Issue 143

Copyright 2011-2013 www.Propwise.sg. All Rights Reserved.

CONTENTS
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Exemption of the TDSR Rules Tweaking or
Loosening? Singapore Property News This Week Resale Property Transactions (January 29 February 4)

FROM THE

EDITOR

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SINGAPORE PROPERTY WEEKLY Issue 143

Exemption of the TDSR Rules Tweaking or Loosening?

By Property Soul (guest contributor) On February 10 2014, the Monetary Authority of Singapore (MAS) issued a press release to broaden the existing exemption from the Total Debt Servicing Ratio (TDSR) rules introduced in June last year. Market watchers have debated whether this just a tweak or a sign that the government is loosening its cooling measures due to the recent weak market sentiment.

Fine-tuning financing restrictions a norm?

Financing restrictions introduced by MAS under the context of prudent borrowing are usually made effective the following day. However, it is not uncommon to see
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SINGAPORE PROPERTY WEEKLY Issue 143 subsequent fine-tuning announcement. after the later that some details were fine-tuned after receiving feedback from borrowers who face challenges refinancing loans for owneroccupied properties. Anyway, all lenders and borrowers are now used to MAS being the modifying authority of financing restrictions introduced in Singapore. Although MAS stands firm on their policies, they know do tweak some terms and conditions based on public feedback. So the question is: Are more fine-tuning announcements on the way? What is the exemption this time?

Motor vehicle loans are a good example:

- On 25 February 2013, MAS imposed financing restrictions on car loans that cap maximum loan-to-value to 50 or 60 percent and loan tenure to five years.
- On March 8, after carefully considering the feedback received from different groups, the physically disabled and their caregivers are exempted from such restrictions. - On April 5, after taking into account the distinct conditions in the used car market, a grace period of 60 days was granted for the purchase of used cars that were inventory before February 25. The TDSR framework was announced in June 2013. But it was not until eight months
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With immediate effect, any borrower who bought his owner-occupied residential property before 29 June 2013 is exempted from the TDSR rules during refinancing of this property, even if he owns more than one

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SINGAPORE PROPERTY WEEKLY Issue 143 property and has other outstanding property loan. He can also enjoy the same remaining tenure in his refinanced loan. Refinancing of all investment property loans above the 60 percent TDSR threshold is allowed during the transition period until 30 June 2017, provided that: 1. The option to purchase was granted before 29 June 2013; 2. The borrower commits to a debt reduction plan with the financial institution (FI) during refinancing; and 3. The borrower assessment. fulfils the FIs credit interest rates go up. On the other hand, property investors are given sufficient time to right-size their loans when the 4-year lock-in period of their loans expires in 2017, so they will be able to service or refinance their loans and wont suffer a huge loss in a forced sale. With interest rates still around two percent now, not many property owners will bother to refinance their properties. For those who bought their properties recently, their housing loans are most likely still under the lock-in period of 2 to 4 years. As the saying goes, you only cross the bridge when you come to it. It is only when interest rates shoot up to over 3 or 4 percent that owners will start feeling the pain. In 2006 and 2007, banks would inform borrowers of a revised interest rate and a higher monthly repayment every few months, to be effective the following month.
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How can property owners benefit from the exemption? The exemption is meant to enable home owners to refinance their properties when
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SINGAPORE PROPERTY WEEKLY Issue 143 Foreign banks were even more aggressive in updating their interest rates. Mortgagors should be aware of the fact that applications for refinancing or re-pricing takes time. When the new loan package is finally approved, it can only be made effective three months later. Who doesnt benefit exemption? much from the magic date of 29 June 2013 or have purchased commercial properties still have to go through the tedious TDSR evaluation process during refinancing. Buyers waiting on the sidelines are unlikely to see many units selling at depressed prices due to failure in securing refinancing. There may not be a drastic drop in property prices this year. 3. Financial institutions FIs are relieved that they can probably meet their sales quota on refinancing of home loans now. But not the quota on new housing loans. Even if the target group of the TDSR exemption fails to pass the stress test, FIs are now unable to hold them hostage to monthly repayments with higher and higher interest rates.
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1. Developers, agents and sellers It is an exemption, not an abortion. And the exemption doesnt apply across the board to include all new property purchases. Buying new projects launched by developers or resale units in the market after 29 June 2013 are still subject to the limit of the TDSR rules. 2. Other buyers

Buyers who unfortunately bought after the

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SINGAPORE PROPERTY WEEKLY Issue 143 Well, there is no clear definition and guideline on debt-reduction plan and credit assessment. At least the FIs do not have to give up too much business from their overleveraged mortgagors with no holding power, especially after toiling for weeks with all that paperwork! By guest contributor Property Soul, a successful property investor and enthusiast who shares her experiences and knowledge on her blog.

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SINGAPORE PROPERTY WEEKLY Issue 143

Singapore Property This Week

Residential
A breather for homeowners who bought before last June 29 With immediate effect from Feb 10 this year, the Monetary Authority of Singapore (MAS) has announced that refinancing of loans for homes bought before June 29, 2013 will be exempted from the total debt servicing ratio (TDSR) cap of 60 percent. The cap means that a borrower's monthly installments for all debt servicing including mortgage payments cannot exceed 60 percent of gross monthly income. This is a breather from the strict debt rules governing mortgages for homeowners who are considering refinancing of their mortgages. Before this, owner-occupiers with
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an intention to refinance their loans could only be exempted from this rule if they owned no other property and had no other home loan. Banks are also likely to welcome this policy tweak because it may revive the refinancing market, after the sharp decrease in new home loan sales since the introduction of the TDSR framework. (Source: Business Times) Riverbank @ Fernvale strong interest project draws

UOL Development's newest condominium development Riverbank @ Fernvale is reported to be gaining strong interest from buyers. It has received more than

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SINGAPORE PROPERTY WEEKLY Issue 143 500 cheques since its showflats opened for preview a week ago. The 555 residential units prices will be above $1,000 psf on average. Anthony Wong, UOL's deputy general manager (marketing) said that he saw strong interest across all unit types. (Source: Business Times) Home ownership a key social pillar Development Board's Home Ownership for the People Scheme the programmed that offers subsidized mortgages to buyers of HDB flats and has culminated in the Republic's high home ownership rate. (Source: Business Times) TDSR tweak a lifeline for struggling owners

Minister for National Development Khaw Boon Wan said that home ownership remains a key social pillar for Singapore, and that the government will continue to help Singaporeans realize their dreams of owning a home in a post on his blog. Mr Khaw wrote that HDB estates are lasting intangibles where Singaporeans build homes, start families and form strong bonds with their neighbors and communities. Feb 12 marked the 50th anniversary of the Housing &
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Following the MASs decision to exempt owner-occupiers from the TDSR cap of 60 percent, analysts are reported to say that the tweak is targeted at a small group of stressed households struggling to get mortgage refinancing. This revision to the rule may mean that the group of households with a debt-servicing ratio (DSR) of 40-60 percent may be larger than expected earlier. However, analysts also said that the tweak is not likely to indicate a rollback of property
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SINGAPORE PROPERTY WEEKLY Issue 143 cooling measures. In fact, the measures are expected to stay, and a reversal may only happen next year. (Source: Business Times) Anchorvale Crescent EC site attracts strong interest The 99-year leasehold site at Anchorvale Crescent attracted 12 bids at the close of its tender period on Feb 13. The top bid was $192.89 million, or $366.91 psf ppr, by SingHaiyi Group's Phoenix Real Estate. The second highest bid was $191 million, or $363.32 psf ppr, by MCL Land (Brighton). Ong Teck Hui, national director, research and consultancy, at Jones Lang LaSalle said that the site has attracted a particularly strong interest with 12 parties contesting and the top six bidders within a 4.8 percent margin. This reflects developer's confidence in demand for
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EC homes, and demand for ECs in the Sengkang area has been encouraging recently. (Source: Business Times) DBS: home prices to fall 10-15% this year Speaking at DBS's Q4 results briefing, DBS Bank chief executive Piyush Gupta expects home prices to decrease 10 to 15 percent in 2014, more than the 10 percent forecast by property consultants. Yet he said that such decline would not make a material impact on the bank's loan book. As for the higher interest rates expected with the shrinking of monetary stimulus policy by the US, he was not expecting it to have any effect on DBS. DBSs own stress tests in the past have shown that DBS can easily withstand a 20 percent reduction in Singapore property

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SINGAPORE PROPERTY WEEKLY Issue 143 prices without portfolio. material impact on their Rivertrees pricing set to top next-door Riverbank's Rivertrees Residences is expected to be launched at a premium of $50-100 psf, topping its next-door competing project, UOL Development's Riverbank @ Fernvale. Rivertrees is a project jointly developed by Frasers Centrepoint, Far East Orchard and Sekisui House. Prices for the units will start from $950 psf when the project is open for booking on Feb 22, with the average price for the initial phase likely to be within $950$1,150 psf. Chief executive Cheang Kok Kheong noted that Rivertreess advantage over Riverbank is that it offers the waterfront view, and its slight premium to the other is considered fair. Riverbank @ Fernvale has an average price indication of slightly more than $1,000 psf.

(Source: Business Times)

Jans resale of non-landed homes down 70%

Resale transactions of non-landed private residential homes decreased 70.2 percent to 310 in Jan 2014 from 1,039 deals of last year. Flash estimates from the Singapore Real Estate Exchange (SRX) also indicated that the number of resale deals last month was 9.1 percent lower than 341 transactions in December. However, resale prices measured by the SRX index increased 2.3 percent from the December level. Analysts said the lower number of transactions in Jan might have caused the overall price index more sensitive to deals that changed hands at a higher price.

(Source: Business Times)

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(Source: Business Times)

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SINGAPORE PROPERTY WEEKLY Issue 143 Commercial Keppel Club and one SICC course affected by review put to other uses. (Source: Business Times) KH Kea Properties seeking partner to develop building KH Kea Properties Pte Ltd is seeking a jointventure partner to tap on the best use of its small building next to Bras Basah Complex with McDonald's as tenant on the lower floors - the nine-storey building at 333 North Bridge Road. The building's existing gross floor area (GFA) is 29,049 sq ft, or an equivalent plot ratio of 7.145 which exceeds the 5.2 plot ratio allocated for the site under Master Plan 2008. The company is controlled by an Indonesian family with business interests across Asia. It also owns an adjacent 635 sq ft piece of land along Cashin Street. Both properties have balance lease tenure of 812 years,

Under the government's plans for land use, Keppel Club may not be able to keep its golf course when its lease expires in seven years, and at least one of the Singapore Island Country Club's (SICC) locations may be affected. The fate of these and other golf courses has long been discussed before 16 Feb, when representatives from government agencies meet the members of four clubs Keppel, SICC, Tanah Merah Country Club (TMCC) and the National Service Resort & Country Club (NSRCC) - at separate briefing sessions. The Ministry of Law said that there would be no new land allocations for golf courses, and that some of the golf courses would have to be phased out and the greens

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SINGAPORE PROPERTY WEEKLY Issue 143 are zoned for commercial use, and yield a total of 32,351 sq ft GFA. (Source: Business Times) Type A (32,754 sq ft to 33,615 sq ft), Type B (10,613-14,574 sq ft) and Type C (2,1958,697 sq ft). The Indexs average price is a bit lower than the $360 psf average for the groups nearby project The Westcom in Tuas South Avenue 6. The group has sold about 92 percent of the 144 warehouse and factory units in The Westcom. The Westcom is on a site with a remaining 41 years on its 60-year lease term. (Source: Business Times)

Far East to begin sales for Tuas factory

complex next week Far East Organization is expected to begin sales at a 30-year leasehold strata factory project, The Index in Tuas South Avenue 3 next week. The expected average price of the factory units is around $330-350 psf. 98 strata factories as well as a staff canteen will be on sale. There will be three unit types:

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SINGAPORE PROPERTY WEEKLY Issue 143

Non-Landed Residential Resale Property Transactions for the Week of Jan 29 Feb 4
Postal District 5 9 10 10 10 11 11 11 14 14 14 15 15 15 15 18 21 21 26 26 26 27 Project Name VARSITY PARK CONDOMINIUM PATERSON RESIDENCE THE MONTANA BALMORAL 8 ONE JERVOIS PARK INFINIA AT WEE NAM HILLCREST ARCADIA CHANCERY COURT THE WATERINA THE WATERINA LE CRESCENDO POSHGROVE EAST RIVEREDGE MABELLE THE VESTA RIS GRANDEUR SPRINGDALE CONDOMINIUM PINE GROVE THE CALROSE CASTLE GREEN CASTLE GREEN YISHUN SAPPHIRE Area Transacted Price Tenure (sqft) Price ($) ($ psf) 1,345 1,590,000 1,182 99 1,313 2,830,000 2,155 FH 614 1,286,710 2,097 FH 2,928 4,900,000 1,674 FH 2,777 4,600,000 1,656 FH 1,464 2,400,000 1,639 FH 926 1,050,000 1,134 99 2,271 2,520,000 1,110 99 635 834,388 1,314 FH 1,066 1,230,000 1,154 FH 3,391 3,480,000 1,026 FH 1,238 1,767,000 1,427 FH 1,518 1,750,000 1,153 99 1,119 1,250,000 1,117 FH 1,561 1,580,000 1,012 FH 1,539 1,400,000 910 FH 1,130 1,280,000 1,133 999 1,755 1,539,000 877 99 1,249 1,570,000 1,257 FH 1,281 1,100,000 859 99 1,152 950,000 825 99 1,399 1,020,000 729 99

NOTE: This data only covers non-landed residential resale property transactions with caveats lodged with the Singapore Land Authority. Typically, caveats are lodged at least 2-3 weeks after a purchaser signs an OTP, hence the lagged nature of the data.

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