Residential Market News Extract - 28 May 2012

Credit data indicates property moves work

It appears people with existing home loans are not going back so often for more. In contrast, those without outstanding mortgages now take up a higher share of private home loans.

The latest figures from Credit Bureau (Singapore) or CBS seem to suggest the property cooling measures have been effective. The measures included lower loan-to-value (LTV) ratios for home buyers with existing home loans.

The seller's stamp duty, aimed at curbing short- term property trading, and the additional buyer's stamp duty (ABSD) may also have deterred property investment and resulted in a higher proportion of first-loan cases.

CBS data shows that 58.3 per cent of the 15,410 Singaporeans/PRs granted private home mortgages (including refinancing cases) in the first three months of 2012 did not have any outstanding home loans either for a HDB flat or private residential property. This figure is higher than the 56.4 per cent for full-year 2011 and 53 per cent for 2010.

Conversely, the proportion of second and third- loan cases among Singaporeans and PRs granted private home mortgages has been falling.

CBS' data also showed that among non-PR foreigners, the proportion of first-loan cases increased from 77.8 per cent in 2010 to 82.5 per cent last year before dipping to 79.7 per cent in the first quarter of this year. A more salient point could be the relatively higher proportion of first-loan cases, hovering around the 80 per cent mark, compared with Singaporeans/PRs, where the figure is closer to the 60 per cent levels

The figures should help clear a popular myth: that foreigners have dominated multiple property purchases. As the CBS data shows, Singaporeans and PRs are more likely to be multiple property owners, which is not surprising as Singaporeans are more familiar with the local market.

In addition, some borrowers may have paid up their first home mortgage before buying a second property in order to qualify for a higher LTV of up to 80 per cent, compared with 60 per cent for those with one or more outstanding home loans. There could be also cases of parents buying a second property but using their children's name to circumvent the lower LTV and to avoid paying ABSD.

Source: Business Times – 28 May 2012

UK tax changes to impact S'pore property buyers

Recent tax changes in Britain will mean higher stamp duties and other new taxes for some Singaporeans investing in property there.

The taxes might be particularly hard on investors who have bought property above £2 million (S$4 million) using a company as opposed to a standard purchase.

A proposed annual charge, for example, will apply both to existing homes and new homes above £2 million held by companies.

The charges will likely take effect next April.

The recent budget targeted buyers of homes of more than £2 million who may have dodged stamp duties by making their purchases through overseas firms.

Buyers from Asia and Eastern Europe are thought to have bought most of these high-end homes. They often use offshore companies as it allows for the owner's family to avoid an inheritance tax of potentially 40 per cent, according to British tax and financial adviser The Fry Group.

For instance, as of March 21, the stamp duty on property sold for more than £2 million is 7 per cent, up from 5 per cent. The duty for a company buying such a home has tripled to 15 per cent.

Companies are also expected to be subject to an annual charge ranging from £15,000 to £140,000 for homes above £2 million. In addition, a capital gains tax on non-UK entities is likely to come into force next year.

But foreign investors thinking about new purchases will have more issues to confront.

'We are already seeing an impact with an increase in demand for properties between £1 million and £2 million where you have the normal rates of stamp duty without the annual tax or capital gains tax exposure,' Mr Conder said.

Investors are also considering commercial property, which is not affected by the tax changes.

Source: The Straits Times – 28 May 2012

Novena Ville sold en bloc for $131m

Tenants of a busy stretch of eateries in Novena are weighing their future after the Novena Ville site was sold to the Fragrance Group for $131.52 million.

Novena Ville comprises 33 apartments and 10 shop units, which include restaurants like the well-known Wee Nam Kee Chicken Rice shop and The Vines Seafood and Steak Restaurant.

With the sale, each apartment owner stands to receive gross sales proceeds of between $2.1 million and $2.7 million, and each shop owner between $4.8 million and $6.3 million.

Source: The Straits Times – 26 May 2012

Some flat owners sitting on a goldmine

Some lucky Housing Board home owners, whose flats are entering the resale market this year, are looking at more than double the price they paid for the units.

Property analysts say such high asset appreciation, attributable to good timing and a buoyant resale market, is one that is unlikely to be repeated in a long time.

These flat owners, who had the keys handed to them in 2007, would have fulfilled the minimum occupancy period (MOP) of five years this year.

As the prices of new flats are pegged to market rates, albeit at a discount, another chance to cash out at such a significant premium is unlikely to happen any time soon.

The resale price index is likely to remain stagnant in the coming year, and any growth would be very small.

Meanwhile, astute real estate agents are tracking MOP dates to find out where to lobby residents to sell. ERA agent Chris Neo said the pickings were hottest in Strathmore Avenue two years ago and Redhill Road last year. 'Most flats that have their MOPs up this year are likely to make a profit. It's only a matter of how much.'

Source: The Straits Times – 26 May 2012

862-unit condo in Whampoa East launches today

The 8 Riversuites condominium in Whampoa East launches today although some of the 862 units have already been snapped up.

More than 200 homes at the 99-year leasehold project were sold over a weekend during a private preview earlier this month, according to a UBS Investment Research report.

The average selling price was $1,400 per sq ft (psf), after buyers were given a 5 per cent early-bird discount by developer United Engineers.

The one-bedders of about 450 sq ft at 8 Riversuites were said to be priced at about $600,000 while two-bedroom units of about 700 sq ft cost about $900,000.

They make up about 60 per cent of the project and were the most popular among preview buyers, the UBS report added.

The project, which will have 843 units ranging from one- to four-bedroom homes across four towers and 19 strata-terraces, was designed by Japanese architect Miyake Masaki, who drew inspiration from the river. It is expected to be completed in the first quarter of 2016.

Reputable schools such as Cedar Primary, CHIJ Primary and Secondary, St Joseph's Institution International, and the Stamford American International School are close by.

Source: The Straits Times – 26 May 2012

Farrer Road holding its own in prime district

It has tended to be overshadowed by the more glamorous Bukit Timah, but the Farrer Road area still holds its own as a desirable residential enclave.

The interest shown in a site in Farrer Drive has underscored the neighbourhood's potential.

An unknown party has committed to bid a minimum of $88.9 million for the 0.63ha residential plot up for sale on the reserve list.

It works out to about $823 per sq ft per plot ratio (psf ppr), said to be the highest application bid, in terms of psf ppr, lodged to trigger a reserve site in the Government Land Sales programme.

The interest points to the Farrer Road area - billed as the 'cousin' of high-end Bukit Timah - heading for lift-off.

Several new condominiums are being built; the Farrer Road MRT station on the Circle Line opened last year; Empress Road Market has the food angle covered.

Property consultants said that properties there will continue to do well, maintaining a 'respectable price premium'.

The area offers some good prices, even as it is sandwiched between the prime areas of Holland and Bukit Timah. And buyers hunting for bigger units could do well to look in the resale market in the area.

A 1,604 sq ft unit at Spanish Village, a 25-year-old condo in Farrer Road, sold for $1,571 psf last month, while a 1,701 sq ft apartment at the 27-year-old Tulip Garden condo nearby sold for $1,264 psf in March.

Both are freehold condos.

The Farrer area, with many older freehold projects, is known for collective sales, but whether it continues to be a magnet for such deals remains to be seen, experts said.

Source: The Straits Times – 26 May 2012