Rich as I am, it's still unfair to penalize me for wanting to be richer!

The wife and I are definitely NOT referring to ourselves...

The article below appeared in The Straits Times Forum page today.

Reference: Multi-property owner speaks up

Everyone is entitled to their own opinions (including Mr Tan) so here's our two cents: To say that every (rich) Singapore citizen should be entitled to own as many private residential properties as they desire without incurring additional taxes is akin to saying that owners of apartments in private condos should be entitled to as many free parking spaces as the number of cars they own. We have to acknowledge (even if we do not like it) that the later is impossible, especially with new condos these days. So why is it so difficult to accept the former?

Objectively speaking (and no, we do not work for the Government), the additional buyer's stamp duty (ABSD) is hardly putting citizens on equal footing with PRs or foreigners - Singapore citizens are allowed to purchase 2 properties before the ABSD kicks in, whereas PRs only get 1 and ABSD applies to the very first property that a foreigner buys.

So unless a native Singaporean has 3 wives that cannot live harmoniously under one roof (a situation that should warrant special exemption from ABSD, after he is charged with bigamy), we reckon that two private properties should more than satisfy his aspiration of home ownership with an extra for investment. Should he decides to plough more money into the market by investing in more than 2 properties, well... the Government has no obligation to continue supporting those profit aspirations, especially given the sky-rocketing home prices that many (not so rich) Singaporean are struggling to keep up with.

Finally, even the slightest hint that ABSD penalises one's "patriotism" to invest in local property is probably far-fetched. If the state of our property market is anything like those of the US or Ireland, we wonder how many of these "patriots" will continue to invest their monies here rather than abroad...


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SG PropConsult is open for business!

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The SG PropConsult page is now "live" and you will find a list of services (which we hope to expand in due course) that SG PropConsult can provide.

We must emphasize (again) that SG PropConsult is very much an information provider. Any opinions/recommendations made in our reviews are not meant to be professional advice and should not be construed as such. But we will always strive to conduct our research with the same diligence and objectivity that is synonymous with our blog.

On our fees: we believed this is pegged at a level which makes sense for us to take on a project and yet not overly prohibitive to our (potential) clients. This is especially considering that buying a private home these days is easily a million-dollar commitment.

Finally, the wife and I are very excited about SG PropConsult and we look forward to be of service to you soon. So come talk to us!

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Home prices are slated to fall this year. Question is, by how much?

Prices of private homes are poised to fall this year. This was foreshadowed in the official flash estimates for the fourth quarter of last year which showed a slowdown in growth.

Urban Redevelopment Authority's private residential property price index rose a mere 0.2% quarter-on-quarter in Q4 2011, its most anaemic growth in 10 quarters since the index bottomed out in Q2 2009.

From the 15.8% q-o-q increase in Q3 2009, the index has now moderated for nine consecutive quarters, according to CBRE's analysis. The 0.2% q-o-q hike in Q4 was lower than the 1.3% q-o-q rise for Q3 last year. For the whole of 2011, the index rose 5.9% - a marked slowdown from the 17.6% jump in 2010.

Most market watchers say it is a given that prices will go down this year, amid the weaker economic outlook and poorer sentiment, especially after the introduction of the additional buyer's stamp duty (ABSD) last month.

"Developers know they need to cut prices but the difficulty is in gauging how much. If they don't cut enough, buyers are not going to act. But if they give too much, there's always a fear that buyers will expect a bit more. What you want to do is to give enough for the fence sitters to come back into the market. Despite the weaker economic outlook, there's still a lot of cash and liquidity in the market," says Knight Frank chairman Tan Tiong Cheng.

DTZ's head of Asia Pacific research Chua Chor Hoon predicts a 10 - 15% drop in URA's overall private home price index in 2012 citing the ABSD which took effect on Dec 8 and the economic slowdown. The luxury housing segment, where there are more foreign buyers, is expected to take the biggest hit given the top ABSD rate of 10% levied on their residential property purchases.

CBRE executive director Li Hiaw Ho expects overall demand for new private homes to be trimmed by 15 - 20% this year.

"Price of luxury/prime condos may fall by 10 - 15% in 2012, and the mass-market condos, by 5 - 10%," he added.

URA's flash estimates show that the price index for non-landed private homes in Outside Central Region (OCR) - where mass-market condo projects are located - was the star performer, though it has also dimmed somewhat. It rose 0.6% q-o-q in Q4 last year, a slower rise than the 2.1% increase in Q3 2011. The full-year 2011 increase of 7.7% was also slower than the 15% climb in 2010.

Prices of non-landed private homes in OCR increased the fastest as demand was supported by HDB upgraders as well as investors, notes DTZ's Ms Chua.

Credo Real Estate executive director Ong Teck Hui notes: "The strong run in OCR market has led to their current (Q4 2011) prices being 28.3% above their pre-financial crisis peak in 2008, while prices in Core Central Region (CCR) and Rest of Central Region (RCR) are only 6% and 15.9% higher than their respective 2008 peaks."

The price index for non-landed homes in CCR - which includes the traditional prime districts, financial district and Sentosa Cove - appreciated 0.5% q-o-q in Q4, following a 0.7% gain in Q3. The full-year 2011 increase was 4%, significantly lower than the 14.2% rise in 2010. The index for RCR for Q4 was unchanged from the preceding quarter, taking the full-year appreciation to 4.4%, after rising 17.6% in 2010.

Source: The Business Times

Most market analysts have said that prices for mass-market private homes will only fall by between 5 to 10% this year. However, the wife and I will go on a limb here by saying that we think mass-market home prices will drop by more than 10%. This is because:

1. More mass-market projects are expected to be launched this year, adding to the rather substantial inventory of launched but unsold units in the market.

2. The furious pace in which the Government is releasing land parcels through its Government Land Sales (GLS) scheme - most of these are slated for mass-market homes or ECs.

3. The new additional buyer's stamp duty (ABSD) rule stipulating that all land parcels bought by developers have to be built and fully sold within 5 years - this is likely to put more downward pressure on home prices.

4. The ramping of supply of HDB flats (especially BTO) and easing of HDB flat purchase criteria (income ceiling increase, higher allocation for second-time buyers etc) may mean that some demand for mass-market private homes will be siphoned off to HDB flats.

Only time will tell if our observations are correct or just a load of bull...

But what do you think?

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New project sales update: 225 units sold at The Hillier!

Far East Organization's project The Hillier in Upper Bukit Timah has chalked up healthy sales, despite the recent property cooling measures.

Close to half of the 528 units at the Soho-style project have been sold so far, the property developer said yesterday.

One key factor seems to be the developer's offer to give a stamp duty reimbursement of 3%. Another sweetener is furniture vouchers, with the amount varying based on the apartment size.

Far East is offering a "stamp duty reimbursement" of 3% to all buyers, a move industry players say is equivalent to a 3% discount.

Far East yesterday said 93% of the buyers were Singaporeans and PRs, adding that more than half of the buyers are existing residents in the Hillview neighbourhood.

The developer has been collecting cheques since the project's preview phase started on Dec 16 and buyers have snapped up 225 units averaging $1,175psf. So far, 333 units have been launched.

Prices start at $668,000 for a 549sqft one-bedroom studio unit, which works out to $1,217psf.

The concept is similar to Far East's other mixed-use projects such as The Tennery at Junction 10 and The Greenwich in Seletar, where residential components are integrated with retail malls.

Some market observers have labelled the offer to absorb stamp duty and the furniture vouchers as marketing tactics and have called on developers to lower their price instead.

But buyers like Dr Ng said he felt it made no difference to him. "Giving vouchers is like lowering the price. Ultimately, my concern as a buyer is the net amount I will have to pay and whether I feel it's value for money," he said.

Some market observers add that developers may wait for a while before cutting prices.

Developers will be more price sensitive in the current market, said PropNex chief executive Mohamed Ismail, where many buyers are aware prices could fall further.

"Hence lowering prices on its own may not always work as some buyers will feel it's not low enough... Pairing incentives like stamp duty absorption with lower prices may have greater appeal."

The Hillier, a 99-year leasehold project, contains a mixture of one- and two-bedroom apartment in two blocks: a 22-storey New-York themed tower and a 28-storey tower modelled after the modern architecture seen in London.

Both towers sit above hillV2, a retail and lifestyle shopping mall slated for completion by next year. The Hillier will be ready by 2016.

Source: The Straits Times

Despite calls from market observers for a direct lowering of prices, the wife and I felt that this will only happen as a last resort. There is compelling reason why developers like Far East will prefer to give out stamp duty reimbursements and furniture vouchers: By doing so, the average price for projects such at The Hillier can still achieve average price of $1,175psf. A direct discount will knock at least 4% (i.e. 3% stamp duty + 1% furniture vouchers) off the selling price, which will reduce the average selling price to around $1,128psf. So by employing what some market observers termed as "marketing tactics", developers may continue to prop up the (perceived) selling price. And as long as there are still buyers like Dr Ng, there is little incentive for developers to lower their prices directly.

If the wife and I are considering a 2-bedder at The Hillier because of hillV2 and its supposed proximity to the upcoming Hillview MRT station, we will be sure to check out neighbouring projects such as Glendale Park and Hillview Heights as well. Granted that these are older projects but both are freehold and currently transacting at about $1,000psf. And our gut feel suggests that the upside potential of these developments may not pale comparison to The Hillier...

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The Real Deals (22-12-2011)

The latest issue of  "The Real Deals" featured the up and coming estate of Punggol.

According to an entry in Wikipedia, Punggol, also spelt as Ponggol, means "hurling sticks at the branches of fruit trees to bring them down to the ground" in Malay. It could also refer to a place where fruits and forest produce are offered wholesale and carried away. These possible names indicate that Punggol was a fruit growing district. The place is said to take its name from the river Sungei Ponggol.

Punggol used to be called a "ghost town" due to the large number of built but unoccupied HDB flats. It was unpopular with potential home buyers then, given its distance from the city and lack of malls and recreational facilities. But what a difference a couple of years make!

The Real Deals (22-12-2011)


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