Singapore Housing – My View (Retake 2)

Here’s more reason to believe that a correction in property prices is inevitable;

Another key change will affect property developers, who have to complete their developments within a certain timeframe and sell all units within two years of receiving its Temporary Occupation Permit (TOP).

Now, developers will be charged a daily fee for any extension of time beyond the given period, similar to the Urban Redevelopment Authority’s (URA’s) Government Land Sales programme.

There is also a new ruling on foreigners who own property here;

Foreign buyers can only purchase one landed home for owner-occupation and not for rental.

He must also sell his existing property before buying a new one, and is not allowed to sell the property in the first few years of ownership. The exact period depends on whether the property is still under construction or completed.

Owners found to breach the above rules will be fined up to $200,000 – up from $5,000 previously, with an additional fine of $2,000 per day for any continuing offence.

In the past, a foreigner who inherits a landed property must sell off the property within 10 years – the new bill has shortened this to five.

Read about it here:
http://www.straitstimes.com/BreakingNews/Singapore/Story/STIStory_592194.html

I love this ping-pong battle between a government that is hell bent on cooling the property market and the banks who are over-exposed to the property market and have to think up new tricks to avoid a credit crunch. First the government raises monetary policy then the banks lower the SIBOR rate and now the government gets tough on developers and curbs foreign speculation.

With this new ruling, developers now have no option to hold on to their projects two years after TOP. In the past, these deep pocketed developers could hold unsold units and even lease them out when the economy was soft. They would then sell them at a higher price as the economy recovered and prices were more attractive. This gave the developer the power to hold the property prices up and be stubborn about negotiating lower rates during a downturn. They got richer while the home-hunters got slaughtered after buying homes at peak prices. This truly levels the playing field for the discerning buyer. Furthermore, this move will take away all the hype from new launches now that buyers know that the developer will get desperate to sell as the dateline approaches.

In another separate report,

SINGAPORE could slip into a technical recession in the second half as the global economic recovery remains subdued and planned drug plant shutdowns could hurt the manufacturing sector, warned Senior Minister of State for Trade and Industry S. Iswaran on Monday.

A ‘technical recession’, which analysts define as two consecutive periods of negative quarter-on-quarter growth, could happen in the second half of the year, even though full year growth remains on track at 13 to 15 per cent, he said in Parliament.

‘If this happened, it would largely be a reflection of the sharp swings in the biomedical manufacturing cluster,’ he said in reply to a question from West Coast GRC MP Ho Geok Choo.

Advance GDP estimates for the third quarter released by MTI last week showed that the Singapore economy grew by 10 per cent from a year ago, after a record 20 per cent growth in the earlier quarter. But quarter-on-quarter growth momentum has declined, contracting by 19.8 per cent in Q3 on a seasonally adjusted annualised basis, said Mr Iswaran.

He said this was due to three key factors – an expected correction from the exceptional growth in the first half, sharp decline in biomedical manufacturing output and contraction in construction sector due to the completion of key commercial and industrial building projects earlier in the year.

Growth for the rest of the year will be underpinned by ‘continued growth in global demand for electronics products’ and a resurgent tourism sector, which has gained a boost from two integrated casino resorts, added Mr Iswaran.

Read about it here:
http://www.straitstimes.com/BreakingNews/Singapore/Story/STIStory_592171.html

So the question is; how often do technical recessions become full blown recessions?

Answer – almost every time.

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Comments

High land cost, development and labor cost will keep prices stable if not, on the upside. In land scarce SIN on the fast tract with heavy reliant on high nett worth workers, housing will always be in steep demand. Unless our economy suffers a prolong period of depression, owners are not or should not be pressured to sell at a loss.

At a loss because many have already committed themselves to high prices and what good will it do for our nation if they realize their losses(those who have not bought realize no losses)?

Therefore, with owners holding out, the monetary cost on those who need housing but want to wait will be high.

The maxim, buy what you can afford without regret is still the best way to go for now so long as they can keep homes affordable to most people.

Thanks for good stuff

Good article

I refer to the Straits Times article on the technical recession.

Conrad Shifu, your prediction on the recession and recovery of the economy has so far been on track and accurate.

Thank you, teacher :-)

Hey, great talk on last night, I really was enlightened. Didnt know the reason behind the whole trading thing is kinda “not that complicated” thanks to your talk.

By the way, I’m the young man who’s 21 years old whom you spoke to yesterday. I was asking you about the course.

U mentioned something about Toni Turner/Toney/Tony…

What is the title of the book?

By the way, next year still got this course?

Cant send u an email.. so dropped this comment

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