I heard news from one of the property investment groups recommending Ecohouse that payment to buyers of Ecohouse Casa Nova CNC phase is delayed by around two months.
Payments to the other phases are as normal.
Is this the start of the crack? Stay tuned to find out more.
Thursday 29 August 2013
Tuesday 27 August 2013
Further Tightening of the HDB Market - MSR and Loan Tenure
Apparently someone up there thinks that the screws are not tight enough and they have to tighten it more to screw HDB owners up.
After achieving some initial success with the Mortgage Service Ratio (MSR) and shorter loan tenure which resulted in HDB resale transactions and cash-over-valuation (COV) falling, the Ministry for National Development (MND) decided to cut the MSR (35% to 30%) and loan tenure (30 years to 25 years).
What will happen next? Your guess is as good as mine.
Resale transactions and COV will continue to ease thereby making it more affordable for first time home buyers. The latest median transacted COV is $20,000.
With a shorter loan tenure and MSR, buyers have to fork out more cash if they buy a more expensive or big HDB flat. There will be lower demand for 5-room and bigger flats.
Sellers will curse their luck. As it is, I have seen advertisements for the same HDB flats for more than a month without success. The seller was only asking $20,000 COV. Two weeks ago, the advertisement changed to View To Offer (VTO) with no mention of COV. It is going to get more chilly for HDB resale flat sellers. There are going to be more transactions where COV is zero or even negative depending on how desperate the seller is.
Those borderline HDB upgraders who committed to a private condominium or executive condominium in 2010 will be the first to get hit HARD, real hard! When I say borderline, I mean those who need to sell off the HDB flat as they do not want to rent out their HDB flat and have no ability to service two loans. Their condominium or EC is going to obtain its TOP in 2014.
But as it is, our Government always try to balance out the market. To maintain a steady rental market for those wanting to hold on to their HDB flats, the Government has directed that the new Permanent Residents (PR) ie. those who get PR status for less than three years rent them. If I am a PR, I will be mad.
Already with the Additional Buyer's Stamp Duty (ABSD), a PR have to pay additional 5% for their first property purchase. Many are putting off the purchase of a property. Now they have to wait even longer. Who knows if the ABSD rate might go up?
Despite the Government trying to keep the HDB rental market steady, we doubt it will help much. First, approvals for PR status have been falling year after year since the Government tightened the criteria. We don't see it easing soon. Second the number of HDB upgraders who are holding on to their flats and renting them out is increasing. The 2Q 2013 subletting cases rose 6% from 1Q 2013. While HDB flat rentals have been holding steady, it is near the tipping point.
The mass market condominium will experience a knee jerk reaction but the fall in transactions will not be glaring. MND chose a nice month to announce new measures. It is the Lunar Seventh Month afterall and transaction volumes are expected to be low anyway.
Hopefully investors will be more sane after absorbing the new cooling measures and not pay ridiculous prices for a mass market condominium unit.
After achieving some initial success with the Mortgage Service Ratio (MSR) and shorter loan tenure which resulted in HDB resale transactions and cash-over-valuation (COV) falling, the Ministry for National Development (MND) decided to cut the MSR (35% to 30%) and loan tenure (30 years to 25 years).
What will happen next? Your guess is as good as mine.
Resale transactions and COV will continue to ease thereby making it more affordable for first time home buyers. The latest median transacted COV is $20,000.
With a shorter loan tenure and MSR, buyers have to fork out more cash if they buy a more expensive or big HDB flat. There will be lower demand for 5-room and bigger flats.
Sellers will curse their luck. As it is, I have seen advertisements for the same HDB flats for more than a month without success. The seller was only asking $20,000 COV. Two weeks ago, the advertisement changed to View To Offer (VTO) with no mention of COV. It is going to get more chilly for HDB resale flat sellers. There are going to be more transactions where COV is zero or even negative depending on how desperate the seller is.
Those borderline HDB upgraders who committed to a private condominium or executive condominium in 2010 will be the first to get hit HARD, real hard! When I say borderline, I mean those who need to sell off the HDB flat as they do not want to rent out their HDB flat and have no ability to service two loans. Their condominium or EC is going to obtain its TOP in 2014.
But as it is, our Government always try to balance out the market. To maintain a steady rental market for those wanting to hold on to their HDB flats, the Government has directed that the new Permanent Residents (PR) ie. those who get PR status for less than three years rent them. If I am a PR, I will be mad.
Already with the Additional Buyer's Stamp Duty (ABSD), a PR have to pay additional 5% for their first property purchase. Many are putting off the purchase of a property. Now they have to wait even longer. Who knows if the ABSD rate might go up?
Despite the Government trying to keep the HDB rental market steady, we doubt it will help much. First, approvals for PR status have been falling year after year since the Government tightened the criteria. We don't see it easing soon. Second the number of HDB upgraders who are holding on to their flats and renting them out is increasing. The 2Q 2013 subletting cases rose 6% from 1Q 2013. While HDB flat rentals have been holding steady, it is near the tipping point.
The mass market condominium will experience a knee jerk reaction but the fall in transactions will not be glaring. MND chose a nice month to announce new measures. It is the Lunar Seventh Month afterall and transaction volumes are expected to be low anyway.
Hopefully investors will be more sane after absorbing the new cooling measures and not pay ridiculous prices for a mass market condominium unit.
Thursday 1 August 2013
First EC Site at Jurong Breaks Price Record
Land prices for Executive Condominium (EC) sites went through the roof in July 2013 when the tender for the first EC site in Jurong closed.
The site saw enthusiastic participation from developers and attracted a top bid of $418.53 psf ppr. The breakeven price is estimated to be between $700 and $750 psf. This means that to maintain their profit margin, the developer has to launch the project at around $840 psf.
This estimated selling price is another record for EC. No EC launches has ever crossed the $800 psf mark. Sea Horizon at Pasir Ris will test that when it opens for e-apps in August 2013.
At this selling price, is EC still affordable to the first timer families earning up to $12,000 a month?
Assuming an average unit size of a 3-bedder to be 1,100 sq ft and a unit price of $850 psf, the price will be $935,000. The couple will need cash and CPF amounting to $187,000 for the 20% downpayment. This is not a small amount.
We further assume that the loan amount is 80% of $935,000, an interest rate of 1.5% and a loan tenure of 30 years. The monthly mortgage payment works out to be $2,582.
If the couple earns a combined income of $12,000 a month, they will contribute $2,100 to their CPF Ordinary Account (OA). This means they have to come up with cash of $482 every month. If the interest rate goes up, they have to cough up more cash monthly.
Another point of concern is the CPF monies for retirement. As all their CPF monies have been used to service the loan, their OA is likely to stay near zero until they repay their loan or they cash out and buy another property.
The site saw enthusiastic participation from developers and attracted a top bid of $418.53 psf ppr. The breakeven price is estimated to be between $700 and $750 psf. This means that to maintain their profit margin, the developer has to launch the project at around $840 psf.
This estimated selling price is another record for EC. No EC launches has ever crossed the $800 psf mark. Sea Horizon at Pasir Ris will test that when it opens for e-apps in August 2013.
At this selling price, is EC still affordable to the first timer families earning up to $12,000 a month?
Assuming an average unit size of a 3-bedder to be 1,100 sq ft and a unit price of $850 psf, the price will be $935,000. The couple will need cash and CPF amounting to $187,000 for the 20% downpayment. This is not a small amount.
We further assume that the loan amount is 80% of $935,000, an interest rate of 1.5% and a loan tenure of 30 years. The monthly mortgage payment works out to be $2,582.
If the couple earns a combined income of $12,000 a month, they will contribute $2,100 to their CPF Ordinary Account (OA). This means they have to come up with cash of $482 every month. If the interest rate goes up, they have to cough up more cash monthly.
Another point of concern is the CPF monies for retirement. As all their CPF monies have been used to service the loan, their OA is likely to stay near zero until they repay their loan or they cash out and buy another property.
Subscribe to:
Posts (Atom)