Aug 11, 2008
Private home prices starting to dip
Experts expect gradual downtrend, but not lows of financial crisis days
By Joyce Teo
IT IS a bit like the dog that didn't bark in the night: Economic growth is slowing, shares are crashing and property sales have slowed, yet private home prices have refused to take the hint and fall.
Indeed, they have barely budged since the slowdown began about nine months ago, despite conventional wisdom saying they should be plunging.
But property experts see increasing signs that a price fall is coming, and while no one knows by how much, few believe a crash is on the cards.
Anyone waiting for bargain basement deals might be out of luck, with the local market trading at a higher range based on the country's rosier long-term prospects.
Prices are being kept up partly by low mortgage rates and the ability of developers flush from last year's bumper returns to hold off launching new flats.
A seasoned market watcher said the impression that Singapore was not dramatically hit by the United States' sub-prime woes has helped keep prices stable.
However, new sales have slowed significantly, and prices are starting to reflect this. The Urban Redevelopment Authority showed that private home prices inched up just 0.17 per cent in the second quarter - the least in four years and well below the 3.8 per cent in the first quarter.
With price growth disappearing amid sluggish demand, a downtrend - with a bigger blip seen for the luxury sector - seems inevitable, said market watchers.
Private home prices are still beyond the reach of most owner-occupiers, said Chesterton International's head of research and consultancy, Mr Colin Tan.
But any correction is likely to be gradual, with experts tipping a timeframe of a year or more. It will not be steep at this point as interest rates are low and the economic outlook is not that bad.
Mr Tan said home prices will take a long time to fall because the decline is being led by individual investors. They will be forced to sell when their rentals cannot meet mortgage payments, a situation that will become increasingly apparent as more units go on market.
These will mostly be the flats bought at the market's peak around the middle of last year, said the market watcher.
Investors who bought low under the deferred payment scheme will be able to sell below developers' asking prices and still make a profit. When they do, their deals will weigh on the market, he said.
'The decline will not be led by developers as they have profited immensely from the price run-up in 2006 and 2007,' added Mr Tan. 'At the moment, they only have to sell enough units to keep revenue streams flowing.'
If the market remains weak in the next six months, prices could easily fall 20 per cent to 30 per cent on average over a period of time to levels seen in 2006, with the high-end sector bearing the brunt.
Still, the lows seen in the post-Asian financial crisis days or the Sars period are gone forever unless Singapore is hit by a major catastrophe, experts say.
'We do not see a repeat of the prices in 1997 or 2003 because those were big shocks,' said National University of Singapore associate professor, real estate, Mr Sin Tien Foo. 'There is no bubble effect.'
Besides, prices hinge on quality. 'Nowadays, people are looking for better designs and materials, which would increase developers' costs,' he said.
Jones Lang LaSalle's head of research for South-east Asia, Dr Chua Yang Liang, said: 'Theoretically, property values appreciate over time.'
While poor fundamentals can send prices below the replacement cost level, this is an unlikely scenario here as fundamentals have been good and look to remain stable, he said.
Singapore's employment rate is still strong and income growth stable. As the director of Savills Residential, Mr Ku Swee Yong put it: 'The sellers are not losing their jobs.'
joyceteo@sph.com.sg
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
Monday, August 11, 2008
Hope for owners fighting en bloc
Aug 11, 2008
Hope for owners fighting en bloc
A website with information on the laws and processes in collective sales is aimed at helping minority owners
By Lim Wei Chean & Arlina Arshad
THE name of the website - www.hope4stayers.com - says it all. It is a forum for, and set up by, people who are worried about losing their homes in a collective sale.
Its opening words are a call to arms.
'We need to share our experiences to get us through this nightmare,' it reads.
'We hope that our daily lives can be free from the constant worries of losing our homes to those who see home as a mere financial tool for wealth.'
Cosmetics distributor Tan Keng Ann started the site when his neighbours wanted their condominium along Toh Tuck Road sold en bloc last year.
The 60-year-old said there had been a dearth of information online about collective sales.
'We want this to be an educational site, for people to learn more about en bloc sales.'
And so the Hope website was born. (It is an acronym for Home Owners' Protecting Entitlements.)
The site started in February with about five or six members from estates on the chopping block. Today, it has a core group of 25 flat owners scattered in 15 estates that are going through the sale process, some for the second time.
They include Bayshore Park, Green Lodge and Pine Grove, some of which made waves in the media by forming an anti-sales brigade.
The Hope group's objective is to equip stayers, also called minority owners, with information about the en bloc process so they can fight to keep their homes.
The website is expansive. It includes a compilation of the collective sales law, legal tips for minority owners and a list of confirmed, on-going and failed en bloc deals.
One member, who declined to be named, joined after some new faces at her condominium tried to get elected to the management committee.
She said: 'I didn't know what these people were up to.'
She learnt soon after when a collective sales order was tabled.
For those who opposed the sale, information about the en bloc law was key, she said. They were facing an uphill battle against a majority of owners who had professional consultants to guide them through the legal minefield.
One minority owner in Rainbow Gardens along Toh Tuck Road wishes he had known earlier how to navigate the en bloc landscape.
The resident, who declined to be named, protested against the sale even though it had the requisite 80 per cent support to go through.
His appeal to the Strata Title Board, a government authority that rules on en bloc sales, was turned down. He took the case to the High Court but, the sale went through before it was heard.
Disappointed, the man said he is considering writing about his ordeal for the Hope website.
He said: 'My advice to minority owners is pray hard you don't get the 80 per cent.'
Meanwhile, the Hope group is cobbling together a list of proposals for the Law Ministry to consider.
A ministry spokesman said it will 'continue to monitor the effect of the changes in practice, and review the feedback to see if further amendments to the en bloc rules are necessary'.
Not everyone is supportive of the Hope website, though.
Mr Issac Chin, an investor who sits on the sales committee of Pearl Bank Apartments at Outram Park, which is trying to go en bloc, does not see the need for such a group.
He said the law is clear: if 80 per cent of the owners want to sell, the sale will go through.
weichean@sph.com.sg
arlina@sph.com.sg
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
Hope for owners fighting en bloc
A website with information on the laws and processes in collective sales is aimed at helping minority owners
By Lim Wei Chean & Arlina Arshad
THE name of the website - www.hope4stayers.com - says it all. It is a forum for, and set up by, people who are worried about losing their homes in a collective sale.
Its opening words are a call to arms.
'We need to share our experiences to get us through this nightmare,' it reads.
'We hope that our daily lives can be free from the constant worries of losing our homes to those who see home as a mere financial tool for wealth.'
Cosmetics distributor Tan Keng Ann started the site when his neighbours wanted their condominium along Toh Tuck Road sold en bloc last year.
The 60-year-old said there had been a dearth of information online about collective sales.
'We want this to be an educational site, for people to learn more about en bloc sales.'
And so the Hope website was born. (It is an acronym for Home Owners' Protecting Entitlements.)
The site started in February with about five or six members from estates on the chopping block. Today, it has a core group of 25 flat owners scattered in 15 estates that are going through the sale process, some for the second time.
They include Bayshore Park, Green Lodge and Pine Grove, some of which made waves in the media by forming an anti-sales brigade.
The Hope group's objective is to equip stayers, also called minority owners, with information about the en bloc process so they can fight to keep their homes.
The website is expansive. It includes a compilation of the collective sales law, legal tips for minority owners and a list of confirmed, on-going and failed en bloc deals.
One member, who declined to be named, joined after some new faces at her condominium tried to get elected to the management committee.
She said: 'I didn't know what these people were up to.'
She learnt soon after when a collective sales order was tabled.
For those who opposed the sale, information about the en bloc law was key, she said. They were facing an uphill battle against a majority of owners who had professional consultants to guide them through the legal minefield.
One minority owner in Rainbow Gardens along Toh Tuck Road wishes he had known earlier how to navigate the en bloc landscape.
The resident, who declined to be named, protested against the sale even though it had the requisite 80 per cent support to go through.
His appeal to the Strata Title Board, a government authority that rules on en bloc sales, was turned down. He took the case to the High Court but, the sale went through before it was heard.
Disappointed, the man said he is considering writing about his ordeal for the Hope website.
He said: 'My advice to minority owners is pray hard you don't get the 80 per cent.'
Meanwhile, the Hope group is cobbling together a list of proposals for the Law Ministry to consider.
A ministry spokesman said it will 'continue to monitor the effect of the changes in practice, and review the feedback to see if further amendments to the en bloc rules are necessary'.
Not everyone is supportive of the Hope website, though.
Mr Issac Chin, an investor who sits on the sales committee of Pearl Bank Apartments at Outram Park, which is trying to go en bloc, does not see the need for such a group.
He said the law is clear: if 80 per cent of the owners want to sell, the sale will go through.
weichean@sph.com.sg
arlina@sph.com.sg
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
US mortgage giants' woes far from over
Aug 11, 2008
US mortgage giants' woes far from over
NEW YORK: Gaping losses at Fannie Mae and Freddie Mac are causing the two American mortgage giants to slow their purchases of home loans at a time when the United States government is counting on them to help prop up the housing market.
The reductions and associated measures that the companies are taking are likely to drive up home mortgage rates, which are near their highest levels in a year.
'Their decision to curtail support of the mortgage market is going to make mortgages more expensive for potential home buyers, which is going to hurt the overall economy,' said Fox-Pitt Kelton analyst Howard Shapiro.
'They're the only real buyers in this market, and they're going to buy less. That's really bad news.'
Concern over the companies' financial health was heightened last Friday when Fannie Mae reported a second-quarter loss of US$2.3 billion (S$3.2 billion). The deficit was three times what analysts had forecast and kept the company in the red for the fourth consecutive quarter. A day earlier, Freddie Mac had reported a US$821 million loss for the quarter.
In the light of their losses, both firms have indicated they will slow the number and types of loans they are purchasing. Fannie Mae will also begin charging more to guarantee loan repayments, a step that is likely to push mortgage rates higher.
Fannie Mae and Freddie Mac buy mortgages from banks and other lenders, providing those financial institutions with capital to make new loans. The companies own or guarantee more than US$5 trillion in mortgages, or nearly half of all home loans in the US.
Fannie Mae's poor results, in many ways, are a reflection of a declining housing market. But the poor results are also an indication of how much more limited the companies' options have become. As an extension, the US government's leverage over the housing market has also waned.
'The government has done a lot to help these firms, but mortgage rates are continuing to rise, and the housing market is continuing to decline,' said Credit Suisse analyst Moshe Orenbuch.
'They've become part of the problem as the government has to worry about them instead of relying on them to save everyone.'
Of particular concern are persistent rumours that one or both companies will require a bailout.
Last month, after the firms' stock prices plunged, Treasury Secretary Henry Paulson proposed an emergency plan that would give the federal government power to inject billions of taxpayer dollars into them if either seems likely to fail. He has repeatedly said he hopes he never has to act on the plan.
'The government wanted its bailout plan to be strong enough to calm the markets, but not so strong that they're forced to use it,' Mr Orenbuch said.
'But so far, it's been only partially effective. It's stabilised the companies, but it hasn't done anything to help the costs of new mortgages go down.'
NEW YORK TIMES
US mortgage giants' woes far from over
NEW YORK: Gaping losses at Fannie Mae and Freddie Mac are causing the two American mortgage giants to slow their purchases of home loans at a time when the United States government is counting on them to help prop up the housing market.
The reductions and associated measures that the companies are taking are likely to drive up home mortgage rates, which are near their highest levels in a year.
'Their decision to curtail support of the mortgage market is going to make mortgages more expensive for potential home buyers, which is going to hurt the overall economy,' said Fox-Pitt Kelton analyst Howard Shapiro.
'They're the only real buyers in this market, and they're going to buy less. That's really bad news.'
Concern over the companies' financial health was heightened last Friday when Fannie Mae reported a second-quarter loss of US$2.3 billion (S$3.2 billion). The deficit was three times what analysts had forecast and kept the company in the red for the fourth consecutive quarter. A day earlier, Freddie Mac had reported a US$821 million loss for the quarter.
In the light of their losses, both firms have indicated they will slow the number and types of loans they are purchasing. Fannie Mae will also begin charging more to guarantee loan repayments, a step that is likely to push mortgage rates higher.
Fannie Mae and Freddie Mac buy mortgages from banks and other lenders, providing those financial institutions with capital to make new loans. The companies own or guarantee more than US$5 trillion in mortgages, or nearly half of all home loans in the US.
Fannie Mae's poor results, in many ways, are a reflection of a declining housing market. But the poor results are also an indication of how much more limited the companies' options have become. As an extension, the US government's leverage over the housing market has also waned.
'The government has done a lot to help these firms, but mortgage rates are continuing to rise, and the housing market is continuing to decline,' said Credit Suisse analyst Moshe Orenbuch.
'They've become part of the problem as the government has to worry about them instead of relying on them to save everyone.'
Of particular concern are persistent rumours that one or both companies will require a bailout.
Last month, after the firms' stock prices plunged, Treasury Secretary Henry Paulson proposed an emergency plan that would give the federal government power to inject billions of taxpayer dollars into them if either seems likely to fail. He has repeatedly said he hopes he never has to act on the plan.
'The government wanted its bailout plan to be strong enough to calm the markets, but not so strong that they're forced to use it,' Mr Orenbuch said.
'But so far, it's been only partially effective. It's stabilised the companies, but it hasn't done anything to help the costs of new mortgages go down.'
NEW YORK TIMES
Europe may be the first to slip into recession
Aug 11, 2008
Europe may be the first to slip into recession
NEW YORK: The United States might get the last laugh.
For months now, experts have been warning that the US economy would slip into a recession. But now it looks like it is Europe that will be the first, but not the last, to take the plunge.
It was a plunge in orders for German exports that dramatically raised fears that Germany and much of Europe was slowing down.
When preliminary figures for second-quarter economic growth are released this Thursday, most economists expect that countries that use the euro will show a decline in economic activity.
'It now looks likely that the euro zone will be the first major economy to fall into recession,' said Mr Jonathan Loynes, the chief European economist for Capital Economics.
He was relying on a popular definition of recession: two consecutive quarters of decline in gross domestic product, adjusted for inflation. In the US, the official measure is more complicated, relying in part on the judgment of experts at the National Bureau of Economic Research. Some economists think the experts will eventually conclude that a recession has already begun in the US.
With Japan also expected to post a negative figure for second-quarter growth when it reports on Wednesday and the United States already suffering from a weak economy, the three major world economies are all stumbling, a fact that cannot be good news for the emerging economies such as China and India where growth remains strong.
'We see a deep global recession,' said chief strategist at Societe Generale Albert Edwards.
'Growth prospects in the euro zone, Japan and Britain have deteriorated. Most now accept that recession has already begun in all three,' he said.
Mr Edwards predicted a 'collapse' in emerging markets next. 'You ain't seen nothing yet,' he said.
Germany, Europe's biggest economy, is also the world's largest exporter even with the rise of China, which passed the US in 2007. Germany accounts for about a third of euro-zone output.
Its reliance on exports makes the data on new orders among the most watched. The figure for June, reported this week, was down 2.9 per cent from May and was 8.4 per cent below the figure from a year ago.
Order figures can be volatile from month to month. But June was the seventh consecutive monthly decline and some economists had expected a rebound from a particularly weak May figure.
For Germany, export orders are especially weak now, particularly for shipments to other countries that use the euro, as weakness in those countries spreads to Germany. Within export orders, capital goods orders were the weakest, a fact that could foretell a significant problem for German industry if it continues.
Consumer sentiment has also taken a distinct negative turn in recent months in the 15 countries that use the euro.
Fears of a European recession have sent the euro tumbling against the US dollar in the last few days. The euro was at US$1.5004 on Friday, from a record high of slightly more than US$1.60 on July 15.
The decline in the euro has also helped to send oil prices falling by nearly US$5 a barrel to settle at US$115.20 on Friday.
The dramatic drop was ignited by a warning from the European Central Bank on Thursday that high energy costs and more sluggish global growth were finally taking a toll on the 15-nation euro zone, an economy that had seemed remarkably resistant to the turmoil around it for most of this year.
NEW YORK TIMES
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
Europe may be the first to slip into recession
NEW YORK: The United States might get the last laugh.
For months now, experts have been warning that the US economy would slip into a recession. But now it looks like it is Europe that will be the first, but not the last, to take the plunge.
It was a plunge in orders for German exports that dramatically raised fears that Germany and much of Europe was slowing down.
When preliminary figures for second-quarter economic growth are released this Thursday, most economists expect that countries that use the euro will show a decline in economic activity.
'It now looks likely that the euro zone will be the first major economy to fall into recession,' said Mr Jonathan Loynes, the chief European economist for Capital Economics.
He was relying on a popular definition of recession: two consecutive quarters of decline in gross domestic product, adjusted for inflation. In the US, the official measure is more complicated, relying in part on the judgment of experts at the National Bureau of Economic Research. Some economists think the experts will eventually conclude that a recession has already begun in the US.
With Japan also expected to post a negative figure for second-quarter growth when it reports on Wednesday and the United States already suffering from a weak economy, the three major world economies are all stumbling, a fact that cannot be good news for the emerging economies such as China and India where growth remains strong.
'We see a deep global recession,' said chief strategist at Societe Generale Albert Edwards.
'Growth prospects in the euro zone, Japan and Britain have deteriorated. Most now accept that recession has already begun in all three,' he said.
Mr Edwards predicted a 'collapse' in emerging markets next. 'You ain't seen nothing yet,' he said.
Germany, Europe's biggest economy, is also the world's largest exporter even with the rise of China, which passed the US in 2007. Germany accounts for about a third of euro-zone output.
Its reliance on exports makes the data on new orders among the most watched. The figure for June, reported this week, was down 2.9 per cent from May and was 8.4 per cent below the figure from a year ago.
Order figures can be volatile from month to month. But June was the seventh consecutive monthly decline and some economists had expected a rebound from a particularly weak May figure.
For Germany, export orders are especially weak now, particularly for shipments to other countries that use the euro, as weakness in those countries spreads to Germany. Within export orders, capital goods orders were the weakest, a fact that could foretell a significant problem for German industry if it continues.
Consumer sentiment has also taken a distinct negative turn in recent months in the 15 countries that use the euro.
Fears of a European recession have sent the euro tumbling against the US dollar in the last few days. The euro was at US$1.5004 on Friday, from a record high of slightly more than US$1.60 on July 15.
The decline in the euro has also helped to send oil prices falling by nearly US$5 a barrel to settle at US$115.20 on Friday.
The dramatic drop was ignited by a warning from the European Central Bank on Thursday that high energy costs and more sluggish global growth were finally taking a toll on the 15-nation euro zone, an economy that had seemed remarkably resistant to the turmoil around it for most of this year.
NEW YORK TIMES
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
Found your dream home?
Found your dream home?
Make sure it doesn't turn into a nightmare. So, what should you do before saying 'I do' to one of the biggest financial commitments of your life?
Sun, Aug 10, 2008
The New Paper
By Suze Orman
FOR most people, the decision to buy a home hits like love at first sight: After endless rounds of dating, you finally find that special one.
You walk in the front door and swoon over the refinished hardwood floors.
Your eyes lock on the high ceilings.
Your heart pounds at the fabulous kitchen and the huge yard.
While I totally understand leading with your heart, use your head too.
Before saying 'I do' to one of the biggest financial commitments of your life, you need to follow up with a few repeat visits checking out every nook and cranny for big-ticket problems.
If you're buying directly from the developer, please don't get snookered into believing new means perfect.
Every single house or apartment needs a thorough inspection.
HERE'S A CHECKLIST
- Cast your eye high and low, to and fro, to spot cracks or leaks outside your 'normal' field of vision.
- If the current owners are still in residence, move their furniture. That means pulling every dresser away from the wall, especially under windows, to check for leaks, cracks and incomplete paint jobs.
- Pull back the rugs - you never can tell what those fine threads are hiding.
- Visit at different times of the day and night to gauge street noise.
- Turn on as many kitchen appliances as possible, simultaneously, to see whether the electrical system can handle the strain.
- Turn on every light in every room. And bring a small appliance to plug in to outlets to see if they work. (Your phone charger is handy for this.)
- While the dishwasher and the washing machine are running, head to the shower and turn on the hot tap. What about the water pressure and the temperature? What happens when you flush the toilet?
- Ring the doorbell, and test the alarm if there is one.
- Find out if the neighbours own any dogs. If they have an aggressive breed and you don't have a fence, perhaps this isn't the best backyard for your toddler.
- If you're buying an apartment, ask residents next door, above, and below to turn on their stereos and television sets and just walk around.
- Get estimates for ongoing maintenance: In a condominium, find out how many times the common charges have been raised during the past five years and by how much.
This article was first published in The New Paper on Aug 9, 2008.
Make sure it doesn't turn into a nightmare. So, what should you do before saying 'I do' to one of the biggest financial commitments of your life?
Sun, Aug 10, 2008
The New Paper
By Suze Orman
FOR most people, the decision to buy a home hits like love at first sight: After endless rounds of dating, you finally find that special one.
You walk in the front door and swoon over the refinished hardwood floors.
Your eyes lock on the high ceilings.
Your heart pounds at the fabulous kitchen and the huge yard.
While I totally understand leading with your heart, use your head too.
Before saying 'I do' to one of the biggest financial commitments of your life, you need to follow up with a few repeat visits checking out every nook and cranny for big-ticket problems.
If you're buying directly from the developer, please don't get snookered into believing new means perfect.
Every single house or apartment needs a thorough inspection.
HERE'S A CHECKLIST
- Cast your eye high and low, to and fro, to spot cracks or leaks outside your 'normal' field of vision.
- If the current owners are still in residence, move their furniture. That means pulling every dresser away from the wall, especially under windows, to check for leaks, cracks and incomplete paint jobs.
- Pull back the rugs - you never can tell what those fine threads are hiding.
- Visit at different times of the day and night to gauge street noise.
- Turn on as many kitchen appliances as possible, simultaneously, to see whether the electrical system can handle the strain.
- Turn on every light in every room. And bring a small appliance to plug in to outlets to see if they work. (Your phone charger is handy for this.)
- While the dishwasher and the washing machine are running, head to the shower and turn on the hot tap. What about the water pressure and the temperature? What happens when you flush the toilet?
- Ring the doorbell, and test the alarm if there is one.
- Find out if the neighbours own any dogs. If they have an aggressive breed and you don't have a fence, perhaps this isn't the best backyard for your toddler.
- If you're buying an apartment, ask residents next door, above, and below to turn on their stereos and television sets and just walk around.
- Get estimates for ongoing maintenance: In a condominium, find out how many times the common charges have been raised during the past five years and by how much.
This article was first published in The New Paper on Aug 9, 2008.
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