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Property curbs to stay for some time / Resale flat prices 'unlikely to rise' despite higher CPF grants

Property curbs to stay for some time: Lawrence Wong

Property curbs on homes are likely to stay for some time as demand in the market remains "very resilient", National Development Minister Lawrence Wong has said.

This has put paid to any hopes for the cooling measures to be rolled back any time soon, amid expectations that this year's Budget would have offered some reprieve to developers here.

Mr Wong, who is also Second Finance Minister, said in a Bloomberg Television interview yesterday that the curbs "have helped to achieve a soft landing in the property market".

"If you look at the market today, demand remains very resilient," he added.

Private residential prices in Singapore fell 3 per cent last year.

But home sales topped those in 2015 as a third straight year of price declines stoked pent-up demand from home buyers.

Some of the curbs have been in place since 2009.

They include capping debt repayments at 60 per cent of a borrower's income, as well as the Additional Buyer's Stamp Duty.

But the Government's move to stand pat on the curbs came as no surprise to most in the industry.

Mr Tay Hong Beng, head of real estate at KPMG in Singapore, said the Government may be concerned that "the existing economic conditions with generally lower interest rates and relative affordability of the residential properties may create an unmanageable spike in demand from both foreign and local investors".

This year's Budget includes bigger Central Provident Fund housing grants for HDB resale flats, which is likely to sustain the increase in resale volume. Resale volume rose 7.8 per cent last year, compared with 2015.

This means that the resale price index, which has remained flat since the third quarter of 2015, will certainly stabilise or perhaps rise slightly with increased demand and higher resale volume.

A healthy Housing Board resale market with stable prices could encourage those aspiring to upgrade to private homes and lift the demand for them.

Mr Lim Ming Yan, president and chief executive of CapitaLand, expects the curbs to stay in place for at least another year.

"We see volume picking up, and the price declines have slowed," he told Bloomberg earlier this month, noting that there is no compelling reason for the Government to lift the curbs."

"We see this trend continuing for 2017."

The Government is probably reluctant to pull back on the curbs because there remain the risks that doing so will overheat the market again.

Adapted from: The Straits Times, 22 February 2017

Resale flat prices 'unlikely to rise' despite higher CPF grants

With the announcement of enhanced resale flat grants comes the question on homebuyers' minds: Will sellers raise prices?

The Central Provident Fund (CPF) housing grants, which are effective for resale flat applications from Monday, were raised by $10,000 to $20,000 for first-timer families, and $5,000 to $10,000 for first-timer singles, Finance Minister Heng Swee Keat announced in his Budget speech.

But some prospective buyers, like Ms M.L. Yong, 30, are concerned that sellers could jack up the price if they find out she is a first-timer applicant. For the past two years, she and her fiance have been looking for a Housing Board flat near his parents' home in central Singapore.

The couple, who have a monthly combined income of $10,000, are tying the knot later this year.

"The grants are very welcome and make resale flats near his parents more affordable now.

"But what is to stop sellers from charging us more?" asked Ms Yong, who works in an architecture firm.

Industry watchers said Ms Yong has little cause for concern, though it is still possible that some sellers may attempt to pocket the gains.

Some sellers will certainly try and perhaps raise prices by half the grant amount. But it is very unlikely for most sellers to do that.

The resale market is and has always been a buyer's one.

There is a simple solution for the buyers should a seller decide to raise prices. They simply go to the next flat.

With an expected rise in demand for resale flats, sellers may soon be able to sell their units in a shorter time, which currently averages around three months.

The impact on resale prices will be minor, with a possible rise of 0.3 per cent this year.

Meanwhile, resale transactions are expected to increase due to the measures.

The volume of transactions may go up by about 10 per cent.

A total of 20,813 resale flats changed hands last year, and the number is expected to cross 22,000 this year.

Indeed, with the recent price corrections in the HDB resale market in the past few years, and now with the increased grants, the Government's decision is timely.

It opens up more choices for young couples who are considering purchasing HDB resale flats.

These grant enhancements are meant to help new couples looking for a home, Parliament heard on Monday.

But property experts believe the rationale for implementing them now is also to encourage financial prudence in homebuyers in the current economy.

One clue is the larger grants for smaller flat types.

It shows that the Government wants families to spend within their means.

In a competitive job market today, a smaller flat is easier to maintain, especially when times are bad.

The group most likely to benefit are young families with pressing housing needs who also want to live near their parents, said ERA Realty key executive Eugene Lim.

The measures may also encourage some couples to tie the knot earlier and have children soon after marriage.

Adapted from: The Straits Times, 22 February 2017

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