Monday, September 14, 2009

Breaking news : Govt curbs property speculation!

It seems like just a few days ago when the govt was busy telling everyone how affordable housing is in Singapore[Link]. It sort of led everyone to think the party in the property market will go on and on. Then all of a sudden, Mah Bow Tan tells parliament that the govt "has decided to adopt several measures to temper the exuberance in the market".

I wonder why the govt kept telling everyone that housing is affordable when it was planning to hit the market with various measures. Maybe it was trying to shock the market into behaving properly- in a research paper by Bernanke many years ago, he wrote that the most effective way for govts to intervene in the market is to catch the players by surprise. Property stocks fell sharply today....and the price of private condos may follow.
UPDATE 1-Singapore moves to curb property market speculation
Mon Sep 14, 2009 3:10am EDT

Govt says signs of heightened speculation in property mkt
* Govt to tighten housing loan rules, release more land
* CityDev, other property stocks fall on tightening steps
* Asian govts concerned about property bubbles (Updates with...";

* Govt says signs of heightened speculation in property mkt
* Govt to tighten housing loan rules, release more land
* CityDev, other property stocks fall on tightening steps
* Asian govts concerned about property bubbles

(Updates with details, analyst comment) SINGAPORE, Sept 14 (Reuters) - Singapore will release more
land for development and make it harder for home buyers to
defer payments, steps aimed at curbing speculation in the
housing market and that drove down property stocks on Monday. With immediate effect, banks and developers will not be
allowed to offer loans on homes under construction where the
borrower need only put down as little as a 5 percent cash
downpayment and defer repayment of the principal until after
building is completed. The government also said it will reinstate its "confirmed
list" of land sales in the first half of 2010 and increase the
supply of land available to developers. "Given the current market conditions, the government has decided to adopt several measures to temper the exuberance inthe market and pre-empt any speculative bubble from forming,"
National Development Minister Mah Bow Tan said in Parliament. Singapore's actions come as some Asian governments warn of speculative bubbles in real estate markets and said they may
take steps to cool an overheated market. For instance, Bank of Korea said on Thursday it would lift interest rates if home prices climbed further. [ID:nSEO269632] Mah's announcement in Parliament caused property stocks to fall sharply, with City Developments (CTDM.SI) falling as much
as 5.6 percent. CapitaLand (
CATL.SI) fell 3.4 percent while
Keppel Land (
KLAN.SI) was down 4.3 percent by 0640 GMT.

Home prices in Singapore have soared in recent months, with
transactions hitting record monthly highs, as buyers flock to
showrooms for new apartments. [ID:nSIN524230] "We are currently seeing signs of heightened speculative
activity, although the level of speculation is not yet
extreme," Mah said. Song Seng Wun, regional economist at CIMB, described the
Singapore government's action as a further sign that
authorities are becoming concerned about the rise in home
prices, but added the measures themselves appear relatively
muted. "It's a tentative step... More significant would be if the
government raises the 5 percent downpayment," he said. "It looks like the government is going down the
softly-softly route first before seeing if it needs to bring
out the big stick."
(Reporting by Kevin Lim; Editing by Neil Chatterjee)


Anonymous said...

What is the impact on HDB prices?

Anonymous said...

Want to curb speculations ? Simply reduce FTs intake to curb demand.

Ah Pat said...

Hey Lucky, you're quick! But you forgot (?) to put the source of your article. It's from Reuters, right?

In any case, thanks! :)

LuckySingaporean said...

Ah Pat,

Reuters. Yes. But will be all over tomorrow's Straits Times. They have to scare the daylights out of everyone.

LuckySingaporean said...

Ah Pat,

Reuters. Yes. But will be all over tomorrow's Straits Times. They have to scare the daylights out of everyone.

Anonymous said...

Actually I read today's Manadarin newspaper Front page saying people showing great concern about rising prices and I speculated the garmeh must be implementing someting soon.Well you know, first publish people's worry, then garhmen take actions... superb way.

Why now and not earlier? Perhaps the economy is going to 'W' shaped soon? or Election coming?

Anyone knows the subsidies for 35years old single buying a resale 3 room flat?

Anonymous said...

Feel like a mega storm is coming soon. Every sgporeans r tied to hdb flat. Gov has to do it super gently. If the property crashes, hoho...the pain will b real.

Anonymous said...

Actually the Gahmen will have to curb slowly lah.

Remember in 1996, when property was red hot due to speculation, the Gahmen introduced drastic measures to curb prices. As a result prices dived and together with the 1997 recession, the prices never really recover for more than 10 years till 2007.

So they must have learn a lesson and now they will do it gradually.

Anyway good luck to those who recently bought at inflated prices.

Anonymous said...

Monday morning's china oops i mean chinese papers has a huge front page on rising HDB prices and COV. So it seems like it is screamintg out for something to be done.

Anonymous said...

More likely they allowed the property prices to rise (although I cannot discount that they might even encourage it). One good reason might be so new monies can be created to make up for the economic downturn (see Lim Swee Say Downturn/Upturn Song). MAS has to monitor and balance Singapore's economy judiciously as the trickle-down effects can be seen many months later.

Onlooker said...

Tsk tsk, they are running out of options.

And ideas.

What to do? It happened when there is too many sycophants and Brown nosing GRC "Back Door" MPs in parliament who do not know what to do......

Anonymous said...

I would wait to find out the details of the steps they will take to curb property speculation before deciding. It may just be another pre-election wayang.

As pointed by another commentator, one contributing factor is the large influx of foreign buyers. Will the PAP government really do something about that?

sgcynic said...

If prices are way too high, any measure should lead to a "crash". The higher you go, the harder you fall.

Anonymous said...

I wish the Singapore govt had followed the Korean way, and raise the interest rates to curb loans rather than their use of supply of land and policies. At least those who have been prudent will stand to gain with higher yields to their savings. Really how much of the demand is due to speculation by the locals who intends to flip this. Anyone who intends to speculate on something as chunky and illiquid as properties will not be fazed by this.

In short, I think the situation is not addressed correctly. MBT is barking up the wrong tree. In so doing, he now protects this domain for the uber rich and the foreigners with hot money.

Anonymous said...

Hey Anon 15/9/09 08:56

Are u surprised?
MBT will not do the "right thing" until he runs out of options.

But at least he is moving the right direction and more importantly he made the people here very happy :-)


Anonymous said...

I wonder how much of the increase in the (esp private) property prices is due to the increased liquidity in the market now due to people with lots of cash but are scared to invest in financial products after the minibond saga. Same goes for the share market bullish run.

Anonymous said...

Anon 11.40

Yes a lot is due to the increased liquidity, low deposit rates and the minibond saga.

One fellow as reported by ST lost 250K in Minibond but made back more than 100K from bank stocks during the recent bull run.

Another reason may be due to people think CPF very hard to withdraw later. So maybe better use it to buy property.

Anonymous said...

If they don't do anything now, it will be disastrous for the future. Better to let the air out slowly than to wait for the balloon to burst. When that happens, it will be meaningless talking about asset enhancements when most Singaporean's CPF, tied to their HDB, turned to dust. All the upgradings means nothing.

Anonymous said...

To : dairy of a singaporean mind

government say that HDB flat is affordable but curb condo speculation. Hdb and condo is different.

If u think that hdb is not affordable. compare them with condo prices.

Anonymous said...

To Anon 15/9/09 16:22

Thank you for pointing out that HDB and Condos are different. You are so smart to tell us too that the prices of HDB cannot be compared to Condo prices, but you failed to also tell us that most landed property prices are even higher. Singaporeans are so stupid not to know all these hard to understand facts.

Anonymous said...

This is a really crappy move by the govt. To control / make price more affordable, u increase the supply of flat for the growing demand (due to growing population of foreign talent). Simple economic sense...

Anonymous said...

they cannot raise the interest rates, our incomes are not high enough to support. so must increase demand to reduce the price instead

Anonymous said...

Anon 15/9/09 17:49

Me not 16:22 but actually hor, per sq ft, condos are usually more ex than landed.

Not I say one.


Rare Truth said...

I don really believe it's a preemptive measure but rather a post bubble action; government more likely to let it blow and reap huge $$ before it's pricked.

Bubbles are usually hard to spot. Guess must be really getting so obvious that if you dont pricked it now, collapse later will be worse.

And coe quoto slashing again after about 20+% dropped the last time?

Guess which way the data the telling the government?

Guess they cannot grow the FT as fast becuase jobs cannot create as fast? or worse, dropping fast due to huge job losses? thus falling demands for everything?

Leon Koh said...

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