risks of smaller sizes units few years down the road.
Again we recommend that investors buy with caution and should have some cash buffer and holding power to limit the potential risks and to make sure to buy at the right price. If valuations drop and banks ask for equity top-up, most people will be caught unprepared.
Read More Singapore Property Investment articles
http://www.PropertyBUYER.com.sg/articles/article.php
TEL: 6100 - 0608
SMS: 9782 - 8606
Email: loans@propertyBUYER.com.sg
Singapore property investor
Singapore Q3, 2009 figures showed that "Singapore's economy grew 0.8% in the three months to September from a year ago". (Source: AFP)
Singapore is technically out of recession with two consecutive quarters of positive growth in Q2 and Q3.
"A clear but modest recovery is under way globally, at least for the next three or four quarters," but "One-off factors such as restocking activities and fiscal stimulus measures will continue to support growth in the near term."
"Manufacturing, which accounts for almost a quarter of Singapore's GDP, grew 8.3 percent in third quarter from a year ago and expanded 34.9 percent on a quarterly basis. The services industry shrank 2.4 percent on the year but expanded 9.5 percent on a quarterly basis. The construction sector surged 12.4 percent year-on-year but fell 0.6 percent from the previous three months." (Source: AFP)
These one off inventory restocking factors are what we are afraid were the primary reasons of Q3, 2009 recovery.
Singapore gets out of recession BUT Singapore property market cools.
We think that the Singapore government didn't expect that their positive media spin, easy credit largely kicked started by DBS and short term constriction of property supply (by property developers) has led to an almost 10 to 20% rise in valuation within one quarter. The Singapore government has therefore had to imposed anti-speculative measures recently in September for fear of a property bubble building up.
But the anti-speculative measures were imposed at a time when the market is already showing signs of slower volumes. It is strange, people buy when there are no fundamentals and slow down in buying when economic fundamentals improve.
Singapore economy recovers with Q3 figures up yet again
Q3, 2009 Singapore economic figures have improved, this means that the economy has firmed up a little and on the path to a slow recovery.
There is a likelihood that this is a recovery that is built for the ramp up to Q4 Christmas sales demand and re-stocking of inventories activities.
But the recovery (growth of Gross domestic product GDP) is likely to be a recovery without job growth at least for the short term.
Unemployment rate may still trend upwards while GDP growth resumes. In all likelihood, the recovery will likely be very mild and fraught with uncertainties and risks.
Possible risks to Singapore property market in 2010
1. Run out of stimulus funding in the US and elsewhere may lead to economy dropping back again.
2. China's stimulus funding (for their own domestic economy) is showing signs of fatigue. China's exports have also dropped. There are worries of stimulus funding being wasted on useless projects just to stimulate the economy.
3. Massive inflation. (The US Federal reserve has kept interest rates at 0.25% while it relied massively on foreign governments to lend it money (by buying it's treasury bonds) to fund it's massive deficit of around US$1 Trillion. The global community has started to lose confidence in the US. USD has started to fall relative to other currencies. The US may be forced to raise rates to attract lending. Other countries may not be interested to lend US the money and see the value of their lending fall.
The options are dire for the USA.
The US may continue to offer low rates and print more money without an actual offset through borrowings or it must raise rates.
Raising rates now will kill a still weak economy. Printing more money will infuriate America's lenders and lead to a cascade of USD falling + interest rates hikes.
Any upswing is likely to be moderate as developers have massive Singapore property supply in the years 2011 through 2015.
Possible positive factors to Singapore property market in 2010
Singapore must hold it's election latest by around June 2011. The economy must hold up well for the PAP to win another election.
Apart from the economy recovering (although very slowly), casinos are also ready in 2010. Media spin: The state controlled press' recent reports have always picked up and accentuated the positives (whether rightly or wrongly), despite the generally very weak economy. The press can single-handedly improve consumer sentiments. These can work in your favour or against you.
Improved sentiments may lead to more aggressive lending by banks, leading to the market over-heating. (remember, banks are usually pro-cyclical, they lend when markets are hot and they cut lending when everyone needs money). Singapore home loans rate may rise, but banks may sacrifice their margins to offer attractive rates which could stimulate the housing market. You will then be able to compare Singapore home loans across many banks who are very eager to lend you money.
Invest in Singapore properties now?
Generally we think that anytime is a good time to look for a property. It's a matter of getting the right price. There are good deals and bad deals in all economic cycles.
For Singapore property investors, now is a good time to look at Singapore property investments. The quieter property market means that there is less hype and more rational sellers. There is a much higher likelihood to get a better deal if you are careful and do your research before buying a properly. If you can find a property with consistent good yield at a good price, you may be able to use sentiments to your advantage when the hype builds up again in 2010 nearing election.
Holding power is still very important during this time as the economic fundamentals have not fully recovered and cash is still king.
Should Singapore property investor simply consider economic fundamentals?
As a Singapore property buyer - investor who wants to also profit from not just fundamentals but also sentiments. It is then important to recognise the sentiments in play.
For example, despite the fact that the market is really not as positive than it really is, but due to the SPIN from the media and other factors, that can work in your favour or against you. But also bear in mind that the media is something you have no control over.
For example, Singapore Aspen heights condo was trading at $1000 psf for units over 1300 sq feet in May 2009 and by July and August the prices have moved to around $1200 psf.
If any economic shocks occur, the property prices could fall. If you bought a property at $1200 psf and it drops back to 1000 psf, that would wipe out your 20% downpayment.
SUMMARY OF SINGAPORE PROPERTY MARKET Q3, Q4 2009
Going forward, economic recovery is going to be slow and bumpy. There exists much uncertainty and risks on the downside as well as some potential upside domestic surprises. Overall economy has stabilized with reduced risks of major economic shocks. There could also be a risk of the economy slipping back into the red, but this should be viewed as an opportunity to cheery pick.
Potential property market bubble curbed. Singapore government's land sales with it's more favourable terms and longer time to completion means developers are likely to bid higher.
Higher land prices are likely to translate higher selling prices (if there is holding power). Incomes are not recovering as fast, therefore the most likely outcome is smaller housing units selling at higher prices.
More and more property developers are likely to launch smaller size units to achieve their margins and meet the budget of the Singapore population. This could potentially lead to oversupply risks of smaller sizes units few years down the road.
Again we recommend that investors buy with caution and should have some cash buffer and holding power to limit the potential risks and to make sure to buy at the right price. If valuations drop and banks ask for equity top-up, most people will be caught unprepared.
Read More Singapore Property Investment articles
http://www.PropertyBUYER.com.sg/articles/article.php
TEL: 6100 - 0608
SMS: 9782 - 8606
Email: loans@propertyBUYER.com.sg
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