These include raising the holding period for which a home seller must pay a stamp duty and reducing the maximum bank loan amount for existing home owners who want to buy another property.

The measures, which take immediate effect, came as a strong economy and low borrowing rates have continued to push property prices up, sparking concerns of a property bubble.

Private property prices shot up by some 11 per cent in the first half of this year and have now exceeded the previous peak in 1996.

National Development Minister Mah Bow Tan said prices are “on the high side”.

He said: “If the current momentum in the market continues, what will likely happen is that a property bubble will form. And when the bubble burst, and not if, but when the bubble burst, there will be severe implications for individuals, as well as for the economy on the whole.”

So the government has moved to curb speculation and also encourage financial prudence among buyers.

The holding period for the seller’s stamp duty has been increased from one to three years to discourage home owners from flipping. The seller’s stamp duty was first introduced in February this year.

Another measure will impact those who have one or more outstanding housing loan. Home buyers who already have at least one mortgage will have to pay more cash upfront when buying their next property.

The minimum cash payment has been doubled from five per cent to 10 per cent of the home’s valuation, while the maximum bank loan amount has been reduced from 80 to 70 per cent.

The government said the objective of the measures is “to ensure a stable and sustainable property market where prices move in line with economic fundamentals”.

See Also:

Singapore Property Cycle Revealed

Is Singapore Property Price due for a Correction?

As the cooling measures implemented by the government take hold, developers are launching properties at a faster pace than usual, said Mr. Cheng, who spoke to the Straits Times.

In response to a question on whether he believed that a correction in the real estate market would occur, he replied: “My reading of the upgraders’ market is that it seems to have come to a saturation point,” after a “tremendous increase” in the number of permanent residents and low interest rates caused property demand to outstrip supply.

The company would have tendered for land in 2009 before prices increased, but not now as it would be risky to “chase” rapidly increasing prices, said Mr. Cheng.

“If you look at any developer, they are actually pushing out (properties) much faster than the normal timeframe required. What it translates to is that people believe the risks are too high to wait.

“You can see that more and more projects are actually pushed out in six to nine months’ time, rather than the normal time of one to 11/2 years.”

“If we also try to push off in the next six to nine months, we may get jammed and given there is such a high price, we believe, even if we wait, the upside may not be there,” added Mr. Cheng.

The mass market segment has seen increases in property prices, and homebuyers have already bought 9,957 private homes in January to July this year, following the strong sales of 14,688 units in 2009.

Based on the latest official data, private home sales have slowed down but prices have still increased above their 1996 highs.

Mr. Cheng said that more government measures will be rolled out if the property market is still out of control.

See Also:
Singapore residential market easing up

Singapore Property Cycle Revealed

Market activity within the private residential market recovered early in Q2 but slowed in mid-quarter due to increased land supply from the GLS programme, local stock market jitters and uncertainty in European sovereign debts.

Is the property market in Singapore due for a correction?

The Straits Times, 24 Aug 2010 reported that “Property launches picking up speed“

In that way, the risks of any correction will be transferred to the home buyers. Developers is doing that becasue they may be fearful that a correction cycle is impending as the saturation peak approaches.

1993 to 1998, 1999 to 2004, 2005 to 2009, 2009 to 201x

As can see from the index chart by URA, the residential prices has hit all-time high. There are possible chances that it may be due for correction soon.

As the saying goes, “What goes Up, must comes Down.”  How much will the correction be? Well, only time will tell as no-one holds any crystal ball to give a definite answer. For now, just has to wait and see.

Kheng Leong bags Minton Rise

KHENG Leong, a privately owned property group controlled by the family of banker Wee Cho Yaw, has bought a privatised HUDC estate in Hougang for $209 million. The company inked a deal over the weekend to buy Minton Rise in a collective sale, according to sources.

BT understands that Kheng Leong may team up with listed construction and property group Low Keng Huat in some way. But sources could not say for sure whether this would involve Low Keng Huat merely handling the construction of the project or taking an equity stake in the redevelopment as well.

Minton Rise has 342 apartments in total. Owners will receive about $611,000 on average. The deal will be subject to approval from the Strata Titles Board.

The $209 million that Kheng Leong has agreed to pay is the reserve price. NRA Real Estate brokered the sale. The unit land price works out to about $236 psf of potential gross floor area, inclusive of an estimated $84 million development charge and a $19.5 million sum (estimated last year but not confirmed by the authorities) for upgrading the site’s lease from a then remaining term of 79 years to a fresh 99-year term.

The 472,378.5 sq ft site is zoned for residential use with a 2.8 plot ratio (ratio of potential gross floor area land area), which could mean a new condo with about 1,100 units averaging 1,200 sq ft.

The index could help facilitate the analysis of price trend in this market segment and help investors in making more informed decisions.

Met our trading objection of >10% and sold it with a tidy profit of 11% or $880.

The prove is here.