I suggested not to hold big or any overnight positions since early January. Reason was that we don't know when DJIA will drop few hundred points while we are sound asleep.
Another suggestion is not to chase any stock that has moved up 5 bids. This is particularly true for penny stocks. If you do chase, chances is I will buy the same stock from you cheaper 5 days later.
Another strategy that many day traders are using now is to wait for DJIA to drop few hundred points, and then buy stocks when prices gap down the next morning - hopping to sell on a rebound intra day.
There is no more retail and little fund participation in the market now. It's all prop traders and stockists playing amoung themselves.
12 comments:
ERP helps business, says LTA
Samuel Ee
Tue, Jun 24, 2008
The Business Times
(SINGAPORE) ERP rates must go up because the current congestion, if left unchecked, will have a negative impact on the economy, says the Land Transport Authority.
From July 7, 2008, electronic road pricing rates will rise sharply and five new ERP gantries will be erected along the Singapore River line to reduce transit traffic using the city area for outbound trips in the evening. This is similar to the concept behind the Orchard Cordon, which discourages vehicles from making use of Orchard Road to get to other areas.
But the hikes and gantries have met with protests from motorists, some of whom have questioned whether the moves are necessary, given that traffic congestion does not appear to be as bad as the LTA says it is.
LTA chief executive Yam Ah Mee disagrees, saying that the authority's measurements of road speeds in the city area have shown that congestion is gradually building up and becoming more pervasive. He says that within the city, speeds on major routes such as North Bridge Road, South Bridge Road, Stamford Road and Bras Basah Road have fallen by up to 22 per cent in the evening, compared to two years ago.
'ERP changes are necessary to manage congestion effectively,' Mr Yam explains . 'Faster travel times lead to overall lower transport costs and ultimately help businesses to remain competitive. Congestion also adversely impacts family life as people spend more time on the roads.'
When asked about the effectiveness of the higher ERP rates, given that Singaporeans seem to eventually accept them after some initial complaints, he says that the actual ERP price levels depend on the choices drivers make and how they weigh the charges to be paid against the other options, such as travelling during non-ERP times or switching to public transport.
'As traffic demand patterns change, ERP rates will also have to respond accordingly because the situation is dynamic,' says Mr Yam.
'If the demand for limited road space goes up over time, it is likely that ERP charges will have to go up as well. This does not mean that ERP is not effective, only that periodic reviews are needed as the situation does not remain static.'
He adds that since the system was implemented in 1998, ERP has been effective in encouraging motorists to consider alternatives. As a result, traffic speeds on priced roads have been maintained within their optimal speed range through regular reviews and rate adjustments.
'However, the edge has come off in recent years and that is why we have had to make some enhancements to the system at this time,' he says. 'Having done this, we are confident that the system will be effective again.'
As for those diehard motorists who are unlikely to give up their cars whatever the increase in ERP rates, Mr Yam says that the LTA's aim is not to get everyone to stop driving 'as we would then be under-utilising the roads'.
'Rather, the intent is to influence enough car users not to use the roads during congested periods,' he says. 'In doing so, we will be able to optimise the use of the roads. We only need a small decrease of cars on the roads to bring about smooth-flowing roads.'
In the case of the five new gantries, LTA is targeting a 17-18 per cent reduction in car trips into the CBD.
The LTA reiterates that the system is not a revenue-raising exercise. The government has been progressively shifting from vehicle ownership taxes to usage charges, with road tax to be cut by 15 per cent from July 1, 2008.
This will cost the government $110 million annually and follows the 10 per cent cut in ARF or the additional registration fee in March 2008 - at a cost of $200 million. So total cost is $310 million.
At the same time, ERP revenue will increase by $70 million a year (total annual ERP revenue is about $100 million).
'ERP places the decision of whether to drive, travel at a different time, use a different route or take public transport, in the hands of motorists,' says Mr Yam. 'Without ERP to keep our roads smooth-flowing, there is no choice as everyone using the road will be caught in gridlock.'
This article was first published in The Business Times on June 23, 2008.
A cohesive nation, thanks to the HDB
By Betsy Pisik
25 Jun 2008
In some countries, an apartment can be the heart of the family, or just a place to store clothes and a bed. In others, it is the unattainable dream, a symbol of security as far away as the moon.
In Singapore, a 48-year-old programme has turned home ownership into a formidable tool to create cohesive communities and fuel economic expansion.
‘The housing programme is a key pillar for continued economic growth,’ says Mr James Koh Cher Siang, chairman of the Housing Board.
‘The underlying philosophy is nation-building, to root the population in Singapore and its future.’
That far-reaching vision was honoured by the United Nations on Monday during a day-long celebration of public-service innovations.
The HDB was one of 12 organisations recognised by the United Nations Public Administration Network (UNPAN), and the only one from Asia singled out for what is, effectively, a lifetime achievement award for excellence. Nearly 190 organisations from 39 countries entered the three public-service award categories.
The HDB, along with social programmes from Rwanda (improving community health and education), the United States (curbing juvenile delinquency and family violence) and Brazil (teaching building trades for historic preservation to unemployed youth), was cited for improving transparency, accountability and responsiveness in public service.
‘Singapore’s home-ownership programme has provided quality housing for more than 80 per cent of the people and helped more than 95 per cent of them to own their homes,’ said UN Undersecretary-General for Economic and Social Affairs Sha Zukang, who presented the awards on Monday.
‘The awardees are an inspiration for all of us in their ability with ingenuity, creativity and commitment to improve transparency, accountability and responsiveness in public service.’
In a statement issued in Singapore yesterday, National Development Minister Mah Bow Tan congratulated the HDB and said that the award was ‘a tribute not just to HDB, but also to the Singapore people because the home-ownership programme is very much a part of our lives today’.
It is a success story that goes back almost half a century, to the days when many Singaporeans lived in kampungs.
A government initiative to develop affordable housing changed people’s lives dramatically, putting families into basic high-rise homes with sanitation and clean running water.
With government commitments of land, money and enabling laws, the HDB built 50,000 flats in the first five years.
As the programme grew, the designs became more varied and ambitious: homes were larger, more pleasant and cost more.
Housing estates featured conveniences like transportation, shops, childcare and recreation. Soon, it was not just a question of affordability, but desirability.
‘As time progressed, people’s aspirations changed, they wanted quality housing,’ Mr Koh told The Straits Times on Monday. ‘They had more money, they wanted different kinds of flats, from smallest to the largest.’
With their upgraded fixtures and amenities, he added, the HDB flats rival private condos for sophisticated buyers.
Today, 80 per cent of Singaporeans live in HDB homes, the dream of owning them made possible by a combination of subsidies and access to their Central Provident Fund savings to pay for their flats.
This kind of stability and success is both a beacon and a taunt to countries struggling to cope with housing shortages and runaway prices.
‘My government cannot possibly undertake something like that,’ said a Brazilian diplomat, after listening to HDB deputy director Lily Wong’s brief presentation on the housing programme. ‘We do not have the money, the foresight, the land, the harmony. I cannot imagine trying to re-create this in Rio. Our slums are too large.’
The world is in something of a housing crisis: slums are spreading like a shadow across Latin America, Africa and Asia, devouring rural areas and extending cities far beyond their capacities.
The US economy is roiled by a mortgage crisis; major cities including Moscow, Copenhagen, Hong Kong, Tokyo and New York have a near-zero vacancy rate, especially for affordable homes.
UNPAN officials noted that the winning programmes should introduce new concepts to tackle widespread problems.
Singapore’s presentation sparked envy in many in the small audience, but also a touch of wistfulness.
‘I guess if you started with a clean slate, such a programme would be possible,’ said a European delegate. ‘Maybe they could replicate this in East Timor but I don’t know where else.’
In fact, housing officials from India and China - sprawling countries with masses packed into teeming cities - have sought out Singapore’s HDB for advice, HDB chief executive officer Tay Kim Poh told The Straits Times.
UN Deputy Secretary-General Asha-Rose Migiro praised the winners, who this year hail from Australia, Brazil, India, Jordan, Rwanda, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Tunisia and the United States.
‘Your exemplary initiatives should inspire all governments around the world - at all levels - to strive for excellence in public service,’ she said.
‘While the private sector and civil society play a fundamental role in the development process, it is governments that have the main role to steer development efforts and provide the necessary conditions for a stable, peaceful and prosperous society.’
Read an interesting article on HDB home-ownership programme...
Topic: ROOT CAUSE of "sky-high" HDB flat prices
Note for readers:
1 Reproduced below is the full text of my letter to TODAY Voices section --- which was rejected(read: censored) for publication for the obvious reason that I had exposed "The HDB Flat Pricing Scam" (which not many S'poreans are aware of).
2 Key Issue --- The HDB (under $2m Minister Mah Bow Tan) had used the clever term "market subsidy" to confuse buyers of HDB new flats into thinking their flats are "heavily subsidized" (Mah's own words) by the PAP Govt.
In fact, there is no "cash subsidy" at all and the HDB is actually raking in a cleverly-disguised profit !
3 For greater public awareness, please help to forward to as many people as possible and ask them to do likewise (for "the multiplier effect").
More informed voters can then vote appropriately at the next 2011 General Elections to send a strong message to the PAP Govt to provide truly-affordable housing for the people.
Original Text of my email letter to TODAY newspaper:
In his letter "Resale flats out of reach" (TODAY Jan 17), Mr Anthony Tan highlighted the problems faced by many first-time HDB flat-buyers. Allow me to trace the root cause behind their dilemma.
As a 60-year old educated Senior Citizen, I surf the Internet regularly to gauge the true concerns of young Singaporeans, who are mostly hesitant to speak up openly.
I empathise with their growing despair on home ownership. Many are resigned that private flats are now way beyond their reach. All they simply want is a basic no-frills inexpensive flat --- with enough money left to decorate it to their own personal taste into a cosy home!
However, even with HDB flats, they are caught between the devil and the deep blue sea --- either wait 4 years for "expensive" new flats or else pay "sky-high" prices for resale flats. They are rightly concerned that a $1 million HDB resale flat may not be that far-fetched.
One worry is that, despite such high prices, few buyers will feel the pinch immediately because up to 90% of the cost can be financed by long-term home loans stretching up to 30 years.
So many seldom give a second thought that if they borrow, say, $300,000 under a 30-year loan, they could ultimately cough up nearly $600,000 in total capital and interest repayments.
Another worry: If a young couple have to sink so much of their hard-earned income and CPF savings into their brick-and-cement flat, how much monies will there be left to raise a family and sent their children to university --- not to mention providing for their own healthcare and retirement needs in their golden years?
In the 1970s, the starting graduate salary was $1000 per month. Then, in the HDB Marine Parade Estate, prices of new 5-rm, 4-rm and 3-rm flats were $35,000, $20,000 and $17,000 respectively. In 1990, average price of new 5-rm flats was $70,000. Such prices then reflected a "cost-based pricing approach".
Now, starting graduate salary is 3 times higher at $3,000 per month but prices of similar HDB new flats have gone up by 10 times to 30 times. The massive price hikes were largely the result of the HDB switching over to a "market-based pricing approach".
Since 2002, many have queried the HDB in newspaper forums on how its new flats are actually priced. Last December, the HDB finally confirmed that "the prices of new HDB flats are based on the market prices of resale HDB flats, and not their costs of construction."
This is a simple-to-understand example using data from 2000, when 5-rm new flats were priced upwards of $200,000.
However, from actual tendered contracts of HDB Building Contractors, the Construction Cost per flat was about $50,000. Adding on an estimated $70,000 for Land Cost & Other Related Costs, the Total Breakeven Cost per flat was about $120,000 --- which HDB should set as the selling price, since it is supposed to be a not-for-profit, low-cost public housing developer.
But, under the market-based pricing approach, HDB will first look at the then prevailing market price of, say $260,000 of a 5-rm resale flat. It will then pick a lower figure of, say $200,000 as the selling price for the 5-rm new flat --- never mind if its actual Total Breakeven Cost was only $120,000.
The HDB can then say the new flat buyer is getting a "market subsidy" of $60,000 arising from the difference between the resale flat price and new flat price. Notice, under such an approach, there is absolutely no "cash subsidy" granted at all to the new flat buyer. Instead, the HDB is actually collecting a profit of $80,000 per flat (representing a 67% profit margin). In contrast, private developers normally earn around 20% profit margin for assuming business risks.
Most importantly, this HDB market-based pricing approach had resulted in new flat prices and resale flat prices chasing each other in an upward spiral ---- that is financially disadvantageous to buyers of both new and resale flats.
Should HDB deem the above example as simplistic or misleading, the onus lies with it to rebut and substantiate with its own detailed data.
HDB should also provide its public response to this remaining burning question --- Why is the HDB not really helping first-time buyers of new flats by passing on to them the substantial cost-savings from economies-of-scale in massive HDB developments through pricing new flats on a "cost-based break-even" approach?
We have also since moved from small "pigeon-holes" to tiny "bee-hives" --- extremely costly beehives, to be precise! HDB new flats are now built smaller, closer and at higher price.
The HDB itself had stopped building the larger 1200 sq ft 5-room and 1400 sq ft Executive flats. Current prices of 1000 sq ft 4-rm HDB new flats range from $200,000 (in Senkang) to $400,000 (in Telok Blangah) and up to the whopping $590,000 (in Boon Keng, under Design, Build and Sell Scheme by private developer).
Our politicians constantly exhort Singaporeans to treat Singapore as "home" literally and figuratively. To help solve our Procreation Problem, young couples are also reminded not to delay marriage and have three or more children. Pray tell us how do you squeeze two parents, three children, one maid and possibly one or two elderly in-laws in a 1000 sq ft "bee-hive"?
When young, educated and mobile Singaporeans are short-changed on such basic "quality of life" aspirations as a truly-affordable and decent-size home for their loved ones, is it any wonder many are contemplating to be "quitters" rather than "stayers"?
Making sense of HDB rejections
Leong Sze Hian
29 June 2008
I refer to HDB’s latest BTO, Straits Vista@Marsiling launched on 10 June. (”HDB’s challenge: low-cost housing, condo-like flats” (ST, Jun 11)) (”Marsiling goes BTO :Straits Vista project launched as HDB wins UN award” (Today, Jun 11)).
Why is it that the problem of all applicants rejecting BTO HDB flats offered, resulting in leftover flats, is only a recent phenomena over the last year or so ?
Is it because not only has HDB 4-room flat prices increased by an average of 40 to more than 100 per cent from about two years ago, and the price range has also widened ?
For example, the price range for BTOs at Straits@Marsiling is from $116,000 to $164,000 (3-room) and $184,000 to $257,000 (4-room), and $ 234,000 to $ 305,000 (4-room) for Punggol Sapphire.
This is a difference of $ 73,000 or 40 per cent between the lowest and highest price at Straits@Marsiling (4-room), and 41 per cent between the lowest and highest price for a 3-room flat.
If an applicant can only afford a cheaper-range flat, but is offered one with a much higher price, is it fair to penalise the applicant after two rejections ?
If one is offered only second floor flats, which nobody wants because of the noise level, the difficulty to sell in future, and generally much slower appreciation in value relative to higher floors, is it fair to penalise applicants too ?
As a flat may probably be the biggest asset that one may own in one’s lifetime, wouldn’t it be natural for applicants to decline accepting flats beyond their affordability, or almost certain relative depreciation in market price and marketability in the future ?
Instead of offering more land sites for private developers to tender and build HDB flats, I would like to suggest that the HDB continue to focus on its historic role to build affordable housing to meet Singaporeans’ needs, as the price of private-development HDB flats tend to be higher than HDB- developed flats.
Is it any wonder that as at end March, 250 of the 714 flats available at City View @ Boon Keng under HDB’s Design, Build and Sell Scheme (DBSS), were still unsold, with prices up to $ 727,000 for a 5-room flat?
In view of the current shortage in the supply of HDB flats to meet rising demand, private developers may tender at higher prices, which may translate into even higher priced flats.
I can understand the rationale to allow private property owners to own a HDB flat as well, when there used to be as many as 16,000 surplus HDB flats that could not be sold.
Now that surplus flats available have dwindled, and demand is arguably at record highs, with the problem of many home buyers being unable to meet the “cash above valuation”, I would like to suggest that the policy of owning both a HDB flat and private property be reviewed.
In this connection, I understand that in other countries, citizens are generally not allowed to own both public and private housing.
Mass market stays buoyant as buyers find price is right
Flash estimates for Q2 show overall private home prices flattening; steady HDB resales keep mass market more active
Business Times
July 2, 2008
Flash estimates for property price indices are in with numbers suggesting that price-sensitive buyers are bargain hunting or scaling down their expectations altogether.
The Urban Redevelopment Authority (URA) released estimates for the Q2 2008 price index for private residential property yesterday with prices rising just 0.4 per cent - a mere crawl compared to the 3.7 per cent increase in the previous quarter.
While this represents the slowest growth in four years, Jones Lang LaSalle’s local director and head of research (South East Asia) Chua Yang Liang also notes that it is the, ’steepest’ quarterly rate of change since Q3 2000.
Much of the activity was in the mid and mass-market as reflected by URA’s index for three geographical regions. Prices of non-landed private residential properties increased by just 0.2 per cent in Core Central Region (CCR) and 0.7 per cent in Rest of Central Region (RCR), but climbed a more robust 1.3 per cent in Outside Central Region (OCR).
Dr Chua added that demand remained favourable in the OCR supported by average nominal wage increases in the Q1 2008 and ‘dislodged residents of collective sale sites’.
Also robust was the Housing and Development Board’s (HDB) resale market with estimates for the quarter revealing that the HDB Resale Price Index increased by 4.4 per cent over the previous quarter, and higher than the 3.7 per cent increase in Q1 2008.
Knight Frank director (research and consultancy) Nicholas Mak said that the mass market is ‘influenced’ by HDB’s resale market and added that, ‘the resale market has been steady’.
Indeed, while HDB resale volume did fall to 6,360 units in Q1 2008, a 6 per cent drop compared to Q4 2007, it actually increased by one per cent on a year-on-year (y-o-y) basis.
By comparison, secondary market private property transactions of 2,304 units in Q1 2008 was a fall of about 40 per cent, quarter-on-quarter (q-o-q) and a fall of 57 per cent, y-o-y, while primary market transactions of about 762 units was a fall of about 48 per cent in Q1 2008 q-o-q, and a fall of 84 per cent y-o-y.
ERA Realty Network assistant vice-president Eugene Lim also believes that a buoyant HDB resale market could boost HDB upgrader sentiment, but he pointed out that the strength of the HDB resale market can be attributed to ‘upgraders, downgraders and permanent residents’. On the last group, Mr Lim estimates that based on in-house data, permanent residents account for about 20 per cent of the buyers in the HDB resale market.
And attention is likely to continue to be diverted away from high-end products.
‘The market is not short of buyers and many astute investors have been shopping around, looking to scoop up value buys,’ added Mr Lim.
CBRE Research executive director Li Hiaw Ho noted that in the private property market, most of the transactions were mid and mass-market projects with the majority of transactions in the $750-$1,000 psf price bracket.
As such, Mr Li expects sales volume of new launches to rise to between 1,200-1,400 units in Q2 2008, compared to just 762 units in Q1 2008.
Property consultants have so far been careful to not use the ‘F’ word to describe home prices. Most believe prices have ‘plateaued’ or ’softened’, but not ‘fallen’.
Colliers International director (research and advisory) Tay Huey Ying even believes that home prices have, ‘remained stubbornly resilient to the extent that they continue to post a y-o-y increase of 20.4 per cent’.
Ms Tay also added that for the first six months of the year, home prices rose by 4.2 per cent. ‘(Developer’s) current pricing strategy can be described as competitive, that is either similar to current market prices or marginally lower than competitors,’ she added.
Ms Tay believes that home prices will continue to resist ‘downward pressure’ and expects prices to hold steady or decline marginally by not more than 3 per cent in Q3 2008.
Saying that mass-market prices have generally not been ‘chased up’ or preyed upon by the ’speculative element’, Ms Tay believes this sector could be the best performing for the rest of the year.
This however needs to be put in context.
Knight Frank’s Mr Mak does point out that prime property prices have increased by 52.4 per cent over the last two years. ‘On this basis, it is not surprising that this market segment will lead the slowdown in price growth,’ he added.
Private home prices creep up just 0.4% in Q2
But HDB resale flat prices were higher than previous quarter
July 1, 2008
SINGAPORE private home prices rose just 0.4 per cent between April and June, the third straight quarter of slower growth. But Housing Board resale flat prices did better, rising by 4.4 per cent.
For private residential properties, the price index crept up to 177.9 points for the three months ended June from 177.2 in the previous quarter, estimates released by the Urban Redevelopment Authority showed.
Prices rose 3.7 per cent in the first quarter, after soaring 31 per cent in 2007 amid a housing boom fuelled partly by strong growth in the Singapore economy.
But an uncertain economic outlook and a looming housing glut has threatened to plunge the property market into a prolonged downturn, which could deal a blow to top builders such as CapitaLand, Keppel Land and City Developments.
Sales volume sank to a five-year low in the first quarter of 2008 as government moves to curb property speculation took effect and global economic fears kept buyers at bay. But sales improved in April and May as some developers cut prices.
URA on Monday also released the flash estimates of the price changes in the three geographical regions for the second quarter. Prices of non-landed private residential properties went up by 0.2 per cent in Core Central Region, 0.7 per cent in Rest of Central Region and 1.3 per cent in Outside Central Region, compared to 3.8 per cent, 3.3 per cent and 3.8 per cent respectively in the previous quarter.
The flash estimates are compiled based on transaction prices given in caveats lodged during the first 10 weeks of the quarter supplemented by information on the number of new units sold.
The statistics will be updated four weeks later when URA releases the full second quarter real estate statistics.
Private residential units in the pipeline
On the supply side, there were about 67,700 private residential units in the pipeline in the first quarter. Of these, about 56,500 new units are expected to be completed within three years.
About 42,700 units, or 63 per cent, have not been been sold by developers yet.
4,524 new HDB flats offered for sale in first half
Separate flash estimate of the second quarter resale price index released by the HDB showed an increase of 4.4 per cent over the previous quarter's 3.7 per cent.
For the first six months, HDB resale prices have gone up by 8.2 per cent.
The HDB also reported that has launched a total of 4,524 new flats for sale in the first six months, and plans to offer about 3,900 new flats under the Built-to-order (BTO) system over the next six months in towns such as Punggol, Sengkang and Bukit Panjang.�
The total planned BTO supply of 8,400 new flats for this year will surpass last year's 6,000 units and 2006's 2,400 units.
This new supply will be in addition to flats offered under the Balloting Exercise for surplus replacement SERS flats, and other exercises for sale of balance flats from previous offers.
Prices of HDB resale flats still climbing
4.4% jump in second quarter, given strong demand, tight supply and higher valuations
By Jessica Cheam
July 2, 2008
THERE is a buzz in the property market and it is in the heartland.
HDB homes are continuing their bull run - even as private home prices stagnate - with prices rising 4.4 per cent in the second quarter.
This is according to flash estimates released by the Housing Board yesterday.
The latest jump is higher than the 3.7 per cent first-quarter rise in HDB flat prices.
Housing experts point to an underlying healthy level of demand for resale flats, tight supply and higher valuations as key reasons for the rise.
The onward march of HDB flat prices comes after prices rose 17.4 per cent last year.
In contrast, private home prices inched up only 0.4 per cent this quarter, compared to 3.7 per cent in the previous quarter, flash figures from the Urban Redevelopment Authority showed.
Last year, private home prices soared 31 per cent.
One reason public flats are outperforming private homes now is that HDB price rises are still lagging behind those of private homes which shot up in the housing boom, say market watchers.
Knight Frank director of research and consultancy Nicholas Mak said HDB prices still have room to rise as they were slow to take off at the start of the recent property boom.
Higher valuations of resale flats are also likely to have contributed to the price rises, said PropNex chief executive Mohamed Ismail.
He expects public-housing prices to continue their rise, by another 5 per cent, for the rest of this year. That would mean a full-year jump of about 13 per cent.
Both men agreed that the tight supply of HDB flats is another factor keeping the market buoyant, with demand from upgraders, downgraders and permanent residents.
‘With Singapore’s economic fundamentals still intact, the buzz in the HDB resale market is expected to continue in 2008,’ said ERA Realty’s assistant vice-president Eugene Lim.
‘A buoyant HDB resale market is good news for developers of mass-market condominium projects as HDB upgraders are their primary target market,’ he added.
However, with the stream of new flats coming into the market, some demand will move away from the resale market to new flats, he said.
During the first half of this year, HDB launched 4,524 new flats.
Subject to demand, HDB said in a statement that it plans to offer about 3,900 new flats under the Build-to-Order system over the next six months, in towns such as Punggol, Sengkang and Bukit Panjang.
The full data for the second quarter will be released at the end of the month.
The Business Times
July 2, 2008
LETTER TO THE EDITOR
HDB approach reflects true subsidy
WE refer to Mr See Leong Kit's comments on the pricing of HDB flats in his letter 'HDB contributing to price spiral', (BT, June 20).
HDB adopts a market-based pricing approach so as to reflect the true subsidy that buyers are enjoying. Under this approach, HDB determines the market value of the flat, based on its location, the finishes and other attributes. Then, it sells the flat at a discount to the market value.
HDB buyers understand this, and appreciate that new HDB flats are priced lower than resale flats. Similarly, when they want to sell their flats in the open market, they are allowed to do so at the prevailing market value, not at their cost of purchase of the flat.
We also wish to highlight that under this approach, the current sharp escalation in construction costs does not directly affect the selling price of HDB flats.
Currently, a new 4-room flat can cost close to $300,000 to develop, taking into account land, building and other costs. This is significantly higher than the subsidised price of a 4-room flat sold by HDB at about $200,000-$260,000.
Kee Lay Cheng (Ms),
Deputy Director,
Marketing & Projects for Director,
Estate Administration & Property,
Housing & Development Board
Soaring rents pushing PRs to buy flats
The Straits Times
July 5, 2008
They account for 20% of resale-flat purchases, say agents
PERMANENT residents (PRs) are flocking to buy Housing Board resale flats as high rents start to make ownership a more attractive option.
Sales to PRs have rocketed in the past two years, say property agents, and the keen army of buyers is helping to keep prices buoyant in an otherwise-flat market.
Property agencies PropNex and ERA Realty told The Straits Times that in recent months, about 20 per cent of total HDB home sales were driven by PRs.
This is a four-fold increase from two years ago, when PRs bought just 5 per cent of the homes sold, said ERA’s assistant vice-president Eugene Lim.
Last year, PRs accounted for about 10 per cent of sales, said PropNex chief executive Mohamed Ismail.The sales figures are even more striking for smaller flats like three- or four-roomers, with PR buyers snapping up 45 to 50 per cent of the stock, added Mr Lim.
HSR Property Group reports similar figures. PRs bought about 18 per cent of HDB homes recently, said executive director Eric Cheng.
The three agencies command about 80 per cent of the HDB resale market.
Last year, 29,436 resale flats changed hands. If the volume holds for this year, it will mean about 6,000 flats could be snapped up by PRs.
With HDB rents rising so fast, buying now ‘makes more economic sense’ than renting, say analysts.
Rents for a four-room flat in an established estate ranged from $1,000 to $1,200 two years ago. Today, they are $1,800 to $2,000, said Mr Ismail.
The penny has dropped for Mr N.E. Shanmugam, who had been renting here for eight years.
He pays $1,200 for a three-room flat in Tampines and was initially looking for a bigger unit to move when his lease expired next month. But with rents shooting up, he faced a monthly outlay of $1,800 for a five-roomer.
‘It didn’t make sense. I’m better off buying my own home,’ said the 56-year-old project manager, who is married with a one-year-old son.
Mr Shanmugam has just bought a five-room flat in Sengkang valued at $380,000. His mortgage will be $1,500 - well under what his rent would have been.
Singapore’s burgeoning PR population - and their purchasing power - has been singled out as one of the factors driving HDB resale prices.
While private home prices inched only 0.4 per cent this quarter, HDB flat prices climbed 4.4 per cent, following a 3.7 per cent rise in the previous quarter.
Singapore’s PR population rose from 287,500 in 2000 to 386,800 in 2005, according to the Department of Statistics.
Property agencies say about 70 per cent of the PR buyers are from China and India with the rest from countries such as Malaysia and the Philippines.
Property Sector - OCBC, 10 July'08
Singapore Property Sector - Credit Suisse, 5 May'08
Analysts say Singapore's property boom cooling
06 July 2008
SINGAPORE - Singapore's booming residential property sector is finally showing signs of cooling but projects including the two integrated resorts developments should underpin long-term prices, analysts say.
The market was described by real estate giant Jones Lang LaSalle as the world's hottest in 2007, when the city-state's property prices surged 31 per cent overall.
But this year the sector has not escaped wider concerns over a US-led global economic slowdown and inflationary pressures.
Private home prices rose 0.4 per cent in the second quarter, the slowest increase in four years, the government's preliminary figures showed last week.
The second-quarter rise was also much slower than the 3.7 per cent increase recorded in the previous three months but prospective buyers waiting for huge bargains may be disappointed.
Property analysts say prices are likely to fall further in the third quarter but experts rule out massive declines because of the multiplier effect from two multi-billion-dollar gaming resorts now under construction.
Housing demand is expected to pick up when the first integrated resort opens next year, employing thousands, said Chua Yang Liang, head of Southeast Asia research with Jones Lang LaSalle.
Some of the workforce for the resorts will likely come from foreign countries, creating possible demand for housing, he said.
"To staff these people, you need housing so there will be a potential effect," Chua told AFP.Foreigners currently make up more than 20 percent of Singapore's 4.6 million population.
The Marina Bay Financial Centre, a new financial district under construction which will also feature luxury apartments, should also underpin the market in the longer term, analysts said.
Tay Huey Ying, director for research with Colliers International real estate consultants, said prices are not about to spiral downwards even though second quarter figures indicate the residential property market may have peaked.
"Singapore's positive mid-term prospects on the back of the completion of the two integrated resorts and the Marina Bay Financial Centre will help to prop prices up," said Tay.
Values may hold, or decline by no more than three percent, in the third quarter but overall for 2008 home prices could still rise four to eight percent, said Tay.
Analysts from DTZ real estate consultancy said buyers are still interested in project launches.
"Some residential projects are enjoying sell-out status while others are being well received," said Margaret Thean, DTZ's executive director for residential.
Government approval for the two intgrated resorts in 2005 was one of the major factors behind the revival of Singapore's property market, which had been stuck in a rut stemming from the 1997 Asian financial crisis.
Efforts to woo wealthy foreigners to take up residence in Singapore, along with an all-out bid to attract skilled foreign migrants, also drove the property market revival, analysts said.
The rebound left many expatriates struggling to cope with soaring rents which in some cases doubled over the past year. - AFP/vm
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