Jul 3, 2013
Last
Friday’s announcement by the Monetary Authority of Singapore (MAS) to cap the
amount of income that Singaporeans can use to finance a property purchase is
already having an impact in property markets far beyond the shores of the
city-state.
Marc
von Grundherr, Director of the London-based Benham & Reeves residential
lettings agency, told PropertyGuru he was already getting calls from worried
Singaporeans who have invested in U.K. property.
He
said: “The MAS initiative came as a shock, and I’ve had a string of calls about
it. Some clients were concerned about properties which will be completing
during the next 12-24 months, and some were even contemplating dropping their
deposits - which is obviously a drastic measure.”
Von
Grundherr predicted that there may be as much as a 40 percent drop in Singaporeans
buying in the UK over the short term.
“The
only saving grace is that MAS did not look at existing loans as this would have
been catastrophic with Singaporeans having to sell. I am sure things will
settle down but there will be a lot of worried people right now,” he added.
Others
in the industry were more optimistic and less worried about the impact of the
latest attempts to cool Singapore’s property market.
Julian
Sedgwick, Director - Head of Business Development for International Residential
Sales Asia Pacific at Savills, said: “I think this measure may slow down the
number of local financing deals offered to clients as they now have to produce
a lot more documentation and declare credit cards, etc.”
But
Sedgwick does not believe there will be a drastic drop in demand for overseas
property from Singaporean buyers and investors.
He
said: “I don’t think it will affect the number of units sold or slow the
market; it is just going to be a tighter and longer process to get financing.
Some clients may just have to pay slightly higher interest rates compared to
what they are used too.”
Doris
Tan, Head of International Residential Sales for Jones Lang LaSalle was also
more circumspect about the possible impact of overseas property sales to
Singaporeans.
She
said: “The impact will be greater for local property as there is a larger
number of people who want to be owners of private residential property rather
than owners of overseas property. However, with the introduction of a lower
overall quantum and more difficulty to qualify for a loan, it will definitely
affect sales of both local and overseas properties.”
Sarah
Nicholson, Associate Director for International Project Marketing at CBRE was
also less worried about the impact of the new MAS ruling.
She
said: “Singaporean buyers looking to invest in international property are well
educated and informed, and it is likely that they already carry out a
self-assessment of their own liabilities before proceeding with any purchase.”
“These
measures will reduce the chances of purchasers over-stretching themselves and
thus prevent the boom and bust cycle which Dubai experienced in 2008 as a
result of the abundance of overleveraging, as well as the amount of cheap loans
which eventually dried up as the global financial crisis deepened.”
“It
may also lead to some previous purchasers, who are yet to get their financing
in place, choosing to assign their contracts before completion. We would urge
anyone in this position not to panic and to get in touch with their agent to
consider the best way forward.”
One
possibly unintended consequence of these latest measures could see Singaporeans
who are intent on getting financing for their overseas property purchase, and
not meeting the MAS requirement, being drawn to overseas banks – and even
taking advantage of developer financing opportunities.
Jimmy
Ng, Key Executive Officer of Premiere Realty, said: “We do expect more overseas
developers to start offering financing plans directly to customers, and we are
already in discussion with an overseas developer to launch a project that
offers zero interest monthly payments.
“We
foresee more Singaporeans will buy overseas properties, as the cost of owning
an additional investment property in Singapore will be tough with all the
government cooling measures.”
Mohamed
Ismail, CEO of PropNex Realty also highlighted the overseas financing
opportunities.
He
said: “If I am looking at an overseas property now, I would rather apply for
overseas bank for my overseas purchase.”
He
added that he felt it is not likely that developers will offer financing on a
large scale, and if they were to do so MAS will definitely look to regulate.
Info courtesy - PropertyGuru.com.sg
