Residential Market News Extract - 20 June 2012

Buyers return 150 private homes in May

Private home buyers returned 150 units to developers last month at projects such as Sky Habitat, The Tampines Trilliant and Hillsta - the highest number in at least five years.

These units, bought in April, made up 5.7 per cent of the more than 2,600 non-landed homes, including executive condominiums (ECs), sold that month.

Despite the high absolute figure for returns, experts say that in percentage terms, the rate is in line with last year's.

They add that the spike in absolute numbers is largely due to April's robust sales which had buyers snapping up the most number of units in almost three years.

Return rates are defined as returned units as a percentage of total non-landed sales in the previous month.

These rates have remained largely below 6 per cent.

While the 150 returned units represent a five-year high in terms of absolute numbers, the percentage return rate was higher in the earlier part of the year.

For instance, while 52 units were returned in January, that translated to a return rate of 9 per cent. This may have been caused by the tough round of cooling measures unveiled last December.

However, the record is still that set in February 2008; the rate was a staggering 41 per cent, with 127 units returned out of about 310 non-landed units sold, as concerns over the United States economy and choppy stock markets hit sentiment.

Last month, 15 units were returned at Hillsta in Choa Chu Kang's Phoenix Road, 11 units at EC project The Tampines Trilliant and 10 at Sky Habitat in Bishan.

In April, buyers returned 17 units at Riversound Residence in Punggol and nine each at Ripple Bay in Pasir Ris and at EC project Twin Waterfalls in Punggol.

Source: The Straits Times – 20 June 2012

 

S'pore 'resilient to global shocks'

Singapore has a high degree of resilience to global financial shocks, despite its open economy and dependence on global finance and trade, said ratings agency Moody's Investors Service.

But the economy is facing structural challenges with slower growth and changes in the political landscape.

Still, Moody's is keeping a stable outlook on its triple-A rating on Singapore's sovereign credit, citing strengths in its economy, institutions and the Government's financial position.

In its annual credit report on the country released yesterday, Moody's said Singapore excels in four areas: its strong economy, institutions, government finances and low vulnerability to external shocks.

It noted that the economy had rebounded from its recession in 2009 to 14.8 per cent growth in 2010, largely due to a competitive trade sector and flexible labour market.

But Singapore faces a key challenge in raising productivity and innovation as global competition heats up.

The report also noted that liberal immigration policies had helped boost growth in the past 10 years.

But 'rising popular anxiety over the significant increase in the number of foreign workers has prompted the Government' to change its immigration policies.

This will in turn lead to a tighter labour market and contribute to upward pressure on costs, unless productivity measures can help offset the rise.

One area of concern was the country's ability to use monetary policy to keep prices stable, with inflation having moved above 5 per cent recently.

Moody's noted the exchange rate policy did not prevent interbank interest rates from dropping to historic lows, while the high costs of cars is outside the exchange rate's influence.

Demand for housing also remains high even though cooling measures have helped slow price increases.

Moody's has also rated the Government's financial position as being 'very high', despite the move to channel more resources to help lower-income earners.

It said the country's strong balance sheet was backed up by investments made by the Government of Singapore Investment Corp (GIC), which manages more than US$100 billion (S$127 billion) of Singapore's reserves.

The report added that Singapore's financial system remains resilient to shocks, largely due to local banks' healthy balance sheets.

On the domestic front, Moody's said political risks remain low, even though the recent general election, presidential election and Hougang by-election had indicated 'an erosion in support' for the ruling People's Action Party.

Source: The Straits Times – 20 June 2012