News Flash! Minister Mah has heard us!

Posted: September 14, 2009 by fievel in Labels: , ,
4

Talk about People Power! After a few weeks of citizens appealing to the government via the Straits Times and other alternative medias such as blogs and online petitions, Minister Mah has moved to curb property speculation in Singapore with immediate effect in today's parliamentary meeting. [ See Straits Times Report ]


While this is great news it will take time for the public housing sector to start showing a price decline due to correlation, if at all. If the HDB resale market does not cool down even with the curbing of speculation in the private housing market, then it is apparent that the supply-demand dynamics in the HDB market needs to be looked into and worked on directly. I wait with bated breath to see where this road leads us in the next few weeks or months...Below is the ST report for your reference...in the mean time, I thank Minister Mah for finally doing something that makes sense and not cents


THE Government has stepped in to temper exuberance in the property market and preempt speculative bubble from forming.

With immediate effect, it will make it tougher for home buyers to borrow by disallowing interest absorption scheme and interest-only loans to prevent excessive speculation, National Development Minister Mah Bow Tan announced in Parliament on Monday.


This means that banks and developers will not be allowed to offer housing loans whereby the borrower only pays the interest and defers repayment of the principal to a later date.


Mr Mah also announced that the Government will reinstate land sales through its confirmed list system and increase the supply of sites under the "reserve list". Sale of state land under the confirmed list was suspended for the first half 2009 Government Land Sales (GLS) Programme to help stave off oversupply risk as the property market here was then on a downtrend.
Instead, state land was only made available under the 'reserve' list system for the first half of the year.

Under the reserve list system, the government releases a site for sale only if an interested party submits an application with a minimum price that is deemed acceptable.

By contrast, land parcels under the confirmed list will be tendered according to scheduled dates - which could translate to more residential property launches.

Mr Mah said speculation was trickling back into the property market and the measures were taken to prevent the overheating.

New home sales in Singapore have shot through the roof recently. Resale prices of many popular projects have also risen from the lows early this year.

4 comments:

  1. About bloody time.

    This is not the first time Mah Bow Tan needed a kick in the butt to get him moving ... took us what felt like *forever* to finally see that the Northeast corridor was congested and needed fixing.

    To be fair to him, he does move in the right direction, albeit grudgingly, after getting kicked which is more than I can say for most of the other ministers in the government. Frankly, Mah Bow Tan is far more suited to be a top civil servant than a minister or a politician. In most other places, he'd have been voted out of office long ago (ignoring Potong Pasir, heh, he hadn't had a chance to "prove" that he sucked then).

    Well, let's see if his measures solve the problem or it ends up being half-measures that don't work.

  1. Fievel says:

    Well the property counters are in panic mode for the last 30 minutes or so. Allgreen dropped 8% today, Capitaland shed 4.4% at this moment of writing. Hopefully things move along.

  1. Anonymous says:

    I don't think HDB prices will be much affected. If anything, more buyers will enter the HDB market instead of the private market.

  1. Fievel says:

    I don't think so. The private property prices ought to be stopped in its track now with the removal of the IAS, as we face a supply glut this year and next. The developers who didn't launch their condos before today have got to be reeling from missing the boat to offload their projects. Now, those developers with a lower apetite for risk will not dare to hold off anymore. A race to the market should ensue for the projects that are already ongoing.

    In the face of the prospects of a private housing market with less speculation, every genuine condo buyer knows the prices are going to stay at par at best given the current inflated prices from the past few months of speculative activities, or decline at worse economic scenarios. As such they will be willing to hold onto their chairs and not join the mad rush.

    With declining private housing prices, a high COV HDB is much less desirable as the slightly more luxurious alternative is no longer that far away. This should soften the prices HDB sellers are holding out for.

    Nonetheless, depending on how severe the HDB supply shortage is, the HDB prices will only correct to a proportionate extent. But it should logically fall. The $30k HDB first timer grant is quite pointless as it can be erased in one month of price volatility in today's situation. As such, most of the frustrated HDB first timers should now expect to pay a fairer asking price, perhaps at or very near to valuation, given this move by Mr. Mah.

    I think sentiments feature quite heavily in Singapore's real estate market, more so than other countries, because of the speculative nature.