Cash-rich private property downgraders, en bloc sellers targeted in new property curbs

by Albert02

Cash-rich private property downgraders, en bloc sellers targeted in new property curbs

Cash-rich private property downgraders, en bloc sellers targeted in new property curbs. On Friday, only nine months after property controls were implemented to keep private residential prices from surpassing fundamentals, a new set of property curbs targeted the public housing market, which had been largely spared in the previous round.

This occurs as hot money from private property downgraders floods into the public housing market, propelling a 12.7% surge in Housing Board resale prices in 2021 and a further 5.3% gain in the first half of 2022. The government is concerned about the growing public resale market, according to Mr Lam Chern Woon, head of research and consultation at Edmund Tie.

“The authorities are clearly concerned about the repercussions of rising resale HDB prices on the private property market as well as the BTO (Built-To-Order) sector, where prices are supplied at a market discount,” he said. With interest rates likely to rise, new loan restrictions to encourage more prudent borrowing came as no surprise. For residential real estate loans, the new medium-term interest rate floor is 4%, and for non-residential real estate loans, it is 5%.

Apart from immediately decreasing the HDB resale market, Colliers’ head of research Ms Catherine He believes that Friday’s measures may indirectly cool the private residential market, particularly the mass market segment, which is backed by HDB upgraders.

Recent steps are expected to lower housing demand and prices. To begin with, the purchasing power of potential home purchasers has been limited by limiting the amount that buyers can gear up. The Total Debt Servicing Ratio (TDSR) and Mortgage Servicing Ratio (MSR) for private financial institution property loans are calculated using a 0.5 percentage point higher medium-term interest rate floor. The TDSR and MSR for mortgages will now be computed using a 4% annual interest rate floor, up from 3.50% before.

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Source: 
https://www.straitstimes.com/business/property/cash-rich-private-property-downgraders-en-bloc-sellers-targeted-in-new-property-curbs


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