Singapore’s central bank warns on foreign property investment

Singapore's central bank has issued a warning to investors about the risks posed by buying property overseas, as high house prices at home prompt a growing number of its residents to invest in real estate abroad.

A strong Singapore dollar and curbs on mortgage lending at home have encouraged more Singaporeans to buy property in the likes of Britain and Australia, with the Monetary Authority of Singapore (MAS) reporting a 43% rise in the value of overseas property transactions handled by local real estate agencies in 2013 compared with 2012.

MAS said in a statement that it is monitoring developments closely to ensure financial stability and that investors do not over-extend themselves.

"Risks are more difficult to assess or manage when investors are unfamiliar with conditions in overseas markets, such as the prospects for oversupply of properties, or of a deterioration in economic conditions," MAS said.

It also flagged the foreign exchange risk of borrowing in one currency but collecting rent in another.

MAS said the value of overseas properties dealt with by Singapore real estate agencies was S$2 billion (RM5.14 billion) in 2013, up from S$1.4 billion in 2012.

A recent research report by estate agent Knight Frank found that buyers from Singapore accounted for 23% of all purchases of newly built central London property in 2013, second only to British buyers who accounted for 27%. – Reuters, May 21, 2014.

Housing for the single people

Singapore’s public housing policy makes a major shift to provide homes for struggling singles.

SINGAPORE’S public housing, which is slowly picking itself up from a bad fall caused by a wave of foreign arrivals, has turned its attention to providing homes for struggling singles.

This vulnerable lot includes people from young professionals to the semi-skilled who are deterred from owning a home after years of working as a result of runaway property prices.

For the first time, the Housing and Development Board (HDB) – a pioneering icon that has built one million homes – is allowing singles above 35 years old to buy small, one-bedroom flats directly from the government.

Previously, they could only buy resale flats which are more expensive and in competition with foreign PRs.

Some 154 units were offered to singles and 8,500 applied in an unexpectedly strong response that could create a future for it. Two singles can apply and qualify for grants later when they tie the knot.

It is the government’s recognition of changing times.

The more conservative elements are worried this could perpetuate singlehood in a society whose rate of procreation is dangerously low.

Nevertheless, about one-third of these small apartments in non-mature estates is reserved for first-timer singles, with the cheapest unit costing S$76,000 (RM195,700).

Eligible applicants must be at least 35 and earn no more than S$5,000 (RM12,900) (half the usual amount) a month.

More importantly are the grants. The total possible grants on offer to those who meet all the conditions amount to around S$60,000 (RM154,500).

“For the lucky ones, the cheapest possible flat is S$16,000 (RM41,200). But in all likelihood, a lot of applicants might pay around S$32,000 (RM82,400),” said a blogger. “But hey, that’s still much cheaper than a resale flat.”

This is the initiative of National Development Minister Khaw Boon Wan, who took over the ministry two years ago. He began to speed up building projects and reduce costs with a fair amount of success.

The scheme has gained praises from singles despite the small number of units on offer.

Since 2011, the Malaysian-born Khaw began to cut down the long queues.

He has virtually cleared the backlog for all first-time applicants and is now working on reducing queues for families with children.

This year, another 13,600 apartments look set to be completed.

Nearly 85% of Singaporeans live in HDB flats which are cheaper than private property.

For the aspirant home owner, the question of adequate supply and price is of utmost importance, particularly those who plan to wed.

Rising cost has been a major cause of many Singaporeans marrying late and avoiding childbirth.

During the peak of the current shortage, selection of applicants became very tight. Success rates were as low 15% with some people having to wait several years.

Some are forced to put their marriage plans on hold. Those who fail keep trying year after year. Those who can afford it buy resale flats.

The situation worsened when the city’s doors were thrown open to foreigners.

Since then some 553,000 mostly professionals and technicians were granted permanent residence (PR) status, which allows them to buy resale public housing in competition with locals.

The public complained bitterly about the over-crowdedness and stress on the nation’s infrastructure, including housing shortage and rising prices.

It forced Prime Minister Lee Hsien Loong to apologise to the nation for his government’s mistakes, saying: “If we didn’t quite get it right, I am sorry but we will try and do better the next time.”

In the 80s, an average HDB flat cost less than three times an average annual income, but as the population spiralled, demand outstripped supply.

That three times rose to 5.5 times annual earnings last year and the minister now wants to pull it down to four times.

New three-room flats average around S$300,000 (RM772,300) to S$400,000 (RM1.03mil) with resale ones at choice areas hitting a million dollars.

“Our children may not be able to afford to buy houses in the future,” a Singaporean lamented. “I hope prices of flats can be controlled, so that my children can have their own homes.”

This system of giving priority based on group needs has so far worked well.

It also serves to reassure elderly Singapore-ans and young people who have just completed tertiary education and are about to start working.

They are the people most worried about living without a home in one of the most expensive cities in the world.

Discontented young Singaporeans – the biggest group of new voters – are today the most important factor to decide how long the ruling People’s Action Party (PAP) will govern this place.

The recent tumble of the HDB, one of Singapore’s early icons, ironically mirrors the decline of popularity of the ruling party itself.

The passion Singaporeans have for property can only be understood by people living in small, land-squeezed cities.

After independence in 1965, then Prime Minister Lee Kuan Yew announced the objective of creating a home-owning society.

“If every family owned its home, the country would be more stable … I believe this sense of ownership is vital for our new society,” Lee said.

The trouble for the current national development minister is not for the present but more for the future. The PAP government wants to have a population of 6.9 million by 2030 by bringing in more foreigners.

This means his work is never-ending.

“Its past achievement had made the PAP one of the most successful parties in Asia, but it can also bring it down if it stumbles,” said a professional, who is still paying off a 30-year HDB loan. - The Star

Singapore takes further steps to cool property market

Singapore's central bank on Friday introduced rules to ensure that a property buyer's monthly payments do not exceed 60 percent of his income, a move aimed at cooling the housing market and ensuring investors are not caught out by a rise in interest rates.

"The TDSR (total debt servicing ratio) will apply to loans for the purchase of all types of property, loans secured on property, and the re-financing of all such loans," the Monetary Authority of Singapore (MAS) said in a statement.

The new requirement, which takes effect on Saturday, will also help strengthen credit underwriting practices by banks and encourage financial prudence among borrowers, MAS added.

Singapore has been trying to keep a lid on property prices due to low interest rates caused by quantitative easing adopted by Western central banks. The flush liquidity could reverse in coming months, however, amid signs that the U.S. Federal Reserve is preparing to slow down its bond buying programme.

The MAS is probably worried that in the environment of low-interest rates, people are overly gearing themselves up to pay for property," said Kenneth Ng, head of CIMB Research in Singapore.

Singapore's 10-year bond yield has risen by more than a percentage point since the start of the year to around 2.5 percent currently, from around 1.3 percent at the end of 2012, following the upward trend in U.S. yields.

But mortgage rates, which in the AAA-rated city-state are tied to short-term interest rates, have only edged up slightly, with the three-month interbank rate little changed from the start of the year at around 0.4 percent.

Barclays, in a recent report, said Singapore property prices were vulnerable to a sharp rate increase after three years of super-low interest rates when private home prices rose by around 60 percent.

Should mortgage rates rise by 200 basis points within a short period, private residential prices in the city-state could fall by up to a quarter, it said.

Singapore has rules regulating the maximum amount of money banks can lend based on the value of the property.

The new requirements, which tie the loan quantum to income levels, will make it harder for property buyers to avoid additional stamp duty on purchases of second homes since they cannot use a family member's name for subsequent purchases. - Reuters, June 28, 2013. 

Singapore new private home sales soar to record number in March

SINGAPORE, April 15 — Developers in Singapore sold a record number of new homes in March as buyers returned to the market, driven by discounts and incentives and raising fears the government could take further steps to cool the housing market.

The Urban Redevelopment Authority (URA) said today developers sold 2,793 housing units last month — nearly four times the 712 units sold in February and the highest number since the URA began publishing monthly data.

Including executive condominiums or ECs, a category of homes reserved for Singaporean buyers, sales by developers rose to 3,072 in March from 921 in February.

Colin Tan, head of research at real estate consultancy Suntec Chesterton International, said the surge in home sales raised the possibility of further government intervention, even though the jump was partly due to discounts offered by developers.

Property consultants said the Singapore developers that have been most aggressive in cutting prices to lure buyers include Southeast Asia’s biggest developer Capitaland and the Far East Organisation, whose listed units include Yeo Hiap Seng Ltd and Far East Orchard.

“March’s transaction numbers are a combination of new launches, attractive pricing and discounts and rebates which would lead to short-term robust buying behaviour,” said Mohd Ismail, CEO of PropNex, a firm of property agents.

“Strong sales are not likely in the coming months,” he added.

For the month of March, the best-selling projects included those launched by Bayfront Reality, a joint venture between Aspial Corp and Fragrance Group, and Tuan Sing Holdings.

Singapore has been trying to cool its housing market as recent immigration and near-record low interest rates drove a surge in demand.

In January, the government raised stamp duties for foreign buyers of Singapore homes and set new limits on their ability to borrow.

Authorities also introduced an additional stamp duty on locals buying a second property and foreigners with permanent residency status seeking to own their first home in the Southeast Asian city-state. — Reuters

S’pore moves to keep new flat prices affordable

SINGAPORE: National Development Minister Khaw Boon Wan said the government has de-linked the prices of new flats from the prices of resale flats by varying the discounts given to first-time buyers.

This was to keep the prices of flats steady and affordable for Singaporeans buying public housing for the first time, and were in addition to the housing grants these buyers also enjoyed, he said in Parliament.

“I vary the discounts so that the prices can remain steady,” he said, in reply to a question from Lee Bee Wah (Nee Soon group representation constituency or GRC).

Khaw also took questions on resale levies, saying the government could reduce or waive the interest charges on resale levies to help families for whom the levy had become a barrier to a subsequent home purchase.

The levy can also be incorporated into the price of the new flat, so that it can be paid in installments or out of their Central Provident Fund. This is because of a revision of the resale levy formula in 2006.

“Yes there are some families where the levy has become a barrier, when the levy was calculated on a different formula. When policy changes, it won’t be fair to families who paid already on the old formula.

“If the transaction happened many years ago, it can be very large and we try to help,” he said. — The Straits Times/ Asian News Network

Credit Suisse: S’pore property prices to stay flattish

PETALING JAYA: Singapore’s residential property prices are likely to remain flattish, supported by low vacancy and strong affordibility in the wake of the city state’s seventh round of cooling measures, a report by Credit Suisse said.

The research house said it expected a further 5%-10% downside risk for the prime (high-end) end due to the vacancy, mitigated by mild increase in the mass and mid-market.

The Singapore government introduced the seventh round of cooling measures about a week ago which takes effect on Jan 12 this year to ensure housing remained affordable to Singaporeans.

The report said that with Singapore’s low interest-rate environment here to stay, a lack of attractive investment and the anticipated growth in household income driven by the tight labour market with unemployment at 1.9%, property could continue to be one of the key investment products.

The report also highlighted that higher construction costs and rising land costs could translate into an upward risk for prices.

The report said the government would manage supply “to avoid significant oversupply” as well as price to “balance affordability”. - The Star

S’pore, HK to cool property markets

Curbs on house buys can shift demand to other sectors

SINGAPORE: Singapore and Hong Kong now have identical 15% levies to slow the foreign money that has added fuel to their overheated property markets measures that will help first-time buyers but throw the spotlight on investors' next targets.

The curbs on residential real estate purchases could shift demand to retail and industrial spaces, diverting billions of dollars to those sectors as well as to housing markets in the United States, Canada, Australia and Malaysia.

Even if the pace of buying slowed, analysts said, the appetite for homes in Hong Kong and Singapore was so strong that prices were expected to stay firm or ease only marginally.

“Singapore is like the London of Asia. Many people are not here to flip their properties or sell out in two to three years,” said Knight Frank's head of consultancy and research Png Poh Soon. “There are lots of non-monetary reasons for buying Singapore and also Hong Kong property.”

The two Asian cities are fierce rivals as financial and wealth centres but share the issues of strong demand, limited space and low mortgage rates that have driven housing prices beyond the reach of many locals.

HDB flats in the Toa Payoh. The appetite for homes in Singapore is so strong that prices are expected to stay firm or ease only marginally.

Shallow capital markets, a cultural tendency towards property as an investment and concerns among mainland Chinese buyers about their home market have also played their parts. After targeting speculators with previous steps, Singapore moved last week to discourage investors by slapping a stamp duty on locals buying a second home, an attempt to keep prices affordable for most first-time buyers.

In Singapore and Hong Kong, which brought in similar measures in October, both governments want to cool but not collapse the market and avoid driving investment elsewhere.

Those moves, including a 15% tax on foreign buyers, had a big impact on sales in November and December, when some agents reported a drop of more than 40% in transactions.

As Hong Kong felt the squeeze, private home sales in Singapore jumped nearly 30% in December from November.

Prices in Singapore rose 1.8% in the fourth quarter from the previous three months and have soared almost 60% to record highs since mid-2009 despite the government's repeated attempts to subdue them.

Hong Kong's transaction volumes have recovered in January and the duration of the measures' impact is getting shorter each time, said Wong Leung Sing of Centaline Property.

“It's like using a miracle drug,” he said. “The first time it is very effective. The second time its effectiveness is largely decreased. The third time there might be no effect at all.”

Hong Kong's government is ready to step in on the demand side if prices keep rising.

“Those demand-side measures will be largely focused on the two tax structures,” said Andrew Lawrence, head of Hong Kong property research at Barclays Capital, referring to stamp duty and a levy on foreign buyers.

Already there was evidence of more Asians buying properties in Australia, the United States, Canada and Britain, he said.

Citigroup estimated 90% of recent transactions in Hong Kong were by people intending to live in the properties. That contrasts with 2010, when an estimated 50% were endusers, 20% speculators, 20% long-term investors and 10% non-local buyers.

The steps Singapore took on Friday included a higher stamp duty of 15% for foreign buyers, a new levy on sellers of industrial property and a limit on loan sizes.

Overseas buyers had already started to look away from Singapore after its previous round of cooling measures. As a percentage of home sales, buying by foreigners in Singapore dropped to just over 6% last year from 18% in 2011, Citigroup said in a report.

The bank said it expected “foreigner participation to moderate slightly” since the Singapore stamp duty was aligned with Hong Kong.

Despite the drop in foreign demand, private home sales in Singapore rose to 24,568 last year from 21,097 in 2011.

Investors who stop buying apartments and houses are almost certain to seek other assets. - Reuters

Singapore property shares tumble after cooling measures

SINGAPORE: Shares of major property developers in Singapore were battered after the government introduced new measures at the weekend to cool the real estate market.

By the closing bell, shares of top developers listed on the Singapore Exchange had sunk more than 4% as investors spooked by the measures dumped the stocks.

CapitaLand closed 4.11% lower at S$3.73, City Developments fell 7.54% to S$11.65 and Keppel Land slumped 7.24% to S$3.97.

“We're seeing a knee-jerk reaction to the cooling measures,” said Jason Hughes, head of premium client management for IG Markets Singapore.

The new measures, which came into force on Saturday, included sharply higher duties on property purchases by foreigners.

Singaporeans' minimum cash downpayments for second or subsequent homes were raised from 10% to 25% of a property's value.

But Hughes predicted property stocks would be able to ride out the storm thanks to their overseas portfolios.

“We do have to consider that a number of these guys are regionally focused,” he said, adding that the effect would have been more severe if they had been purely local developers.

HSBC Global Research said in a report that Singapore may institute more cooling measures because property demand is expected to remain robust.

“Low interest rates and an expected economic recovery this year will support demand. Further steps can, therefore, not be ruled out,” the report said.

The measures were imposed after home prices continued to rise even as the city-state suffered an economic slowdown. It narrowly avoided a technical recession in the last quarter of 2012.

The economy grew just 1.2% in 2012, from 4.9% in 2011.

Expansion this year is forecast at 1%-3%. - AFP - The Star

Singapore housing market needs more certainty — Conrad Raj

JULY 19 — Singapore National Development Minister Khaw Boon Wan’s comments in Parliament on the state of the property market illustrate the conundrum of viewing a glass of water as being half full or half empty.

Noting that residential property prices have moderated in recent months, he said the various measures to cool the market “have helped buyers, including those at the middle and low end of the market”. 

Growth in mass market private housing prices outside of the central region slowed to 0.4 per cent in the second quarter of the year compared with 1.1 per cent in the previous quarter, while overall private home prices moved up just 0.3 per cent in the first six months of the year compared with 6 per cent a year ago.

And there is a warning more measures might be introduced if the situation requires.

“These are positive signs that the market is moving towards a stable and more sustainable path. We continue to monitor the market closely, and remain ready to revise and enhance the policy, if and when the situation demands it,” Khaw said.

What exactly is the ministry monitoring, and what are its targets or goals? 

It is also good to see that short-term property speculation has fallen sharply, as indicated by the relatively low volume of sub-sales. But the fact remains that home prices have not come down — they are still at historical highs.

Perhaps the ministry should be clearer about its goals and targets. What exactly is “a stable and more sustainable path”, in its view?

FOREIGN BUYERS

Yes, the proportion of foreign purchases of residential property has come down — from 20 per cent last year to 7 per cent for the first six months of the year.

This is perhaps because of the introduction in December last year of the Additional Buyer’s Stamp Duty (ABSD). 

Foreigners (albeit those from America, Switzerland, Liechtenstein, Norway and Iceland are exempt because of certain trade agreements) here have to pay an ABSD of 10 per cent when they buy a home here.

But what is the proportion of purchases by foreigners that Singapore would be comfortable with? I am sure we do not want to eliminate foreign sales altogether. 

Also, what about the proportion of sales to permanent residents, who have been said to be one of the main causes of the steep jump in prices in sub-sales of housing board flats? 

SPELL OUT THRESHOLDS

As I have argued before in a previous column, there must be a fairer and more transparent way of introducing measures to cool the property market. 

It is not fair for the government to sell land one day and introduce cooling measures the next, as it has done previously. Buyers and sellers should not have to suffer huge losses by being caught unaware.

Property development takes time. It is often a five- to six-year proposition between buying the land, developing it and finally selling it. In the meantime, loans and other finances have to be managed. 

Forecasts are made under prevailing conditions and with current factors in mind. Developers may feel shortchanged if the government one day puts up a piece of land for sale and soon after introduces measures that are negative to developers. 

Residential property buyers and investors would feel likewise, if they purchased a property on current assumptions and conditions, and find the government introducing measures to dampen the market the next day. 

Buying a property is a considerable investment; for most people it makes up a big chunk of their assets and life savings. 

Property, in a society where a very large proportion own their own homes, impacts almost everybody. There is therefore a need for greater clarity in our housing policies. The government should spell out the benchmarks or price thresholds that would entail a response in action from the ministry.

Also, if the government believes in market forces, the “reserve price” in government land sales should be abolished. You cannot say that market forces should prevail and at the same time artificially prop up land prices with the reserve price. The national coffers might suffer a bit, but it might perhaps help make housing more affordable.

There must be more certainty in the property market. There should be less — or no — speculation on when and what measures the government would introduce to curb or cool the market. — Today

* Conrad Raj is Today’s editor-at-large. - The Malaysian Today

* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.

HDB flat prices up again in Q2

SINGAPORE: Resale HDB flat prices have inched upwards yet again, this time by 1.3% in the second quarter of this year, according to the Housing Board’s flash estimates released on Monday.

This resurgence comes on the back of a downward trend in the two previous quarters.

The percentage increase in the fourth quarter of last year, and the first quarter of this year were 1.7% and 0.6% respectively.

A more detailed release, said the HDB, would be out on July 27.

Upward swing: The Punggol Residences HDB BTO apartment blocks under construction This resurgence in prices comes on the back of a downward trend in the two previous quarters. – The Straits Times/ Asian News Network

The agency has committed to offer 25,000 Build-To-Order flats this year, and has launched more than 15,000 flats in the first quarter alone.

There will be 5,200 more flats launched this month, and will be in areas such as Bedok, Bukit Merah, Choa Chu Kang, Clementi, Geylang and Punggol.

On the private homes front, estimates released by the Urban Redevelopment Authority (URA) on Monday showed that prices have risen by 0.4% in the second quarter of this year.

Non-landed private home prices increased by 0.6%, while prices for properties outside the central region went up by a more moderate 0.4%.

There was no change in the prices in the rest of the central region.

The latest price increase is a reversal of last quarter’s price decrease of 0.1% , the first quarterly price fall since Q2 of 2009.

More detailed data will be revealed on July 27 when URA releases the full second quarter real estate statistics. – The Straits Times/Asian News Network

Tweak prior cooling measures before imposing new ones — Colin Tan

MAY 18 — Those who were uncertain over whether the robust home sales by developers in Singapore chalked up in recent months can be sustained have been left with no doubt following Tuesday’s release of April’s sales figures.

In all, a total of 2,487 new private homes — excluding executive condominiums (ECs) — were sold last month. This is a near 4 per cent jump from March and is the highest monthly level since 2,772 units were sold in July 2009.

Initially, the doubters attributed the good performance to a few select projects with well-conceived developmental themes. However, the market has proven almost every property expert wrong. It had been all doom and gloom in the weeks following December’s cooling measures.

Today, the elevated monthly sales are being described by some as the new norm, although there is nothing normal as these robust numbers have been achieved on historically low borrowing rates.

Others are even suggesting that the volume of Singapore government land sales may need to be reviewed and revised upwards if the current pace of sales is sustained. It was also not so long ago — slightly over a year — that the Real Estate Developers’ Association of Singapore (REDAS) suggested that the supply of state land be reduced as there were hints then that the market might be oversupplied.

This got me thinking: If so many of our private sector property experts got it so wrong, what of our counterparts in the public sector, especially those involved in advising the government on the five sets of cooling measures introduced so far?

Could they have similarly misread and misunderstood the factors driving the private housing market? And if they did, surely it would be in the interest of the long-term stability of the private housing market that they review some the earlier cooling measures implemented, especially those that have not quite met their objectives.

At the moment, as I see it, some of the measures — especially those relating to stamp duties — are akin to slowly putting the private housing market into a straitjacket. In the near future, the market may find it hard to go forward or move backwards, to go up or to come down.

Already, we can see the distortions in the market created by some of these cooling measures. In general, all segments of the housing market should behave in the same way, in terms of price trends or volume of sales. After all, they all provide the same service — accommodation — and are substitutes.

Today, we see the volume of resale transactions shrinking while new sales boom. Prices of suburban homes move in opposite direction to those in the central areas. This is simply not normal. 

And new apartment sizes are getting smaller and smaller. Shoebox units of 50 sq m or less bear the brunt of criticism but how many of us are aware that half of all new apartment sales today are for those below 75 sq m? And if more small units are being built, does it not mean that the supply of large or normal-sized apartments have been interrupted.

They have been lots of hints that the next set of cooling measures may target the shoebox unit. 

But before we introduce another set of cooling measures, we should fine tune some of the earlier ones. As I see it, both the sellers’ and buyers’ stamp duty measures have more or less the same impact on the market. With the introduction of the additional buyers’ stamp duty, surely there can a case for the sellers’ stamp duty measure to be made less punitive.

If we keep adding on to the cooling measures — and my feeling is that there will be more to come as we have not quite addressed the liquidity problem — without a review of the earlier ones, there will come a time when the market will be caught in some kind of gridlock. - The Malaysian Insider

* Colin Tan is head of research and consultancy at Chesterton Suntec International.

S$108mil for a bungalow

Online asking prices of S$50m for posh homes not unusual in S’pore

Singapore: A luxury bungalow in Sentosa Cove with a staggering S$108mil price tag. A huge, swanky condo unit in Cuscaden Walk on sale for a cool S$68mil.

Homes are being tagged with a level of prices never seen before here.

Online asking prices of S$50mil or more are now not uncommon. For instance, there are more than a dozen listings of good-class bungalows, mainly in the traditional upscale areas of Leedon Road and Victoria Park Road, with price tags at this level.

But with asking prices significantly higher than market prices, some experts say these could be more of a marketing tactic to generate publicity for the particular home.

So far, there have been only a handful of homes sold that have managed to cross the S$50mil mark, and none has exceeded the S$100mil threshold. But it was also important to look not just at overall prices but also at the unit per sq ft (psf) price when comparing these homes, experts added.

For instance, the most expensive landed home sold here was a 41,850-sq-ft good-class bungalow in Leedon Park that changed hands for S$61.4mil, or S$1,467 psf, in December 2010. The record psf price is held by a bungalow in Chatsworth Road that went for S$2,081 psf, or S$22mil, in July last year.

In the non-landed homes market, it was a 8,050-sq-ft Boulevard Vue unit that smashed records with a transaction of S$33.4mil in November 2009. But it was The Marq on Paterson Hill that caused jaws to drop with a 3,003-sq-ft unit snapped up at about S$6,850 psf or S$20.5mil.

International Property Advisor chief executive Ku Swee Yong said that when a home was sold at 50% above the price of a similar home in the vicinity, alarm bells should ring and buyers should look closely at the specific attributes of the property to see if it was worth the premium.

“It must have good attributes to justify why its price is so much higher than its neighbours. But if it is truly a good quality property, then buyers might still pay,” he added.

Credo Real Estate executive director Ong Teck Hui said that in a rising market, a valuer might be able to support a valuation above the prices of past sales, taking into account how much the market had risen.

But the valuer would not be able to justify a value beyond that, he added. However, there could still be demand for homes with high quantums as long as their values are at market rates.

This was because the supply of some of these posh homes was limited, experts added.

For instance, there are only about 2,400 good-class bungalows in 39 gazetted areas islandwide. They typically occupy at least 15,000 sq ft of land.

Good-class bungalow developer George Lim said that he typically marketed his high-end homes discreetly through word of mouth, friends' recommendations or through a specialised agent.

“When you reach that kind of price category, there are few people who can afford (such homes) and they are usually discerning and discreet.

“They don't go online to look for homes as that is more for the mass market So you need to find a reputable agent who is known in the market and has the right connections,” he added.

Among the online listings, the 99-year leasehold Sentosa Cove bungalow in Ocean Drive is the one with the highest asking price of S$108mil.

At a whopping S$5,436 psf of land area, the bungalow comes with six en-suite bedrooms and sits on a double plot with a sea view.

Its price is almost three times the overall price record of S$39mil for a bungalow sold in the exclusive estate in March, and more than 80 per cent higher than the record unit price of S$2,989 psf achieved in October 2010.

Other expensive homes listed include a 40,500-sq-ft good-class bungalow in Queen Astrid Park with a price of S$64mil, while another 26,500-sq-ft bungalow in Belmont Road would require a buyer to fork out about S$50mil.

Even condos are nudging well above S$50mil asking prices.

A six-bedroom 11,200-sq-ft unit at Boulevard Vue in Cuscaden Walk is listed with a guide price of S$68mil. Another 9,000sq-ft five-bedder unit at Skyline@Orchard Boulevard is asking for S$55mil. - The Straits Times/Asia News Network

The private home buyer’s journey — Ong Kah Seng

MAY 11 — Private home buying interest has remained significant despite the Singapore government imposing five rounds of market cooling measures in the past 2½ years, with sales of suburban condominiums remaining buoyant even as prices scale new heights.

The proliferation of shoebox apartments has also meant that more are able to embark upon their personal quest for a dream property. Indeed, the surge in supply of these small units in recent years has been met by overwhelming buyer response.

Whether it is an individual home buyer or joint property investors or families going for a better quality of life by upgrading from HDB flats, there is often a strong motivation for targeting that favourite property.

For investors, the motivation is more direct — perceived financial returns. Investors generally are seasoned property players, although there will be the new investors. The newbies, together with single owners of small apartments as well as some HDB upgraders, may have been primed for the purchase by various factors. They will find that the quest can be both exciting and stressful.

The majority who embark on buying private property decisions have been roused in some way.

For some, such awakening may have come from seeing their peers profiting through property investments and speculation. For some singles who buy shoebox apartments, it may stem from a desire for independence, to live apart from their families. There may also be those who have visited friends who live in private homes and are inspired to own one as soon as possible.

Daily leisure activities may also have shaped one’s desire to buy a property. In addition to fanciful show flats, shopping can also conjure up a liking towards property. With the arrival of many mega malls and big-box retail stores that present a convenient array of exciting offerings, the leisure shopper is spoiled for choice.

Home design concept stores, furniture chains and boutiques showcase all kinds of DIY offerings or professional services to consumers, some of whom are planning to own a home. And for those on tight budgets, buying a smaller or far-flung property will become more of an urgency.

Upon setting his or her mind on buying a home, the property seeker will likely use different means to source, compare and affirm the property choices. Most property seekers will validate these through studying and understanding district development plans, consulting friends in property and mortgage-related trades to ascertain the property’s potential and financing requirements.

The process will be both intensive but exhilarating for the earnest buyer, particularly for one with limited investment background who gets to understand many property and financial concepts.

The recent months have seen tremendous sales perks from developers — in the form of rebates or discounts from listed prices. Such schemes are surely attractive for those who have already tuned themselves psychologically into the mode of buying. The quest for private homes has also extended from developer sales to the resale market recently.

Buyers who have concluded their house hunting and purchase will be most excited to share the journey with peers. But it must be noted that while the property hunt is thrilling, the actual journey begins after one commits to a purchase.

The real benefits and the financing requirements will go hand-in-hand, depending on prevailing market conditions and whether the rental income is sufficient to meet the mortgage payments and other expenses. These have probably been downplayed in today’s context of an increasing desire for wealth opportunities and higher risk thresholds.

The current thinking is that given the large number of uncertainties, whether economic or supply-led fluctuations or possible policy calibrations, a buyer should not think too far but enjoy the direct benefits of owning the property. Since there are so many uncertainties, it is “the journey that counts rather than the destination”.

The past decade has seen the prevalence of “specu-vestors”, but since the harsh additional seller’s stamp duty of last December, speculation has become a thing of the past.

Most investors are now also thinking of owner-occupation should the property not be able to be rented out, hence creating another group that can be called “investor-piers”. That’s also a major property-owning mindset for many shoebox apartment buyers.

While the destination may not count as much as the journey, if the buyer enters the market at the wrong time or overestimates his long-term financing capacity, the journey will be a long and difficult one. — Today

* Ong Kah Seng is director at R’ST Research, an independent property market research company in Singapore. - The Malaysian Insider