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Singapore home prices hit four-year low

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  • Sg_Review@yahoogroups.com
    The latest CPF cuts have been described by many un-informed writers as Pension Cuts . For the sake of clarity, Pension schemes in other civilised
    Message 1 of 1 , Oct 1, 2003
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      The latest CPF cuts have been described by many un-informed writers as "Pension
      Cuts". For the sake of clarity, Pension schemes in other civilised
      jurisidictions (e.g Switzerland) are state-funded (public funded) schemes.

      By Contrast CPF schemes are actually funded from the private employees own
      pockets, directly from his monthly salary. The state/government does not
      contribute a single cent to this CPF scheme.

      This highlights the important fact that Singapore is not a welfare state and
      there is no public (state funded) welfare scheme in place to look to the needs
      of Singaporeans.

      Bangkok POst
      2 Oct 2003

      Singapore home prices hit four-year low

      Sector braces for pension changes

      Jacqueline Wong

      Singapore's private home prices fell 0.4% to a fresh four-year low in
      the third quarter and analysts said job losses and cuts to wages and
      pensions made any recovery a distant hope.

      Home prices are now down around a third from a 1996 peak.

      The Urban Redevelopment Authority (URA), the government's real estate
      planning body, said yesterday its advance price index for private
      home properties fell to 113.0 points in the July to September quarter
      from 113.4 in the second quarter.

      ``It's something that most people expected and mainly a product of
      poor sentiment which started in August,'' said Nicholas Mak,
      associate director of research at Chesterton International.

      Developers had a good run of sales in July but after hints of pension
      cuts in early August, volumes dipped, he said.

      A revamp in the government's compulsory retirement savings scheme,
      the S$100 billion (US$57.8 billion) Central Provident Fund, will
      shrink employer contributions to pension funds.

      Home buyers often use the money to service their mortgage payments,
      and analysts say the pension changes could hit the housing sector
      hard. The reforms took effect yesterday.

      Ratings agency Standard & Poor's estimates new housing sales could
      drop this year to about half of the 9,500 units recorded in 2002
      following the overhaul to the 48-year-old pension scheme.

      ``Developers continue to hold back their launches because of the
      question of affordability, but really, it's more sentiment which has
      been negatively affected,'' Mak said.

      He expects prices to stay flat in the first half of 2004 and only
      begin a recovery in the second half.

      Singapore's residential developers include City Developments Ltd,
      CapitaLand Ltd, Keppel Land Ltd, the unlisted Far East Organisation,
      MCL Land Ltd and Allgreen Properties Ltd.

      The property index has tumbled 48% since mid-1999 but is up by more
      than a quarter year-to-date thanks to gains since May.

      As Singapore's economy flounders, some analysts have drawn parallels
      with Hong Kong, where home prices are down 60-70% from a 1997 peak.
      Both are big financial centres, heavily reliant on multinational
      companies with growing exposure to China.

      But while an estimated two-thirds of Hong Kong homes are worth less
      than what their owners bought them for, the situation is vastly
      different in Singapore, where 90% of residents live in public
      housing, often heavily subsidised.

      Analysts said a spurt in housing loans did not reflect recent
      property transactions in Singapore.

      Property loans lifted bank lending in August for a sixth straight
      month, Monetary Authority of Singapore data showed on Tuesday, rising
      0.4% to S$165.9 billion.

      ``Loan data is a reflection of what has happened cumulatively over
      the last six to 24 months,'' said David Lum, banking analyst at Daiwa
      Institute of Research.

      Lum noted that transactions had been strong last year and remained so
      in the first quarter, prior to the Sars outbreak. ``When uncompleted
      properties bought earlier mature or are closer to completion, then
      loans would expand because of the drawdown.''
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