Category Archives: Economics

Q1 Credit update: Mortgage loans up 20%

Credit Bureau just recently release a report on consumer credit behaviour and how people use credit balances, as well as their payment delinquency and default rates in both secured and unsecured credit facilities. Home loans are examples of secured facilities, while unsecured debt refers to loans with no collateral, like those racked up on credit cards or overdrafts.
The highlights are as follows:

1. Mortgage loan applications rose 20 % in the three months to March 31 from the preceding quarter. The average mortgage for people aged between 21 and 29 had the greatest quarter-on-quarter change among several age groups, rising 3.4 %.

Home loan applications could have been given a boost after the Government tweaked some property cooling measures in early March since the curbs were implemented in 2009. For example the seller’s stamp duty holding period for homes bought from March 11 was shortened to three years from four years. Subsequently the sales of new private homes surged to a near four-year high in March.

2. Motor vehicle loan applications rose 4.13 %. Consumers aged between 30 and 34 had the most significant change in motor vehicle loans, with average borrowings up 5.1 %.

3. Credit card applications fell 5.97 %, while those for personal loans dropped 5.94 %. Credit card applications still made up 72 % of about 331,600 new credit applications across all facilities in the first quarter, with home loans next on 14 %. People aged between 35 and 39 were doing better than others when it came to paying off debts, with their delinquency rate for credit cards falling 5.4 % quarter-on-quarter, while the personal loan rate dropped 8.74 %.

For more details the link to report is as follows

Click to access CBSConsumerCreditReportQ12017.pdf

Make Singapore land Great again! Courtesy of 38 Oxley Road

38 Oxley Road is the top Singapore address in the media right now. What is the big deal about centre of dispute of Singapore’s first Family? How much does this plot of land worth?

De-licensed projects to use net prices in URA index

As reported in September 2016, for de-licensed private projects where the developers offered incentives and discounts to buyers, URA will not include such incentives into the prices when it compiles the regular quarterly price index. The index is computed based on prices from all property sales in the new sale and resale market.

De-licensed projects are those which have obtained the Certificate of Statutory Completion and where individual titles have been issued and thus no longer come under the Housing Developers Rules.

In such a scenario, developers of such projects will have more flexibility to offer creative marketing schemes such as deferred payment, discounts and rebates, and need not provide sales updates to URA.

The affected projects include OUE’s Twin Peaks and Ardmore Three by Wheelock Properties.

TDSR framework exempted from home mortgage refinancing 

MAS announced in September that borrowers may be exempted from Total Debt Servicing Ratio (TDSR) framework when refinancing their homes. The TDSR rules still apply to new housing loans. The authority also noted that this is not an easing of property cooling measures. This measure is seen to be providing some stability to the property market in the current lull, as well as the current labour market.  

Singapore emerged as TOP asian economy in innovation.

Singapore has emerged as the top Asian economy in innovation, going by the 2016 Global Innovation Index (GII), bettering other top asian economies — South Korea (11th), Hong Kong (14th), Japan (16th) and New Zealand (17th) in the Asia-Pacific rankings. Australia takes 19th spot. The Republic is the 6th most innovative economy in the world in 2016 improving from its 7th position the previous year.

Switzerland – which was No 1 globally in 2015 – takes the top spot again this year – followed by Sweden, the UK, the United States and Finland. Notably, China takes the overall 25th position this year. The GII said that the country’s top-25 entry marks the first time that a “middle-income country” has joined the highly developed economies that have historically dominated the top of the index.

In northern America, taking top spots are the US (ranked 4th) and Canada (15th). In sub-Saharan Africa, the leading economies are Mauritius (53rd), South Africa (54th) and Kenya (80th). In Latin America and the Caribbean, Chile (44th), Costa Rica (45th) and Mexico (61st) lead the charts. And in central and southern Asia, India (66th), Kazakhstan (75th) and Iran (78th) are ahead.

Online financial comparison for home buyers

Business times and launched a new tool online to allow Singapore consumers compare financial information like home loans, credit cards and personal loans. The online tool can be found on Business Times’ website, which is powered by’s propriety comparison technology.


Singapore: no. 75 in city rankings

According to JLLs City Momentum Index (CMI), Singapore fell from 17th place in 2015 to 75th place in 2016. CMI is an index that tracks cities short-term socio-economic and real estate momentum, in combination with measures of whether they have the longer-term foundations for success.

From being one of the top rental performers globally in 2014, Singapore saw office rents drop by around 10 % in 2015, with a further 10 to 20 % decline forecast for 2016. Rents in the retail sector have also fallen.

While it is improving affordability, the sharp rental corrections have been the main contributor to the citys poor real estate momentum scores.  Despite Singapore being one of the most popular investment destinations globally, the current lower levels of real estate investment have contributed to this poor score.

Covering 120 major established and emerging business hubs across the world, the CMI highlights the top 20 cities where change is rapidly occurring.

For detailed reading one can look at reports at JLL.

Q4 private home prices have the lowest dip in the past 2 years

The private residential prices in the island registered the lowest quarterly decline in more than 2 years for the last quarter of 2015. The drop of 0.5% in the URA’s flash estimates coincides with the full year drop of 3.7% in private home prices over the past year. In 214 the price drop is at 4%. After 9 consecutive quarters of price decline, the island’s private home prices dropped 8.4% from the peak of 3rd quarter of 2013.

HDB prices however registered a 0.2% rise over the last quarter. This leads to a contraction of prices for the whole year to be 1.5%. If this stabilisation trend continues for the HDB resale prices, the HDB upgraders will be more confident to move to private suburban market, thus possibly even lead a slight recovery in the sector.

Some property consultants has indicated that this is a sign for further soft landing of prices and thus justify the cooling measures implemented so far. Others feel that the market has found a new equilibrium and thus the cooling measures may take a longer time before they are being lifted.

Based on the URA/HDB flash estimates the Q4 price/year-on-year movements are as follows:

Prices of non landed private homes
1. Core Central Region (CCR) -0.4%/ -2.6%
2. Rest of Central Region (RCR) -1.6% / -3.9%
3. Outside Central Region (OCR) -1.6% / -3.7%

1. All residential -0.5% / -3.7%
2. Landed property -2.1% / -4.4%

For HDB the statistics are as below
Price movement +0.2% / -1.5%

Nomura: softening of property prices have small impact on GDP growth

The softening in Singapore property prices would only have a relatively small impact on GDP growth, said Nomura in a report.

Nomura made its calculations through a vector auto-regression (VAR) framework, using five variables: GDP growth, PRPPI, private consumption, residential investment, and interest rates. VAR models are commonly used in housing studies in other advanced economies, the bank said.

Based on its calculations, Nomura believes that declines in property prices, in and of themselves, inflict limited damage to economic growth in the short term.

However declines in property prices could become more significant in the current context of an increasingly fragile economic outlook, high domestic debt, and slowing potential GDP growth.


No quick recovery for Singapore property market: seminar

AS Singapore faces a “new normal” of slower growth and even stagnation risks, the property market is unlikely to stage a major rebound even if some cooling measures are relaxed now, market watchers said at a property seminar on Tuesday.

Chua Hak Bin, head of emerging Asia economics at Bank of America Merrill Lynch, warned that Singapore may enter a period of stagnation over the next couple of years.

Recent alarm bells were sounded when employment growth contracted for the first time in the first quarter since the global financial crisis (GFC), loans growth contracted in May for the first time since the GFC, and Singapore’s inflation plunged to the lowest in five years, he said.

Some studies in the US have shown that macro-prudential measures such as housing loan-to-value ratios and stamp duties are more effective as tightening tools, but loosening these measures has less impact akin to “pushing on a string” in a downturn, Dr Chua said at the Real Estate Developers’ Association of Singapore (Redas) property market seminar.

Redas president Augustine Tan flagged that any recovery in the property market will not be brisk. “We have to brace ourselves for a different mode of operation as the real estate market enters a different period,” he told market practitioners at the seminar. “The build-up of the oversupply situation in the private residential market will not abate in the short term and recovery will not be a quick one.”

The private housing inventory from the last few years of government land sales supply, along with the plunge in demand and rising vacancy rate, remains a drag on the market, he said.

Private home prices marked their seventh straight quarter of decline – the longest downward streak in 13 years – based on the Urban Redevelopment Authority’s second-quarter flash index; over 89,000 new private residential units, including executive condominiums, are expected to be completed from 2015 to 2019.

Savills head of research Alan Cheong noted that prices alone do not provide a full picture. “It is more about market transactions collapsing that one should be concerned with,” he said. Using the average monthly sales from January to May, it will take 12 years to clear the stock of launched and unsold inventory in the core central region. In the mass to mid-tier private homes market, it will take over 11 years to clear the inventory assuming that the government continues to sell land at the 2015 pace.

It also seems that Singapore’s economy is becoming less supportive of the property market – going by lower GDP growth, slower population growth and a productivity drive that has fallen far below the growth target of 2-3 per cent per year. Labour productivity growth was negative in the last four years, while private investment contracted over the past two years.

But as the US starts raising interest rates, likely from September, the Sibor is expected to climb to 2 per cent by the end of next year, Dr Chua projected. Though past Federal rate hikes was accompanied by stronger US economic growth that in turn buoyed Asian economies and currencies, “we think that this time is different because of China”, he said. A sputtering Chinese economy is negating that lift from the US economy and changes in US consumption patterns have reduced demand for Asian exports.

Property consultants at the seminar on Tuesday noted that prevailing economic conditions are also hurting key non-residential property segments.

As manufacturing activities remain subdued and supply of multiple-user factory space continues to outpace demand, rentals are expected to remain under pressure, said DTZ head of research Lee Nai Jia. “Difficulty in leasing is also expected to widen the rental gap between new and older industrial developments.”

The relocation of tech companies like Google and Oracle from the CBD to modern high-tech business parks that are some 30-40 per cent cheaper in rents does not bode well for the office sector, property consultants noted.

According to Christine Li, research director at Cushman & Wakefield, new office leases as a proportion of total leases by floor area plunged to only 4 per cent in the first half of this year from 15 per cent in 2014. And among relocation contracts, as much as 88 per cent of the space is signed at cheaper buildings such as high-tech industrial buildings, business parks and suburban office buildings, up from 29 per cent in 2014. Office prices have shown to strongly correlate with economic growth in the past, except in an oversupply situation, Ms Li said.

In the retail space, rents and prices are also under pressure amid sliding occupancy rates. Knight Frank’s survey of retailers showed that 53.3 per cent of the respondents are mulling downsizing or moving retail outlets to cheaper locations.

“The existing trend of major retailers consolidating their operations could persist through H2 2015 with the challenging retail market outlook,” said Knight Frank’s head of research and consultancy Alice Tan. “An influx of new retail space of 1.7 million sq ft in 2015 and 2016 could exert downward pressure on prime retail rents island-wide by 1 to 2 per cent in 2015.”