CPF Update - Owners Told To Top-up CPF Shortfall By Amount Sold Below Valuation
By: Dennis Wee Group
12 May 2009
In view of the current property market, some owners are selling their properties below valuation. According to CPF Board, if an owner sells his property below valuation and it is a negative sale (ie. the owner is not making any money from his sale and is unable to refund to his CPF account the full CPF utilised plus interest), there is a possibility that CPF Board will require the owner to top-up his CPF shortfall by the amount sold below valuation.
Example:Sale Price : $500,000
Valuation : $520,000
Outstanding Loan : $450,000
CPF Refund + Interest : $100,000
After repaying the $450,000 outstanding loan, the owner is only able to refund $50,000 back to his CPF account instead of the required $100,000. CPF Board may ask the owner to top-up his CPF shortfall by the amount sold below valuation, ie. $20,000.CPF Board has clarified that the above is on a case-to-case basis and owners are required to write to CPF Board to enquire if they are required to top-up any shortfall. Agents are therefore advised to ask owners who are selling below valuation to write to CPF Board to enquire if they are required to top-up any shortfall in CPF before selling their property. The above will not apply to owners who are selling above valuation and it is a negative sale or owners who are selling below valuation and it is a positive sale.
Monday, May 11, 2009
Tuesday, March 3, 2009
Property Market Update for December 2008
Monthly Property Market Update for December 2008
Introduction
The global economic pie is shrinking rapidly, and when that happens, there will not be enough business to keep everyone happy. So far, all the economic numbers, data, and statistics that have been released by both the governments and private sector analysts the world over are pointing to a long and torturous year in 2009.
And as for now, nobody is any wiser about when the recovery will begin. As for the interim period, there will be no denying or escaping it – in order for the global economy, including Singapore’s to get better, there will be many bitter pills to swallow. In short, the global situation will get worse before it gets better.
Fortunately, not all the housing sectors in Singapore will be adversely affected by the on-going downturn – at least not the public flats that continue to provide more than 70% of the secondary market transactions for real estate agents. Demand for resale flats continue to stay on the healthy level; and as the crisis deepens, more prospective buyers may be forced to go for the safer option of public flats which are being heavily subsidised by the state.
(A) The big picture of the larger economy
[A.1] Global economy in serious trouble – IMF
The International Monetary Fund (IMF) reported that the unemployment rate in the 15-nation euro region will reach 8.3% in 2009.
A study by the Organisation for Economic Cooperation and Development (OECD), which includes the world's richest economies, said that the financial turmoil that started in the US has rapidly spread to the rest of the world. The study indicated that the number of unemployed people in its 30 member nations will rise to 42 million in 2010 from 34 million now.
[A.2] Prospect bleaker for US economy
The year-old recession in the US began to intensify with the third quarter growth shrinking by 0.5%.
§ [A.2.1] Consumer spending and corporate earnings down
According to revised figures from the US Commerce Department released on 23 December 2008, consumer spending along with corporate earnings fell the most in almost three decades and the contraction in GDP was the worst since 2001.
§ [A.2.2] Residential investments down
Residential investments contracted 16% at an annual pace in Q3 2008. Besides, new-home sales plunged 2.9% to 407,000 in November 2008, the lowest level since January 1991.
The National Association of Realtors (NAR) reported on 23 December 2008 that sales of existing homes fell 8.6% to an annual rate of 4.49 million in November, from a downwardly revised pace of 4.91 million in October.
§ [A.2.3] Job losses up in US
On 5 December 2008, the US Labour Department confirmed that some 2.7 million jobs have been lost since the US slipped into recession in December 207. It also revealed that the US economy lost another 533,000 jobs in November 2008 and the unemployment rate now stands tall at 6.7%. Many economists are expecting the unemployment rate to rise to 8% in 2009.
The government report also corrected the previous months’ job loss data as follows: October saw a loss of 403,000 jobs (up from an earlier estimate of 240,000) and September job losses were revised up to 320,000 from 284,000.
In the week ended 20 December 2008, the number of Americans on dole rose 140,000 to 4.506 million people – the highest since December 1982 which saw 4,509 people receiving unemployment benefits.
This means that the current economic recession is far worse than the last two recessions and may need much longer time to recover.
[A.3] US subprime mortgage crisis spread to other domains
Rising unemployment in the US has intensified and widened delinquencies on mortgages across the nation.
§ [A.3.1] More prime mortgages in trouble
The continual slide in property value are causing more prime mortgages to sour, and exacerbating foreclosures on prime mortgages.
The US government efforts to rescue the massive housing slump can at best be described as slow. In earlier December 2008, the Federal Reserve began its first move to buy up to US$100 billion of government-back mortgages. It was the first step in the right direction but the journey will be a long and painful one.
Home foreclosures in the US may rise to 8.1 million homes over the next four years, according to Credit Suisse.
§ [A.3.2] US Commercial real estate asking for help
Even big commercial real estate players in the US are not spared the blushes. The US$6 trillion industry of hotels, office buildings and shopping malls, has recently asked the US government for help in providing some ‘credit market support’.
The commercial property industry is bracing itself for a record total debt of close to US$530 billion due for refinancing in the next few years. In 2009 alone, about US$160 billion of the huge pile will need to find fresh financing. However, with credit virtually in non-existence, thousands of those properties could go into foreclosure or bankruptcy if owners are unable to get new loans.
The trade associations are asking that their members be included in a US$200 billion lending facility that was created by the government for consumer debt such as car loans, student loans and credit cards.
(B) The overall performance of Private Residential Property segment
[B.1] Private homes prices continue down trend as export stalls
The final quarter of 2008 (Q4) saw the steepest drop in private home prices in a decade – shedding 5.7% quarter-on-quarter. This is on top of the 2.4% overall drop in home prices in the previous quarter (Q3) of 2008. (See Table [1] below for details)
The price fall in consecutive months brought the overall price growth to the negative region of minus-4.3% for the whole of 2008 year-on-year. This is a stark contrast to the 31.2% price hike in private home in 2007.
Since late 2007, potential buyers have played the ‘wait-and-see’ game; and their patience has been rewarded with cheaper home prices over the months.
In Q4 2008, prices for apartments in the Core Central Region (CCR) were down 6.3%; while those in the Rest of the Central Region (RCR) slipped 5.5% and Outside Central Region (OCR) dropped by 4.7%. This follows declines of 2.7%, 2.4% and 1.5% respectively in those areas in Q3 2008.
Looking over the horizon, the private home prices are likely to stay down for at least the next six to nine months as the property market will have to digest the over-supply situation amid one of the worst global recession in decades.
Prospective buyers sitting on the fence certainly feel vindicated and are likely to persist in their strategy of ‘sitting out the crisis’.
[B.2] Primary home sales did better in November 2008
Primary home sales did slightly better in November 2008 only because the sale figures were compared with the ‘flat performance’ of 112 sales transactions in the preceding month. The overall sales volume rose to 192 transactions – which could only be described as an ‘indifferent’ performance. See Tables [2] to [6] for details.
The unsold inventories of new home units continue to pile up with unsold units outweighing sold units by 6,033 to 4,208. (See Table [3] for details)
§ [B.2.1] Performance of primary sales in Core Central Region (CCR)
Out of the 188 brand new condo projects on sale in the Core Central Region, only 6 projects had some sales. In all, the total new units sold in CCR in October 2008 were 63. See table below for details.
§ [B.2.2] Performance of primary sales in Rest of Central Region (RCR)
Out of the 123 brand new condo projects on sale in the Rest of Central Region, only 13 projects had some sales. In all, the total new units sold in RCR in Nov 2008 were 28. See table below for details.
[B.2.3] Performance of primary sales in Outside Central Region (OCR)
Out of the 140 brand new condo projects on sale in the Outside Central Region, only 19 projects had some sales. In all, the total new units sold in OCR in November 2008 were 101. See table below for details.
[B.3] Secondary home market faces steep challenges in 2009
§ [B.3.1] Secondary sales of Condo/Apt in Nov-Dec period halved
The revised November 2008 secondary sales figures fell way short of expectation, falling more than 50% of October’s transactions. The December 2008 interim figures fared even worse. (See Table [7] below for the full-year secondary sales performance of condo/apartments).
This is clear evidence that home owners and buyers alike are wary of the current market situation, preferring to be ‘safe than be sorry’. The current economic downturn, which has been exacerbated by the on-going corporate layoffs and insolvencies, is expected to continue to suppress buying activities for at least the next six months to a year. The near term prospect for secondary sales does not look good.
Table [7] – Total Secondary Private Sales of condo/apartments so far in 2008
Months
Sales volume
Primary sales
Secondary Sales
Total
Jan
320
949
1,269
Feb
174
807
981
Mar
301
704
1,005
Apr
274
927
1,201
May
441
811
1,252
Jun
801
370
1,171
Jul
897
831
1,728
Aug
320
1,007
1,327
Sept
376
643
1,019
Oct
112
680
792
Nov
56 (revised)
291 (revised)
347 (revised)
Dec
41*
110*
151
Source of data – SISVRealink
*Interim figures according to the latest search results on 10 January 2009. The final figures will be revised in the next update in February 2009.
§ [B.3.2] Sales of Landed homes slide
The overall sales of landed homes in Q4 were clearly affected by the on-going stock market turmoil and in particular the 10 Oct stock market meltdown all over the world. (See Tables [8] to [10] for the full-year secondary sales performance of landed property by house types).
Table [8] – Transaction figures of Detached houses in the whole year of 2008
Sales of Detached houses
New home
Secondary sale
Total
Q1 2008
16
57
73
Q2 2008
17
52
69
Q3 2008
14 (revised)
36 (revised)
47
Q4 2008
6
30
36
Source of data – SISVRealink
Table [9] – Transaction figures of semi-detached houses in the whole year of 2008
Sales of Semi-detached houses
New home
Secondary sale
Total
Q1 2008
27
98
125
Q2 2008
31
105
136
Q3 2008
23 (revised)
96 (revised)
117
Q4 2008
25
53
61
Source of data – SISVRealink
Table [10] – Transaction figures of Terrace houses in the whole year of 2008
Sales of Terrace houses
New home
Secondary sale
Total
Q1 2008
84
263
347
Q2 2008
137
316
453
Q3 2008
82 (revised)
249 (revised)
298
Q4 2008
58
141
199
Source of data – SISVRealink
[B.4] Property investment sales slow to a trickle
Investment sales – an effective gauge of developers' and investors' medium– to long–term confidence in the investment climate – are likewise in the doldrums in 2008, giving a faithful reflection of the currently weak market sentiment. The total investment sales of Singapore real estate achieved for 2008 (up to 9 December 2008) were just $17.8 billion, year–on–year. This is a far cry from the record $54 billion achieved for the whole of 2007 in investment sales.
In 2008, the residential sector brought in $6.25 billion worth of transactions and accounted for 35% of total investment sales. The breakdown of the various residential property transactions is as follows:
§ Collective Sales
A total of seven collective sales worth a total $371 million were transacted in 2008. In 2007, a total of 111 collective sales worth a total of $12.4 billion were transacted.
§ Good Class Bungalows
A total of 48 Good Class Bungalow (GCB) transactions worth $763.7 million were done in 2008, down from $1.2 billion from 90 deals in 2007.
§ Office investments
Office investment sales worth $5.4 billion were transacted in 2008, compared with $14.3 billion for full-year 2007.
§ Industrial property
The only growth came from the industrial property sector where a 66% growth was recorded. A total of $3.32 billion of investment sales deals were done in 2008, the best showing since 2002.
About 50% of the industrial investment sales for 2008 were accounted for by JTC Corporation's $1.7 billion divestment of its industrial portfolio to a joint venture involving Mapletree Investments, Arcapita and Mapletree Industrial Fund.
[B.5] Auctioneers expect more mortgagee sales in 2009
Given that the loan default rate will rise due to the worsening economic situation and the rapid rise in unemployment, most auctioneers expect mortgagee sales to increase next year by leaps and bounds.
In fact, mortgages sales had already inched up in 2008 in the aftermath of the various major stock market clashes in the year. Out of the $69.1 million auction sales in 2008, about 36% were mortgagee sales, slightly higher than the 32% mortgagee sale share of the total $422.3 million auction sales in 2007.
Besides, there may be a significant jump in the number of speculators and investors, who bought their properties with the defunct Deferred Payment Scheme (DPS), dumping their properties onto the market before the completion dates draw nearer.
A veteran auctioneer reckoned that 'success rates at auctions may improve if a continued worsening in economic conditions forces some sellers to further lower reserve prices and satisfy the price expectations of some buyers who are bottom fishing'.
[B.6] Home rents set to fall as more previously en bloc project come back for lease
More condominium and apartment projects that were sold collectively during the 2006/07 property bull-run have been put back by their new owners on the market for rental. Below are some recent examples:
§ All the 91 units at Lucky Tower at Grange Road, which was snapped up by city Developments Ltd (CDL) in May 2006, have been leased to one single tenant.
§ OUE, the developer who purchased The Grangeford at Leonie Hill has similar plan to lease out all the 192 units in the District 9 project.
§ Frasers Centrepoint has so far rent out about 60% of the 185 units at Flamingo Valley at Siglap, which it acquired in early 2007.
§ Other en bloc developments back on the rental market include Pin Tjoe Court, Furama Towers, Fairways Condominium, Sophia Court, and Lincoln Lodge.
This means that the potential supplies of new apartment units will be fewer going forward. However, the flip side of the coin is that home rents are expected to ease due to the increase in supply of rental properties in prime locations.
(C) The performance of Non-Residential Property segment
[C.1] Prime office rents slide – vacancies Up
For the first time since Q4 2003, prime office rents in Raffles Place have come down.
In the final quarter (Q4) of 2008, these rents dropped a whopping 15.8% on a quarterly basis. The average prime office rent now stands at $16 psf per month.
Office rents in the Marina Centre micro market also fell by a big percentage of 12.9% on a quarterly basis to $13.50 psf pm.
Likewise, office vacancies edged up further in Q4 2008 as demand slowed in tandem with the global economic downturn.
In Raffles Place, the average office occupancy fell 1.3% compared with Q3 2008 to 95.6% in Q4 2008. Island-wide, office occupancies slid 0.8% to 95.6%. Only Tampines Finance Park bucked the trend with 96.8% occupancy.
Major developers have reacted to the situation by delaying the development of new office buildings, for example, City Developments (CDL) has delayed the South Beach project. Plans to extend office buildings by other developers were also shelved, for example, Tampines Mall and Funan DigitaLife Mall and the redevelopment of Marina House. As such, potential office supply from 2009 to 2013 would be at 11.3 million sq ft, instead of the earlier estimate of 12.1 million sq ft.
Occupancy rates and rents are expected to decline further in 2009.
[C.2] Shop space rents getting cheaper
Prime Orchard Road shop rents have fallen 1.9% quarter-on-quarter to an average of $36.10 per sq ft per month (psf pm) in the final quarter of 2008 (Q4). This is the first time in five years these rents have fallen.
Measured year-on-year, prime retail rents in the Orchard Road area fell by 0.8%, reversing their 5.4 % growth in the same quarter in 2007.
Outside of Orchard Road, prime suburban rents also dropped, though by a moderate 1% quarter-on-quarter to an average of $29 psf pm in Q4 2008. This is the first time in nine years since these rents fall.
In the next few years, there will be ample supply of about six over million square feet of retail space with the completion of new malls, shops within the integrated resorts, and refurbished shopping centres. As such, prime Orchard Road rents could contract another five to 10% in the first half of 2009; while prime suburban malls another two to three per cent.
[C.3] Industrial rents and capital value almost reached ‘tipping point’
The industrial property sector may have reached its tipping point in the final quarter of 2008 as manufacturing activity dips and relocations from offices slow to a crawl. Besides, sub-letting of excess space may start with more redundancies appearing in the manufacturing sector, thereby bringing down rents.
There are lots of glooms over the horizon beginning with the expected slowdown in GDP growth and the poor reading of the Purchasing Managers' Index (PMI) which fell to the record low of 44.3 in November 2008. The demand for industrial space is likely to moderate, to say the least.
According to the latest DTZ study, average rents of first-storey and upper-storey private industrial space could each drop by more than 2% in the fourth quarter of 2008 (Q4) from the previous quarter to $2.30 and $2.00 psf pm respectively. The average rent of high-tech and business park space could drop to $4.30 psf pm in Q4.
Likewise, JTC Corporation has been taking back more space as manufacturing and related companies consolidated their operations. JTC had reported that termination at its ready-built facilities surged 25.7% quarter-on-quarter and 45% year-on-year in the third quarter.
Economic uncertainty has already spurred the Trade and Industry Ministry to suspend sales of state-owned industrial land on the Confirmed List for the first half of 2009.
(D) The performance of Collective Sales
[D.1] En bloc sale news: Laguna Park condominium
The owners of Laguna Park condominium along Marine Parade Road have the second bite of the cherry after a majority of more than 80% of them voted in favour to try their luck for collective sale again.
The 667,000 sq ft project was first put up for collective sale in 2007, but in vain. That year, a total of 111 collective sale transactions worth $12.4 billion were sealed, but Laguna Park missed the boat due to a very high asking price of $3million per unit.
This time around, the 528 apartment owners are asking for $1.2 billion for the former HUDC project – or $1.8 million to $2.3 million per unit.
Laguna Park is one of the rare offerings for collective sale in 2008 where only seven collective sales worth a total of $371 million were successfully transacted.
(E) Foreign Interest in Singapore Real Estate
[E.1] Another ‘Runaway bride’ in property joint venture
US-based El-Ad Properties, owned by Israeli billionaire Yitzhak Tshuva, is seeking to find a buyer to buy out its stake in the high-profile South Beach development in Singapore.
The group clinched the 99-year leasehold South Beach site jointly with City Developments Ltd (CDL) and Dubai World unit Istithmar in September last year for $1.69 billion or $1,069 psf per plot ratio (psf ppr).
El-Ad Properties owns one-third stake in the South Beach project and also has half-share with CDL in the Futura condo site at Leonie Hill Road. The total worth of El-Ad’s stakes in both the project in Singapore is estimated to be around $707 million.
El-Ad has also had some problems with its investment in the US. It would delay the construction for a casino project in Las Vegas in the US to 2010, due to financing difficulties and high construction costs.
(F) News on Government Land Sale (GLS) Programme
[F.1] 2009 Government Land Sales Programme will be halted
Ministry of Nation Development (MND) has decided not to add any new sites to the Government Land Sales (GLS) Programme for first half (H1) 2009, in view of the negative forecast for the economy.
The H1 2009 slate - comprising the entirely reserve list sites, will have a total of 38 sites, comprising 37 plots that are being carried over from the H2 2008 reserve list and the unsold executive condo site at Punggol Road/Punggol Field.
The potential total floor areas that can be developed from the H1 2009 GLS Programme will be 7,920 private homes, 512,000 sq metres gross floor area (GFA) of commercial space and 5,160 hotel rooms.
There will also be a reduced supply of commercial space and no new supply of private residential units from Government agencies. The H1 2009 supply from this source will comprise about 40,000 sq metres GFA of commercial space and 240 hotel rooms.
[F.2] Kallang River and Stamford sites put off
The impending release of a hotel site in the Kallang River area has been postponed to next June by URA, yet another planned project delayed in view of the floundering market.
The 1.59ha hotel site at Kallang River - part of plans to transform the Kallang Riverside into a waterfront lifestyle precinct – will be relegated to the reserve list.
Likewise, a historic site in North Bridge Road - which contains Singapore's first cinema Capitol Theatre and two other heritage buildings - has been released on the reserve list sale system as planned.
It is means that the site will be put up for tender only if developers indicate interest by committing to a minimum bid.
(G) Overall performance of the HDB resale market
[G.1] HDB resale price continue to climb despite recession
Price of resale HDB flats continue to rise despite the ongoing economic slowdown. The prices have climbed 1.5% in the final quarter (Q4) of 2008 – on top of the 4.2% rise in Q3 2008. The final figure of Q4 adds up to a total of 13.9% price growth for the whole of 2008, building on the 16.6% price increase in 2007.
This means HDB resale flat prices have reached a new peak since the 1996 high.
[G.2] More HDB flat owners behind in instalments
There has been an increase in HDB home loan defaults since late 2003.
About 8,000 households or 8% of them are unable to pay back their monthly instalments for three consecutive months. This means that in Singapore one in 12 households has been unable to pay for their basic housing for more than three months.
HDB has revealed that at the end of 2003, 25,000 flat owners out of the 517,300 households with HDB loans were in arrears for three months or more; however, the figure went up recently with 33,000 delinquencies out of 420,000 HDB home loans.
The spike in delinquency could be due to higher HDB resale prices. The latest flash estimates published by the Urban Redevelopment Authority (URA) on 28 December 2008 showed that HDB flat prices rose 13.9%, despite the recession. The recent price increase was on top of the 17.4% gain a year earlier in 2007.
Another reason for the increase in the delinquency figures could be due to the fact that HDB seldom repossesses defaulters' flats, leaving their numbers to accumulate in the system. Some home owners in arrears can take up to a few years to pay off debts.
Members of Parliament (MPs) interviewed by the Straits Times confirmed that more HDB flat owners are seeking help for home loan problems at their Meet-the- People sessions.
The HDB will consider the following measures to help with the increasing delinquencies:
· It may allow defaulters to pay reduced loan instalments on a temporary basis and work out a solution to their financial situation.
· It may allow owners to sublet a room to generate income, or include working family members as joint owners to help pay for the flat.
· Finally, the HDB may also consider providing an additional HDB loan to help owners downgrade to a smaller, more affordable unit.
[G.3] Resale transaction in December 2008 down
Due to the long festive season in December 2008, the HDB resale transactions were down in that month, though it still stays above the 2,000-deal level and finishes the whole year on a strong note.
[G.4] Case Study – 5-room resale prices kept at bay
After the spectacular rise in November 2008, the resale prices for 5-room flats in the 10 survey areas were held at bay in December 2008. Only four places had higher median resale prices. This shows that the drop in the resale transactions of 5-room flats was followed by the drop in the resale prices, due to the prevailing cautiousness.
Introduction
The global economic pie is shrinking rapidly, and when that happens, there will not be enough business to keep everyone happy. So far, all the economic numbers, data, and statistics that have been released by both the governments and private sector analysts the world over are pointing to a long and torturous year in 2009.
And as for now, nobody is any wiser about when the recovery will begin. As for the interim period, there will be no denying or escaping it – in order for the global economy, including Singapore’s to get better, there will be many bitter pills to swallow. In short, the global situation will get worse before it gets better.
Fortunately, not all the housing sectors in Singapore will be adversely affected by the on-going downturn – at least not the public flats that continue to provide more than 70% of the secondary market transactions for real estate agents. Demand for resale flats continue to stay on the healthy level; and as the crisis deepens, more prospective buyers may be forced to go for the safer option of public flats which are being heavily subsidised by the state.
(A) The big picture of the larger economy
[A.1] Global economy in serious trouble – IMF
The International Monetary Fund (IMF) reported that the unemployment rate in the 15-nation euro region will reach 8.3% in 2009.
A study by the Organisation for Economic Cooperation and Development (OECD), which includes the world's richest economies, said that the financial turmoil that started in the US has rapidly spread to the rest of the world. The study indicated that the number of unemployed people in its 30 member nations will rise to 42 million in 2010 from 34 million now.
[A.2] Prospect bleaker for US economy
The year-old recession in the US began to intensify with the third quarter growth shrinking by 0.5%.
§ [A.2.1] Consumer spending and corporate earnings down
According to revised figures from the US Commerce Department released on 23 December 2008, consumer spending along with corporate earnings fell the most in almost three decades and the contraction in GDP was the worst since 2001.
§ [A.2.2] Residential investments down
Residential investments contracted 16% at an annual pace in Q3 2008. Besides, new-home sales plunged 2.9% to 407,000 in November 2008, the lowest level since January 1991.
The National Association of Realtors (NAR) reported on 23 December 2008 that sales of existing homes fell 8.6% to an annual rate of 4.49 million in November, from a downwardly revised pace of 4.91 million in October.
§ [A.2.3] Job losses up in US
On 5 December 2008, the US Labour Department confirmed that some 2.7 million jobs have been lost since the US slipped into recession in December 207. It also revealed that the US economy lost another 533,000 jobs in November 2008 and the unemployment rate now stands tall at 6.7%. Many economists are expecting the unemployment rate to rise to 8% in 2009.
The government report also corrected the previous months’ job loss data as follows: October saw a loss of 403,000 jobs (up from an earlier estimate of 240,000) and September job losses were revised up to 320,000 from 284,000.
In the week ended 20 December 2008, the number of Americans on dole rose 140,000 to 4.506 million people – the highest since December 1982 which saw 4,509 people receiving unemployment benefits.
This means that the current economic recession is far worse than the last two recessions and may need much longer time to recover.
[A.3] US subprime mortgage crisis spread to other domains
Rising unemployment in the US has intensified and widened delinquencies on mortgages across the nation.
§ [A.3.1] More prime mortgages in trouble
The continual slide in property value are causing more prime mortgages to sour, and exacerbating foreclosures on prime mortgages.
The US government efforts to rescue the massive housing slump can at best be described as slow. In earlier December 2008, the Federal Reserve began its first move to buy up to US$100 billion of government-back mortgages. It was the first step in the right direction but the journey will be a long and painful one.
Home foreclosures in the US may rise to 8.1 million homes over the next four years, according to Credit Suisse.
§ [A.3.2] US Commercial real estate asking for help
Even big commercial real estate players in the US are not spared the blushes. The US$6 trillion industry of hotels, office buildings and shopping malls, has recently asked the US government for help in providing some ‘credit market support’.
The commercial property industry is bracing itself for a record total debt of close to US$530 billion due for refinancing in the next few years. In 2009 alone, about US$160 billion of the huge pile will need to find fresh financing. However, with credit virtually in non-existence, thousands of those properties could go into foreclosure or bankruptcy if owners are unable to get new loans.
The trade associations are asking that their members be included in a US$200 billion lending facility that was created by the government for consumer debt such as car loans, student loans and credit cards.
(B) The overall performance of Private Residential Property segment
[B.1] Private homes prices continue down trend as export stalls
The final quarter of 2008 (Q4) saw the steepest drop in private home prices in a decade – shedding 5.7% quarter-on-quarter. This is on top of the 2.4% overall drop in home prices in the previous quarter (Q3) of 2008. (See Table [1] below for details)
The price fall in consecutive months brought the overall price growth to the negative region of minus-4.3% for the whole of 2008 year-on-year. This is a stark contrast to the 31.2% price hike in private home in 2007.
Since late 2007, potential buyers have played the ‘wait-and-see’ game; and their patience has been rewarded with cheaper home prices over the months.
In Q4 2008, prices for apartments in the Core Central Region (CCR) were down 6.3%; while those in the Rest of the Central Region (RCR) slipped 5.5% and Outside Central Region (OCR) dropped by 4.7%. This follows declines of 2.7%, 2.4% and 1.5% respectively in those areas in Q3 2008.
Looking over the horizon, the private home prices are likely to stay down for at least the next six to nine months as the property market will have to digest the over-supply situation amid one of the worst global recession in decades.
Prospective buyers sitting on the fence certainly feel vindicated and are likely to persist in their strategy of ‘sitting out the crisis’.
[B.2] Primary home sales did better in November 2008
Primary home sales did slightly better in November 2008 only because the sale figures were compared with the ‘flat performance’ of 112 sales transactions in the preceding month. The overall sales volume rose to 192 transactions – which could only be described as an ‘indifferent’ performance. See Tables [2] to [6] for details.
The unsold inventories of new home units continue to pile up with unsold units outweighing sold units by 6,033 to 4,208. (See Table [3] for details)
§ [B.2.1] Performance of primary sales in Core Central Region (CCR)
Out of the 188 brand new condo projects on sale in the Core Central Region, only 6 projects had some sales. In all, the total new units sold in CCR in October 2008 were 63. See table below for details.
§ [B.2.2] Performance of primary sales in Rest of Central Region (RCR)
Out of the 123 brand new condo projects on sale in the Rest of Central Region, only 13 projects had some sales. In all, the total new units sold in RCR in Nov 2008 were 28. See table below for details.
[B.2.3] Performance of primary sales in Outside Central Region (OCR)
Out of the 140 brand new condo projects on sale in the Outside Central Region, only 19 projects had some sales. In all, the total new units sold in OCR in November 2008 were 101. See table below for details.
[B.3] Secondary home market faces steep challenges in 2009
§ [B.3.1] Secondary sales of Condo/Apt in Nov-Dec period halved
The revised November 2008 secondary sales figures fell way short of expectation, falling more than 50% of October’s transactions. The December 2008 interim figures fared even worse. (See Table [7] below for the full-year secondary sales performance of condo/apartments).
This is clear evidence that home owners and buyers alike are wary of the current market situation, preferring to be ‘safe than be sorry’. The current economic downturn, which has been exacerbated by the on-going corporate layoffs and insolvencies, is expected to continue to suppress buying activities for at least the next six months to a year. The near term prospect for secondary sales does not look good.
Table [7] – Total Secondary Private Sales of condo/apartments so far in 2008
Months
Sales volume
Primary sales
Secondary Sales
Total
Jan
320
949
1,269
Feb
174
807
981
Mar
301
704
1,005
Apr
274
927
1,201
May
441
811
1,252
Jun
801
370
1,171
Jul
897
831
1,728
Aug
320
1,007
1,327
Sept
376
643
1,019
Oct
112
680
792
Nov
56 (revised)
291 (revised)
347 (revised)
Dec
41*
110*
151
Source of data – SISVRealink
*Interim figures according to the latest search results on 10 January 2009. The final figures will be revised in the next update in February 2009.
§ [B.3.2] Sales of Landed homes slide
The overall sales of landed homes in Q4 were clearly affected by the on-going stock market turmoil and in particular the 10 Oct stock market meltdown all over the world. (See Tables [8] to [10] for the full-year secondary sales performance of landed property by house types).
Table [8] – Transaction figures of Detached houses in the whole year of 2008
Sales of Detached houses
New home
Secondary sale
Total
Q1 2008
16
57
73
Q2 2008
17
52
69
Q3 2008
14 (revised)
36 (revised)
47
Q4 2008
6
30
36
Source of data – SISVRealink
Table [9] – Transaction figures of semi-detached houses in the whole year of 2008
Sales of Semi-detached houses
New home
Secondary sale
Total
Q1 2008
27
98
125
Q2 2008
31
105
136
Q3 2008
23 (revised)
96 (revised)
117
Q4 2008
25
53
61
Source of data – SISVRealink
Table [10] – Transaction figures of Terrace houses in the whole year of 2008
Sales of Terrace houses
New home
Secondary sale
Total
Q1 2008
84
263
347
Q2 2008
137
316
453
Q3 2008
82 (revised)
249 (revised)
298
Q4 2008
58
141
199
Source of data – SISVRealink
[B.4] Property investment sales slow to a trickle
Investment sales – an effective gauge of developers' and investors' medium– to long–term confidence in the investment climate – are likewise in the doldrums in 2008, giving a faithful reflection of the currently weak market sentiment. The total investment sales of Singapore real estate achieved for 2008 (up to 9 December 2008) were just $17.8 billion, year–on–year. This is a far cry from the record $54 billion achieved for the whole of 2007 in investment sales.
In 2008, the residential sector brought in $6.25 billion worth of transactions and accounted for 35% of total investment sales. The breakdown of the various residential property transactions is as follows:
§ Collective Sales
A total of seven collective sales worth a total $371 million were transacted in 2008. In 2007, a total of 111 collective sales worth a total of $12.4 billion were transacted.
§ Good Class Bungalows
A total of 48 Good Class Bungalow (GCB) transactions worth $763.7 million were done in 2008, down from $1.2 billion from 90 deals in 2007.
§ Office investments
Office investment sales worth $5.4 billion were transacted in 2008, compared with $14.3 billion for full-year 2007.
§ Industrial property
The only growth came from the industrial property sector where a 66% growth was recorded. A total of $3.32 billion of investment sales deals were done in 2008, the best showing since 2002.
About 50% of the industrial investment sales for 2008 were accounted for by JTC Corporation's $1.7 billion divestment of its industrial portfolio to a joint venture involving Mapletree Investments, Arcapita and Mapletree Industrial Fund.
[B.5] Auctioneers expect more mortgagee sales in 2009
Given that the loan default rate will rise due to the worsening economic situation and the rapid rise in unemployment, most auctioneers expect mortgagee sales to increase next year by leaps and bounds.
In fact, mortgages sales had already inched up in 2008 in the aftermath of the various major stock market clashes in the year. Out of the $69.1 million auction sales in 2008, about 36% were mortgagee sales, slightly higher than the 32% mortgagee sale share of the total $422.3 million auction sales in 2007.
Besides, there may be a significant jump in the number of speculators and investors, who bought their properties with the defunct Deferred Payment Scheme (DPS), dumping their properties onto the market before the completion dates draw nearer.
A veteran auctioneer reckoned that 'success rates at auctions may improve if a continued worsening in economic conditions forces some sellers to further lower reserve prices and satisfy the price expectations of some buyers who are bottom fishing'.
[B.6] Home rents set to fall as more previously en bloc project come back for lease
More condominium and apartment projects that were sold collectively during the 2006/07 property bull-run have been put back by their new owners on the market for rental. Below are some recent examples:
§ All the 91 units at Lucky Tower at Grange Road, which was snapped up by city Developments Ltd (CDL) in May 2006, have been leased to one single tenant.
§ OUE, the developer who purchased The Grangeford at Leonie Hill has similar plan to lease out all the 192 units in the District 9 project.
§ Frasers Centrepoint has so far rent out about 60% of the 185 units at Flamingo Valley at Siglap, which it acquired in early 2007.
§ Other en bloc developments back on the rental market include Pin Tjoe Court, Furama Towers, Fairways Condominium, Sophia Court, and Lincoln Lodge.
This means that the potential supplies of new apartment units will be fewer going forward. However, the flip side of the coin is that home rents are expected to ease due to the increase in supply of rental properties in prime locations.
(C) The performance of Non-Residential Property segment
[C.1] Prime office rents slide – vacancies Up
For the first time since Q4 2003, prime office rents in Raffles Place have come down.
In the final quarter (Q4) of 2008, these rents dropped a whopping 15.8% on a quarterly basis. The average prime office rent now stands at $16 psf per month.
Office rents in the Marina Centre micro market also fell by a big percentage of 12.9% on a quarterly basis to $13.50 psf pm.
Likewise, office vacancies edged up further in Q4 2008 as demand slowed in tandem with the global economic downturn.
In Raffles Place, the average office occupancy fell 1.3% compared with Q3 2008 to 95.6% in Q4 2008. Island-wide, office occupancies slid 0.8% to 95.6%. Only Tampines Finance Park bucked the trend with 96.8% occupancy.
Major developers have reacted to the situation by delaying the development of new office buildings, for example, City Developments (CDL) has delayed the South Beach project. Plans to extend office buildings by other developers were also shelved, for example, Tampines Mall and Funan DigitaLife Mall and the redevelopment of Marina House. As such, potential office supply from 2009 to 2013 would be at 11.3 million sq ft, instead of the earlier estimate of 12.1 million sq ft.
Occupancy rates and rents are expected to decline further in 2009.
[C.2] Shop space rents getting cheaper
Prime Orchard Road shop rents have fallen 1.9% quarter-on-quarter to an average of $36.10 per sq ft per month (psf pm) in the final quarter of 2008 (Q4). This is the first time in five years these rents have fallen.
Measured year-on-year, prime retail rents in the Orchard Road area fell by 0.8%, reversing their 5.4 % growth in the same quarter in 2007.
Outside of Orchard Road, prime suburban rents also dropped, though by a moderate 1% quarter-on-quarter to an average of $29 psf pm in Q4 2008. This is the first time in nine years since these rents fall.
In the next few years, there will be ample supply of about six over million square feet of retail space with the completion of new malls, shops within the integrated resorts, and refurbished shopping centres. As such, prime Orchard Road rents could contract another five to 10% in the first half of 2009; while prime suburban malls another two to three per cent.
[C.3] Industrial rents and capital value almost reached ‘tipping point’
The industrial property sector may have reached its tipping point in the final quarter of 2008 as manufacturing activity dips and relocations from offices slow to a crawl. Besides, sub-letting of excess space may start with more redundancies appearing in the manufacturing sector, thereby bringing down rents.
There are lots of glooms over the horizon beginning with the expected slowdown in GDP growth and the poor reading of the Purchasing Managers' Index (PMI) which fell to the record low of 44.3 in November 2008. The demand for industrial space is likely to moderate, to say the least.
According to the latest DTZ study, average rents of first-storey and upper-storey private industrial space could each drop by more than 2% in the fourth quarter of 2008 (Q4) from the previous quarter to $2.30 and $2.00 psf pm respectively. The average rent of high-tech and business park space could drop to $4.30 psf pm in Q4.
Likewise, JTC Corporation has been taking back more space as manufacturing and related companies consolidated their operations. JTC had reported that termination at its ready-built facilities surged 25.7% quarter-on-quarter and 45% year-on-year in the third quarter.
Economic uncertainty has already spurred the Trade and Industry Ministry to suspend sales of state-owned industrial land on the Confirmed List for the first half of 2009.
(D) The performance of Collective Sales
[D.1] En bloc sale news: Laguna Park condominium
The owners of Laguna Park condominium along Marine Parade Road have the second bite of the cherry after a majority of more than 80% of them voted in favour to try their luck for collective sale again.
The 667,000 sq ft project was first put up for collective sale in 2007, but in vain. That year, a total of 111 collective sale transactions worth $12.4 billion were sealed, but Laguna Park missed the boat due to a very high asking price of $3million per unit.
This time around, the 528 apartment owners are asking for $1.2 billion for the former HUDC project – or $1.8 million to $2.3 million per unit.
Laguna Park is one of the rare offerings for collective sale in 2008 where only seven collective sales worth a total of $371 million were successfully transacted.
(E) Foreign Interest in Singapore Real Estate
[E.1] Another ‘Runaway bride’ in property joint venture
US-based El-Ad Properties, owned by Israeli billionaire Yitzhak Tshuva, is seeking to find a buyer to buy out its stake in the high-profile South Beach development in Singapore.
The group clinched the 99-year leasehold South Beach site jointly with City Developments Ltd (CDL) and Dubai World unit Istithmar in September last year for $1.69 billion or $1,069 psf per plot ratio (psf ppr).
El-Ad Properties owns one-third stake in the South Beach project and also has half-share with CDL in the Futura condo site at Leonie Hill Road. The total worth of El-Ad’s stakes in both the project in Singapore is estimated to be around $707 million.
El-Ad has also had some problems with its investment in the US. It would delay the construction for a casino project in Las Vegas in the US to 2010, due to financing difficulties and high construction costs.
(F) News on Government Land Sale (GLS) Programme
[F.1] 2009 Government Land Sales Programme will be halted
Ministry of Nation Development (MND) has decided not to add any new sites to the Government Land Sales (GLS) Programme for first half (H1) 2009, in view of the negative forecast for the economy.
The H1 2009 slate - comprising the entirely reserve list sites, will have a total of 38 sites, comprising 37 plots that are being carried over from the H2 2008 reserve list and the unsold executive condo site at Punggol Road/Punggol Field.
The potential total floor areas that can be developed from the H1 2009 GLS Programme will be 7,920 private homes, 512,000 sq metres gross floor area (GFA) of commercial space and 5,160 hotel rooms.
There will also be a reduced supply of commercial space and no new supply of private residential units from Government agencies. The H1 2009 supply from this source will comprise about 40,000 sq metres GFA of commercial space and 240 hotel rooms.
[F.2] Kallang River and Stamford sites put off
The impending release of a hotel site in the Kallang River area has been postponed to next June by URA, yet another planned project delayed in view of the floundering market.
The 1.59ha hotel site at Kallang River - part of plans to transform the Kallang Riverside into a waterfront lifestyle precinct – will be relegated to the reserve list.
Likewise, a historic site in North Bridge Road - which contains Singapore's first cinema Capitol Theatre and two other heritage buildings - has been released on the reserve list sale system as planned.
It is means that the site will be put up for tender only if developers indicate interest by committing to a minimum bid.
(G) Overall performance of the HDB resale market
[G.1] HDB resale price continue to climb despite recession
Price of resale HDB flats continue to rise despite the ongoing economic slowdown. The prices have climbed 1.5% in the final quarter (Q4) of 2008 – on top of the 4.2% rise in Q3 2008. The final figure of Q4 adds up to a total of 13.9% price growth for the whole of 2008, building on the 16.6% price increase in 2007.
This means HDB resale flat prices have reached a new peak since the 1996 high.
[G.2] More HDB flat owners behind in instalments
There has been an increase in HDB home loan defaults since late 2003.
About 8,000 households or 8% of them are unable to pay back their monthly instalments for three consecutive months. This means that in Singapore one in 12 households has been unable to pay for their basic housing for more than three months.
HDB has revealed that at the end of 2003, 25,000 flat owners out of the 517,300 households with HDB loans were in arrears for three months or more; however, the figure went up recently with 33,000 delinquencies out of 420,000 HDB home loans.
The spike in delinquency could be due to higher HDB resale prices. The latest flash estimates published by the Urban Redevelopment Authority (URA) on 28 December 2008 showed that HDB flat prices rose 13.9%, despite the recession. The recent price increase was on top of the 17.4% gain a year earlier in 2007.
Another reason for the increase in the delinquency figures could be due to the fact that HDB seldom repossesses defaulters' flats, leaving their numbers to accumulate in the system. Some home owners in arrears can take up to a few years to pay off debts.
Members of Parliament (MPs) interviewed by the Straits Times confirmed that more HDB flat owners are seeking help for home loan problems at their Meet-the- People sessions.
The HDB will consider the following measures to help with the increasing delinquencies:
· It may allow defaulters to pay reduced loan instalments on a temporary basis and work out a solution to their financial situation.
· It may allow owners to sublet a room to generate income, or include working family members as joint owners to help pay for the flat.
· Finally, the HDB may also consider providing an additional HDB loan to help owners downgrade to a smaller, more affordable unit.
[G.3] Resale transaction in December 2008 down
Due to the long festive season in December 2008, the HDB resale transactions were down in that month, though it still stays above the 2,000-deal level and finishes the whole year on a strong note.
[G.4] Case Study – 5-room resale prices kept at bay
After the spectacular rise in November 2008, the resale prices for 5-room flats in the 10 survey areas were held at bay in December 2008. Only four places had higher median resale prices. This shows that the drop in the resale transactions of 5-room flats was followed by the drop in the resale prices, due to the prevailing cautiousness.
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Being your own boss You are in business for yourself. You can exercise your creativity and ingenuity in getting your customers.
No income ceiling The Skies the Limit! With hard work and the right formula, your monetary rewards have no limits!
Flexible working hours There are no fixed hours; you decide your working hours.
The Real Estate Market
People will always be looking to buy / sell / rent a home and there is always a constant flow of transactions thus the demand will always be there for Real Estate Agent. Real Estate sales come up tops in the market because more money changes hands in real estate than in any other business!
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So if you are looking for a rewarding career in Real Estate, sms me at 9021 1218 your contact number, I'll arrange for you to attend our Free Career Seminar.
Free Career Seminar (Limited Seats)
Thinking of becoming your own Boss?
Then a career in Real Estate is your key to success.
Benefits of a Career in Real Estate
Being your own boss You are in business for yourself. You can exercise your creativity and ingenuity in getting your customers.
No income ceiling The Skies the Limit! With hard work and the right formula, your monetary rewards have no limits!
Flexible working hours There are no fixed hours; you decide your working hours.
The Real Estate Market
People will always be looking to buy / sell / rent a home and there is always a constant flow of transactions thus the demand will always be there for Real Estate Agent. Real Estate sales come up tops in the market because more money changes hands in real estate than in any other business!
Embark on a Real Estate Career
And you'll be assured of a Career For Life.
So if you are looking for a rewarding career in Real Estate, sms me at 9021 1218 your contact number, I'll arrange for you to attend our Free Career Seminar.
Free Career Seminar (Limited Seats)
Buying Tips
Buying Resale Properties
If you are looking to buy a private property or HDB flat in Singapore, make sure that you know all the pitfalls before you sign on the dotted line. Here are some of the major things you should look out for to avoid getting into a legal or financial tangle during the transaction.
Selecting an Real Estate Agent
You need to select an agent to service you. Find one who is familiar with the location and type of property you have in mind. Make sure the agent is from a Listed Housing Agency and also a member of the Institute of Estate Agents (IEA). Discuss your requirements with him and be specific. This will allow him to advise and service you in a professional manner.
Ownership
Always ensure that the seller is the actual owner of the property. You may wish to request for proof when you are making the purchase.
Eligibility to sell
Ensure that the seller of the property is eligible to sell the property. For a private property that is mortgaged to a bank, if the seller has lost money on the sale, and is unable to top up the shortfall on his bank loan, the bank may not allow the seller to go through with the transaction.
Bankruptcy
On some occasions, the seller of the property may be a bankrupt. With the written consent of the Official Assignee, the seller will be eligible to sell the property, however, the Official Assignee may request for all monies, including the option money or deposit, to be paid to the Official Assignee.
Eligibility to Buy
Decide beforehand on a few likely locations that you'd like to live in. Take into account things like the distance to work places, schools, transportation and places that you visit frequently with your family's lifestyle in mind.
Financial Planning
Once you've decided on a location and size of home that you'd like, think about how much you'll be willing to spend. Bear in mind other monthly expenses that come with owning or renting a home. Several software exists to assist agents to accurately calculate the cost of buying a home. Providing your agent with accurate data regarding your financial status is vital and will help him to formulate a proper financial plan. If you're buying, talk to two or three banks and discuss a financial plan that you're comfortable with. Your banker will also be able to advise you on the loan quantum available to you. This will help you decide on your budget. Remember, Banks and HDB require documentary proof of income.
Considering Factors
Decide beforehand on a few likely locations that you'd like to live in. Take into account things like the distance to work places, schools, transportation and places that you visit frequently with your family's lifestyle in mind.
* Size - How large a home do you need? Have you thought about the next couple of years - are members of your family likely to move in or out? How many bedrooms do you need? Where do you and your family spend most time?
*Facilities - Would you like the advantage of a swimming pool, tennis courts and other condominium type facilities? Or, would you prefer to join a recreation club and enjoy a wider variety of leisure?
*Amenities - Are shops, banks, and markets within a short distance away?
Illegal Renovations/Alterations
Ask the seller if the renovations or alterations in the property are legal and approved. Get the understanding from the seller that should the relevant authorities require the seller to rectify any of the illegal renovations or alterations, the seller will be responsible for the rectification, at his own expense.
Making an Offer
Once you find a home that you like, discuss with your agent with regards to the asking and market price for the property. Compare that property with those that you have viewed. Refer to your notes about the property. Your agent should be able to help you to decide on an offer price. The rule is to start the offer at a price that seems fair to you and wait for a counter offer. If the seller is serious, you should receive a counter offer.
Option Money/Deposit
Confirm that the option money or deposit will be of the standard amount. For private property, the option money is usually one per cent of the purchase price while for HDB resale flats, the deposit should not exceed $5,000. Lastly, when buying an HDB resale flat, it is also important to take note of the following.
Scheme of Purchase
As there are 14 different schemes of purchase when buying an HDB resale flat, it is important to check with the HDB or the real estate agent representing you which scheme you are categorised under. This is to determine your eligibility to buy a resale flat.
Ethnic Integration
It is also important to check with the HDB or your agent if you are affected by the ethnic integration policy.
Completing the Sale
It is the sellers obligation to hand over the property upon legal completion as agreed in the contract. In the case of a HDB flat, vacant possession is a requirement. Inspect the property before completion. Make known any objections or faults immediately. Check with your agent if you are in doubt.
Commission
The Institute of Estate Agents (IEA) has finalised and published the recommended commission / fee for real estate transactions.
Viewing Etiquette
Once you have decided on the type of home to purchase, your agent will arrange for you to view all available homes matching your criteria. Bring a small notebook and take notes for later comparison. Put down the positive and negative points about the property. This will help you make an informed decision later. Be punctual for viewing appointments. Dress casually but smartly.
If you are looking to buy a private property or HDB flat in Singapore, make sure that you know all the pitfalls before you sign on the dotted line. Here are some of the major things you should look out for to avoid getting into a legal or financial tangle during the transaction.
Selecting an Real Estate Agent
You need to select an agent to service you. Find one who is familiar with the location and type of property you have in mind. Make sure the agent is from a Listed Housing Agency and also a member of the Institute of Estate Agents (IEA). Discuss your requirements with him and be specific. This will allow him to advise and service you in a professional manner.
Ownership
Always ensure that the seller is the actual owner of the property. You may wish to request for proof when you are making the purchase.
Eligibility to sell
Ensure that the seller of the property is eligible to sell the property. For a private property that is mortgaged to a bank, if the seller has lost money on the sale, and is unable to top up the shortfall on his bank loan, the bank may not allow the seller to go through with the transaction.
Bankruptcy
On some occasions, the seller of the property may be a bankrupt. With the written consent of the Official Assignee, the seller will be eligible to sell the property, however, the Official Assignee may request for all monies, including the option money or deposit, to be paid to the Official Assignee.
Eligibility to Buy
Decide beforehand on a few likely locations that you'd like to live in. Take into account things like the distance to work places, schools, transportation and places that you visit frequently with your family's lifestyle in mind.
Financial Planning
Once you've decided on a location and size of home that you'd like, think about how much you'll be willing to spend. Bear in mind other monthly expenses that come with owning or renting a home. Several software exists to assist agents to accurately calculate the cost of buying a home. Providing your agent with accurate data regarding your financial status is vital and will help him to formulate a proper financial plan. If you're buying, talk to two or three banks and discuss a financial plan that you're comfortable with. Your banker will also be able to advise you on the loan quantum available to you. This will help you decide on your budget. Remember, Banks and HDB require documentary proof of income.
Considering Factors
Decide beforehand on a few likely locations that you'd like to live in. Take into account things like the distance to work places, schools, transportation and places that you visit frequently with your family's lifestyle in mind.
* Size - How large a home do you need? Have you thought about the next couple of years - are members of your family likely to move in or out? How many bedrooms do you need? Where do you and your family spend most time?
*Facilities - Would you like the advantage of a swimming pool, tennis courts and other condominium type facilities? Or, would you prefer to join a recreation club and enjoy a wider variety of leisure?
*Amenities - Are shops, banks, and markets within a short distance away?
Illegal Renovations/Alterations
Ask the seller if the renovations or alterations in the property are legal and approved. Get the understanding from the seller that should the relevant authorities require the seller to rectify any of the illegal renovations or alterations, the seller will be responsible for the rectification, at his own expense.
Making an Offer
Once you find a home that you like, discuss with your agent with regards to the asking and market price for the property. Compare that property with those that you have viewed. Refer to your notes about the property. Your agent should be able to help you to decide on an offer price. The rule is to start the offer at a price that seems fair to you and wait for a counter offer. If the seller is serious, you should receive a counter offer.
Option Money/Deposit
Confirm that the option money or deposit will be of the standard amount. For private property, the option money is usually one per cent of the purchase price while for HDB resale flats, the deposit should not exceed $5,000. Lastly, when buying an HDB resale flat, it is also important to take note of the following.
Scheme of Purchase
As there are 14 different schemes of purchase when buying an HDB resale flat, it is important to check with the HDB or the real estate agent representing you which scheme you are categorised under. This is to determine your eligibility to buy a resale flat.
Ethnic Integration
It is also important to check with the HDB or your agent if you are affected by the ethnic integration policy.
Completing the Sale
It is the sellers obligation to hand over the property upon legal completion as agreed in the contract. In the case of a HDB flat, vacant possession is a requirement. Inspect the property before completion. Make known any objections or faults immediately. Check with your agent if you are in doubt.
Commission
The Institute of Estate Agents (IEA) has finalised and published the recommended commission / fee for real estate transactions.
Viewing Etiquette
Once you have decided on the type of home to purchase, your agent will arrange for you to view all available homes matching your criteria. Bring a small notebook and take notes for later comparison. Put down the positive and negative points about the property. This will help you make an informed decision later. Be punctual for viewing appointments. Dress casually but smartly.
Selling Tips
Selecting an Real Estate Agent
When the time comes for you to put your home on the market, make an effort to select the right agent. Find an agent who is familiar with your type of property. Ask for transaction data. Check to see if the agent is a member of the Institute of Estate Agents ( IEA ) and if yours is an HDB unit, make certain that the agent is a Listed Housing Agent. Interview the agent to ensure he has the knowledge and the skill required to successfully market your property. Most importantly, you must appoint one exclusive agent and allow him to conduct his duties in a professional manner.
Why Exclusive ?
Exclusive Authorisation means a dedicated agent handling the entire marketing process ensuring full discretion and personal reporting.
Exclusive agents are more willing to share listing information thus ensuring the widest possible coverage within the real estate community thru Multiple Listings and Networking.
All prospective buyers will be carefully screened by a single agent with your requirement and scheduling in mind thus ensuring a peace of mind marketing effort.
Accepting a serious offer is easier since your agent is fully aware of all marketing activity associated with your property. This reduces your having to check with several agents for any other offers. Price control is easily achieved.
An Exclusive Agent is authorised to negotiate on your behalf since you both have a customised marketing strategy, thus resulting in a faster closure at the best possible price.Most successful real estate transactions are conducted thru exclusive agency - the preferred method by both agents and sellers.
Formulating a Marketing Strategy
Get your agent to prepare a Comparative Market Analysis ( CMA ). The CMA will clearly illustrate the transacted prices of similar properties in your neighbourhood within a given time span. Discuss and finalise the asking and the reserve price for your property and any special conditions that you might have. Formulate and agree on a marketing strategy.
Preparing your home for sale
First Impressions are really important! Taking some time out to present your home in its best possible light can provide a big advantage when your Property Consultant shows your home to a prospective Buyer.
House Viewing
Buyers usually ask many questions when being shown through the house. If you have a real estate agent, your immediate presence isn't required at the viewing. If you insist on following the potential buyer around, do not discuss terms, price, etc. Leave the details to your agent.
Accepting the right offer
Successful marketing efforts bring in several offers. The dilemma facing all sellers is which offer to accept. Smart money would be on the highest offer with the least attached conditions. Not all buyers would be willing to wait too long for an acceptance of their offer. Effective negotiating requires being prompt. If you feel it's a fair offer for your property, it is wise to negotiate immediately and enter into a sales contract. It may never be repeated. A bird in the hand is worth two in the bush. Always discuss with your agent as to the eligibility of the buyer, completion period, and your legal obligations as a seller.
Completing the Sale
It is the sellers obligation to hand over the property upon legal completion as agreed in the contract. In the case of a HDB flat, vacant possession is a requirement. Plan your move early to prevent a last minute rush. Remove all your belongings and discard any unwanted furniture and rubbish. Ensure that all fixtures and items in the inventory list are left behind. Invite the buyer (as required by HDB) for an inspection before completion. In the case of private properties, they can be sold with existing tenancy or vacant possession. The sales contract will specify your legal obligations. Check with your agent if you are in doubt.
Commission
The Institute of Estate Agents (IEA) has finalised and published the recommended commission / fee for real estate transactions. Service is not about cutting cost. The commission you pay will determine the marketing budget available to your agent. Since you want the best possible price for your property, be prepared to pay for a good agent as it will make the difference between a successful closure or a lost opportunity.
When the time comes for you to put your home on the market, make an effort to select the right agent. Find an agent who is familiar with your type of property. Ask for transaction data. Check to see if the agent is a member of the Institute of Estate Agents ( IEA ) and if yours is an HDB unit, make certain that the agent is a Listed Housing Agent. Interview the agent to ensure he has the knowledge and the skill required to successfully market your property. Most importantly, you must appoint one exclusive agent and allow him to conduct his duties in a professional manner.
Why Exclusive ?
Exclusive Authorisation means a dedicated agent handling the entire marketing process ensuring full discretion and personal reporting.
Exclusive agents are more willing to share listing information thus ensuring the widest possible coverage within the real estate community thru Multiple Listings and Networking.
All prospective buyers will be carefully screened by a single agent with your requirement and scheduling in mind thus ensuring a peace of mind marketing effort.
Accepting a serious offer is easier since your agent is fully aware of all marketing activity associated with your property. This reduces your having to check with several agents for any other offers. Price control is easily achieved.
An Exclusive Agent is authorised to negotiate on your behalf since you both have a customised marketing strategy, thus resulting in a faster closure at the best possible price.Most successful real estate transactions are conducted thru exclusive agency - the preferred method by both agents and sellers.
Formulating a Marketing Strategy
Get your agent to prepare a Comparative Market Analysis ( CMA ). The CMA will clearly illustrate the transacted prices of similar properties in your neighbourhood within a given time span. Discuss and finalise the asking and the reserve price for your property and any special conditions that you might have. Formulate and agree on a marketing strategy.
Preparing your home for sale
First Impressions are really important! Taking some time out to present your home in its best possible light can provide a big advantage when your Property Consultant shows your home to a prospective Buyer.
House Viewing
Buyers usually ask many questions when being shown through the house. If you have a real estate agent, your immediate presence isn't required at the viewing. If you insist on following the potential buyer around, do not discuss terms, price, etc. Leave the details to your agent.
Accepting the right offer
Successful marketing efforts bring in several offers. The dilemma facing all sellers is which offer to accept. Smart money would be on the highest offer with the least attached conditions. Not all buyers would be willing to wait too long for an acceptance of their offer. Effective negotiating requires being prompt. If you feel it's a fair offer for your property, it is wise to negotiate immediately and enter into a sales contract. It may never be repeated. A bird in the hand is worth two in the bush. Always discuss with your agent as to the eligibility of the buyer, completion period, and your legal obligations as a seller.
Completing the Sale
It is the sellers obligation to hand over the property upon legal completion as agreed in the contract. In the case of a HDB flat, vacant possession is a requirement. Plan your move early to prevent a last minute rush. Remove all your belongings and discard any unwanted furniture and rubbish. Ensure that all fixtures and items in the inventory list are left behind. Invite the buyer (as required by HDB) for an inspection before completion. In the case of private properties, they can be sold with existing tenancy or vacant possession. The sales contract will specify your legal obligations. Check with your agent if you are in doubt.
Commission
The Institute of Estate Agents (IEA) has finalised and published the recommended commission / fee for real estate transactions. Service is not about cutting cost. The commission you pay will determine the marketing budget available to your agent. Since you want the best possible price for your property, be prepared to pay for a good agent as it will make the difference between a successful closure or a lost opportunity.
Grace Client Testimonial
1) Grace is truly a professional property agent who not just delivers remarkably results, but she also surpasses my expectations! I would definitely recommend his service to my friends. Thank you, Grace!
[Seller: Mdm Chan - Blk 98 Commonwealth Crescent – Dec 07]
2) Grace is not just my property agent, she is more like a friend and personal advisor to all my property matters! Her professionalism and positive attitude is really amazing!
[ Landlord: Mdm Radimah – Blk 144 Rivervale Drive – Feb 08]
3) I used to have many doubts over HDB housing issue, since I engaged Grace as my property agent, she helped me go through and clear my doubts and manage my rental unit for the entire 3 years, I am very pleased with her friendly and helpful service!! She will never failed to response to my enquiry.
[ Landlord: Ms Teo – Blk 484D Choa Chu Kang – Mar 09 ]
4) Since my mum ’s demise, I was lost and confused over HDB matters pertaining selling my flat, but Grace helped me by advising me what my options are and showed sensitivity at the same time given my situation.
[Seller: Mr Fong – Blk 166 Mei Ling Street – Aug 08]
5) We are a couple from China. We were at a loss when searching for a home in Singapore due to the complicated rules and regulations pertaining to HDB matters, fortunately we met Grace. She has helped us in finding our dream home and also gone the extra mile to assist us. We are indeed impressed with her service and patience.
[Buyer: Mr & Mrs Zhang – Blk 165 Hougang Ave 1 – May 05]
6) Grace is very willing, cheerful, confident and positive. We believe she will be very successful in her career! Grace, we will support you!
[Seller: Mr & Mrs Tan KH – Blk 612 Ang Mo Kio – July 06]
[Seller: Mdm Chan - Blk 98 Commonwealth Crescent – Dec 07]
2) Grace is not just my property agent, she is more like a friend and personal advisor to all my property matters! Her professionalism and positive attitude is really amazing!
[ Landlord: Mdm Radimah – Blk 144 Rivervale Drive – Feb 08]
3) I used to have many doubts over HDB housing issue, since I engaged Grace as my property agent, she helped me go through and clear my doubts and manage my rental unit for the entire 3 years, I am very pleased with her friendly and helpful service!! She will never failed to response to my enquiry.
[ Landlord: Ms Teo – Blk 484D Choa Chu Kang – Mar 09 ]
4) Since my mum ’s demise, I was lost and confused over HDB matters pertaining selling my flat, but Grace helped me by advising me what my options are and showed sensitivity at the same time given my situation.
[Seller: Mr Fong – Blk 166 Mei Ling Street – Aug 08]
5) We are a couple from China. We were at a loss when searching for a home in Singapore due to the complicated rules and regulations pertaining to HDB matters, fortunately we met Grace. She has helped us in finding our dream home and also gone the extra mile to assist us. We are indeed impressed with her service and patience.
[Buyer: Mr & Mrs Zhang – Blk 165 Hougang Ave 1 – May 05]
6) Grace is very willing, cheerful, confident and positive. We believe she will be very successful in her career! Grace, we will support you!
[Seller: Mr & Mrs Tan KH – Blk 612 Ang Mo Kio – July 06]
Procedures for Rent/Lease
Procedures for Rent/Lease:
1. Select an agent
Optional, but recommended. A professional agent will not only help you to find the right property, but also ensure you get the right location & price, ensure all small details are covered prior to renting, guide you through the documentation process and taking & handing over of property.
2. Location and Price
Deciding on the right location is very important and it will determine the convenience for you and your family. Price - Budgeting yourself will also evaluate the size areas of the apartments or houses that are suitable for you.
3. Documentation
After you have decided to rent your ideal property and you will need to prepare the following:
- Photocopied passport
- Photocopied employment pass
- One month's rental for the good faith deposit
Your agent will then prepare the necessary documents for you such as the Letter of Intent and Tenancy Agreement.
4. Letter of Intent
The Letter of Intent, LOI for short, is a letter proposing your intention to lease the property. It will also state your requirements to the landlord. You should take note of the following:
a. Diplomatic Clause
This clause is to safe-guard you in the event that your employment is ceased or you are transferred to another country such that you can terminate the lease after 12 months by giving 2 months notice. Thereafter, the security deposit will be refunded to you. Please note that most landlords will only include the diplomatic clause if the lease is more than a year.
b. Good faith Deposit
This is the booking deposit; usually the amount is one month's rent. After the landlord signed the Letter of Intent and accept this deposit, he cannot rent the property to other party. This deposit will become part of the security deposit or advance rental after the Tenancy Agreement is signed.
c. Security Deposit
The amount of the security deposit is usually stated in the Letter or Intent. The standard practice in Singapore is usually one month's rent for every year of lease. It will only be payable upon signing of the Tenancy Agreement. When the lease term ends, the deposit will be refunded without interest. However, the landlord reserves the right to deduct from the deposit all costs and expenses arising from the tenant for breaching any of the covenants stated in the Tenancy Agreement.
d. Term of Lease
In Singapore, the standard lease period is more than 1 year, with or without an option to renew the lease. The lease renewal is usually for another 1 to 2 years. For the lease renewal option, the landlord would normally require that you give 2 or 3 months' advance notice of your intention to renew. Most landlords will not accept leases that are less than 1 year.
e. Your Requirements
Ensure that all your requirements and requests are clearly stated in the Letter of Intent. For example, such as requesting a new sofa, new bed or new washing machine etc. After the landlord had signed the Letter of Intent, he is bound by the Letter to provide you the requests.
5. Tenancy Agreement
After the Letter of intent is duly signed, the landlord’s agent will prepare the Tenancy Agreement. Any legal fees incurred for the drawing up of the agreement is usually borne by the tenant. However, if the landlord's agreement is acceptable, there will usually not be any legal fees involved. You will need to prepare the rest of the security deposit and advance rental upon signing of the Tenancy Agreement.
- For 1 year lease - 1 month's deposit and 1 month's advance rental.
- For 2 years lease - 2 month's deposit and 1 month's advance rental.
6. Taking Over the Property
The landlord will prepare an Inventory List on or before the day of handing over. Check the items listed in the inventory. Check all electrical appliances, air-con, lightings, water heater etc. If there is anything unsatisfactory, do not panic; note it down on the inventory. Even brand new houses have defects, therefore be understanding and allow the landlord to rectify it within a reasonable period.
1. Select an agent
Optional, but recommended. A professional agent will not only help you to find the right property, but also ensure you get the right location & price, ensure all small details are covered prior to renting, guide you through the documentation process and taking & handing over of property.
2. Location and Price
Deciding on the right location is very important and it will determine the convenience for you and your family. Price - Budgeting yourself will also evaluate the size areas of the apartments or houses that are suitable for you.
3. Documentation
After you have decided to rent your ideal property and you will need to prepare the following:
- Photocopied passport
- Photocopied employment pass
- One month's rental for the good faith deposit
Your agent will then prepare the necessary documents for you such as the Letter of Intent and Tenancy Agreement.
4. Letter of Intent
The Letter of Intent, LOI for short, is a letter proposing your intention to lease the property. It will also state your requirements to the landlord. You should take note of the following:
a. Diplomatic Clause
This clause is to safe-guard you in the event that your employment is ceased or you are transferred to another country such that you can terminate the lease after 12 months by giving 2 months notice. Thereafter, the security deposit will be refunded to you. Please note that most landlords will only include the diplomatic clause if the lease is more than a year.
b. Good faith Deposit
This is the booking deposit; usually the amount is one month's rent. After the landlord signed the Letter of Intent and accept this deposit, he cannot rent the property to other party. This deposit will become part of the security deposit or advance rental after the Tenancy Agreement is signed.
c. Security Deposit
The amount of the security deposit is usually stated in the Letter or Intent. The standard practice in Singapore is usually one month's rent for every year of lease. It will only be payable upon signing of the Tenancy Agreement. When the lease term ends, the deposit will be refunded without interest. However, the landlord reserves the right to deduct from the deposit all costs and expenses arising from the tenant for breaching any of the covenants stated in the Tenancy Agreement.
d. Term of Lease
In Singapore, the standard lease period is more than 1 year, with or without an option to renew the lease. The lease renewal is usually for another 1 to 2 years. For the lease renewal option, the landlord would normally require that you give 2 or 3 months' advance notice of your intention to renew. Most landlords will not accept leases that are less than 1 year.
e. Your Requirements
Ensure that all your requirements and requests are clearly stated in the Letter of Intent. For example, such as requesting a new sofa, new bed or new washing machine etc. After the landlord had signed the Letter of Intent, he is bound by the Letter to provide you the requests.
5. Tenancy Agreement
After the Letter of intent is duly signed, the landlord’s agent will prepare the Tenancy Agreement. Any legal fees incurred for the drawing up of the agreement is usually borne by the tenant. However, if the landlord's agreement is acceptable, there will usually not be any legal fees involved. You will need to prepare the rest of the security deposit and advance rental upon signing of the Tenancy Agreement.
- For 1 year lease - 1 month's deposit and 1 month's advance rental.
- For 2 years lease - 2 month's deposit and 1 month's advance rental.
6. Taking Over the Property
The landlord will prepare an Inventory List on or before the day of handing over. Check the items listed in the inventory. Check all electrical appliances, air-con, lightings, water heater etc. If there is anything unsatisfactory, do not panic; note it down on the inventory. Even brand new houses have defects, therefore be understanding and allow the landlord to rectify it within a reasonable period.
Singapore Housing Type
Singapore Housing Type
A) Housing and Development Board (HDB)The Housing and Development Board (HDB) is a common feature of Singapore real estate listings in Singapore with more than 80% of Singaporeans living in public housing.
Purchases of HDB flats are restricted to Singaporeans and Permanent Residents.
For the HDB flat classification system, please note that the living room is counted as 1 room. Please refer to the HDB website for more information.
- 2 Rm (2 room HDB Flat). - 1 bedroom with a built-in area of about 45 sq m or 485 sq ft.
- 3 Rm (3 room HDB Flat). 2 bedrooms with a built-in area of about 70 sq m or 754 sq ft.
- 4 Rm (4 room HDB Flat). 3 bedrooms with a built-in area of about 90 sq m or 969 sq ft.
- 5 Rm (5 room HDB Flat). 3 bedrooms with a built-in area of about 110 sq m or 1,184 sq ft.
- EA (Executive Apartment). 3/4 bedrooms with built-in area of about 150 sqm or 1,615 sqft.
- EM (Executive Mansionette). Same as Executive apartment, except it has two levels.
- 6 Rm (6 room HDB Flat). Jumbo flat joint by two 3 room flats
B) Condominium / Private ApartmentPrivate apartments and condominiums come in various sizes from as small as 500 sq ft to 8,000 sq ft. The units in private residential projects range from studio, 1, 2, 3 and 4-bedroom units to penthouses. Residents, both Singaporeans and foreigners, share a common compound and facilities such as clubhouses, playgrounds, gymnasiums, swimming pools, tennis courts and BBQ pits. Most condominiums also come with 24-hour security surveillance and intercom systems.
- Condo (Condominiums). Apartment with facilities.
- Duplex. Apartment divided into two living residences, having separate entrances.
- HiRise (High rise Apartment). Usually with no facilities.
- LoRise (Low rise Apartment). Usually with no facilities.
- Mansionette. Apartment with two levels, double storey.
- Penthse. Biggest unit in a condo or apartment block. Usually on top floor and two levels.
- TownHse. Landed house that shares the same compound or facilities (if any).
- WalkUp. Low rise apartment without a lift, have to walk up using the stairs.
C) Landed PropertyConventional landed property on Singapore real estate listings refer to houses which come with private garden compounds and/or garages. Please note that the Singapore Government has imposed restrictions on foreign ownership of private residential property in Singapore. Please refer to the Singapore Land Authority website for more information.
- Bungalow. Free standing house with no shared wall with others except the fence.
- Semi Detached. A pair of houses, two houses joint side by side.
- Inter Terrace (Intermediate Terrace House). A row of houses joint side by side.
- Corner Terrace (Corner Terrace House). The last house of the row of houses.
D) Others
- Colonial House, Bungalow: Houses built in the pre-war British colonial times.
- Conservation House, Shop House: Houses or Shop Houses that are marked for conservation.
- Black and White House: Houses built in the pre-war British colonial times, usually with white external walls with wood support painted in black.
- Heritage House: House constructed with a touch of Asian heritage and culture, Balinese concept and loved by expatriates.
A) Housing and Development Board (HDB)The Housing and Development Board (HDB) is a common feature of Singapore real estate listings in Singapore with more than 80% of Singaporeans living in public housing.
Purchases of HDB flats are restricted to Singaporeans and Permanent Residents.
For the HDB flat classification system, please note that the living room is counted as 1 room. Please refer to the HDB website for more information.
- 2 Rm (2 room HDB Flat). - 1 bedroom with a built-in area of about 45 sq m or 485 sq ft.
- 3 Rm (3 room HDB Flat). 2 bedrooms with a built-in area of about 70 sq m or 754 sq ft.
- 4 Rm (4 room HDB Flat). 3 bedrooms with a built-in area of about 90 sq m or 969 sq ft.
- 5 Rm (5 room HDB Flat). 3 bedrooms with a built-in area of about 110 sq m or 1,184 sq ft.
- EA (Executive Apartment). 3/4 bedrooms with built-in area of about 150 sqm or 1,615 sqft.
- EM (Executive Mansionette). Same as Executive apartment, except it has two levels.
- 6 Rm (6 room HDB Flat). Jumbo flat joint by two 3 room flats
B) Condominium / Private ApartmentPrivate apartments and condominiums come in various sizes from as small as 500 sq ft to 8,000 sq ft. The units in private residential projects range from studio, 1, 2, 3 and 4-bedroom units to penthouses. Residents, both Singaporeans and foreigners, share a common compound and facilities such as clubhouses, playgrounds, gymnasiums, swimming pools, tennis courts and BBQ pits. Most condominiums also come with 24-hour security surveillance and intercom systems.
- Condo (Condominiums). Apartment with facilities.
- Duplex. Apartment divided into two living residences, having separate entrances.
- HiRise (High rise Apartment). Usually with no facilities.
- LoRise (Low rise Apartment). Usually with no facilities.
- Mansionette. Apartment with two levels, double storey.
- Penthse. Biggest unit in a condo or apartment block. Usually on top floor and two levels.
- TownHse. Landed house that shares the same compound or facilities (if any).
- WalkUp. Low rise apartment without a lift, have to walk up using the stairs.
C) Landed PropertyConventional landed property on Singapore real estate listings refer to houses which come with private garden compounds and/or garages. Please note that the Singapore Government has imposed restrictions on foreign ownership of private residential property in Singapore. Please refer to the Singapore Land Authority website for more information.
- Bungalow. Free standing house with no shared wall with others except the fence.
- Semi Detached. A pair of houses, two houses joint side by side.
- Inter Terrace (Intermediate Terrace House). A row of houses joint side by side.
- Corner Terrace (Corner Terrace House). The last house of the row of houses.
D) Others
- Colonial House, Bungalow: Houses built in the pre-war British colonial times.
- Conservation House, Shop House: Houses or Shop Houses that are marked for conservation.
- Black and White House: Houses built in the pre-war British colonial times, usually with white external walls with wood support painted in black.
- Heritage House: House constructed with a touch of Asian heritage and culture, Balinese concept and loved by expatriates.
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