Daily Lessons from Life 14 September 2009

"Singapore moves to cool down property market - Mon, Sep 14, 2009 AFP

SINGAPORE - Singapore Monday announced measures to curb speculation in the red-hot property market following warnings that a new bubble might be forming despite an economic slowdown.

The Ministry of National Development signalled it was ready to sell more state land for property projects and announced an end to bank loan schemes that allow buyers to purchase homes with just a 10 or 20 percent initial payment.

'Demand for uncompleted private housing units has picked up strongly since February 2009,' the ministry said in a statement.

'The 10,017 units sold by developers in the first seven months of 2009 had already exceeded the 4,260 units sold for the whole of 2008.'

Singapore's economic output is forecast to shrink by four to six percent in 2009, but the city-state is now technically out of recession and back on a growth path.

Analysts said the property frenzy was largely driven by buyers left out when prices spiralled in 2007 and then again in 2008 when a global banking crisis exploded, but signs of speculation including by foreign buyers were emerging.

The statement said the Monetary Authority of Singapore will no longer allow developers to offer Interest Absorption Scheme and Interest-Only Housing Loans for residential projects not yet offered for sale after Monday.

'These schemes could encourage property speculation in a buoyant market where prices are rising rapidly,' the ministry said.

Such loans 'entirely eliminate or substantially lower regular installment payments for property purchasers in the first few years before the properties are completed,' the ministry added.

Only an upfront payment of 10 to 20 percent of the bank-assessed value is needed under the schemes for a house or apartment to be sold.

The removal of the easy financing schemes 'will also encourage prospective home-buyers to consider carefully their ability to afford the properties over the long term and not rush into any purchases.'

'This will promote a more healthy and sustainable property market in the long run,' the ministry added.

In addition, some market-stabilising measures announced in January, when the property market was at rock bottom, will be phased out starting January 2010.

These measures include allowing developers to seek extensions of project completion deadlines and rent out unsold units for up to four years."

Asians like to spend their WHOLE life working to pay off a property. The smart ones profited handsomely from buying and selling but these are only about 10% of the market. Most are caught with holding highly priced properties that they have to pay mortgage or forced to sell and take a realized loss.

Lessons for me are:

1. property market is NEVER a 'free market' as land is controlled by the government mostly;

2. the people that made the MOST money is the developers in the good time as they influenced the speculators to bring in the genuine and innocent buyers who were afraid of not able to own a property, ever!;

3. being a life-slave to owning a property shoud NEVER be the destiny of any decent, clear living and hardworking person's fate! In Singapore, affordable public housing MUST be the least the people can expect from the government. The focus must be on 'affordability relative to the average annual net income of the average citizen'!

May the crazy property market find its senses. May the property developers continued to make money but just reasonable amount and not obsence amount of money!