Press Statements on the new property measures

MND Press Statement

HDB Press Statement

Annex: Stamp Duty Calculation Examples

New government measures for the property market

THE Ministry of National Development (MND) announced on Monday several measures that would maintain a 'stable and sustainable' property market, that will take place with immediate effect.

In a statement issued on Monday morning, MND said it would increase the holding period for the imposition of Seller's Stamp Duty (SSD) on residential properties sold from one year to three years.

The SSD levied will vary according to the term of occupancy. If the property is sold in the first year of purchase, the full SSD will be levied - one per cent for the first $180,000 of the consideration, two per cent for the next $180,000, and three per cent for the balance. Two-thirds of the SSD will be levied for properties sold in the second year of occupancy and one-third for properties sold in the third year of occupancy.

The extended SSD will not affect HDB lessees as the required Minimum Occupation Period for HDB flats is at least 3 years.

For property buyers with outstanding housing loans, the Minimum Cash Payment has been increased from five per cent to ten per cent of the valuation limit. This measure is applied only to buyers of private residential properties, Executive Condominiums, HUDC flats and HDB flats (including those under the Design, Build and Sell Scheme) who are taking housing loans from MAS-regulated financial institutions who already have one or more outstanding housing loans.

For this group, the Loan-to-Value (LTV) limit has been lowered from 80 per cent to 70 per cent. Borrowers who do not have any outstanding housing loans will continue to have an LTV cap of 80 per cent. Loans granted by HDB for HDB flats (including DBSS flats) will still have an LTV cap of 90 per cent.

HDB loans are offered to eligible first-time flat buyers and second-timers who are right-sizing their flats to meet their housing needs. They are required to utilise all of their CPF Ordinary Account balance before HDB loans will be granted.

In their statement, the MND said lowering the LTV limit would 'send a clear signal' to financial institutions to maintain credit standards, and also encourage greater financial prudence.

HDB ups MOP for resale flats to 5 years

The Housing and Development Board (HDB) will increase the Minimum Occupation Period (MOP) of non-subsidised flats from three to five years.

Buyers of these flats will also be banned from concurrently owning both an HDB flat and a private residential property within the MOP.

Private property owners who buy a resale HDB flat must now dispose of their private residential property within six months from the date of flat purchase.

HDB said this will help ensure buyers purchase flats only when they have the intent of staying in it for long term and ensure equitable treatment for all flat lessees during their MOP.

Ownership of private properties by HDB lessees will be allowed after the MOP.

The changes will apply to resale applications received by HDB from Monday.

For the full article, please visit Channel News Asia at http://www.channelnewsasia.com/stories/singaporelocalnews/view/1077921/1/.html

CNA: New measures to cool property market

Channel News Asia: New measures to cool property market
By Mok Fei Fei | Posted: 30 August 2010 0824 hrs

	Photos 1 of 1 Home buyers at a property launch
	Related News • Special Report: 2010 National Day Rally

SINGAPORE: The government said Monday that it will increase the holding period for imposition of Seller's Stamp Duty (SSD).

The SSD will be raised from the current one year to three years.

Another measure will impact those who have more than one outstanding housing loan.

Property buyers who already have one or more outstanding housing loans at the time of the new housing purchase will have to pay more money upfront.

The government will increase the minimum cash payment from five per cent to 10 per cent of the valuation limit.

Those with more than one outstanding housing loan will also see a decrease in the Loan-to-Value (LTV) limit for housing loans granted by financial institutions regulated by MAS.

The LTV will be lowered from the current 80 per cent to 70 per cent.

The measures will take immediate effect on August 30.

The government said the objective of the measures is "to ensure a stable and sustainable property market where prices move in line with economic fundamentals".

It noted that the property market is currently very buoyant, with prices increasing by 11 per cent in the first half of this year.

It added that while Singapore has enjoyed strong economic growth in the first half, growth is expected to moderate in the second half of the year.

Should economic growth falter and the market correct, the government said property buyers could face capital losses.

It has thus decided to introduce additional measures now to temper sentiments and encourage greater financial prudence among property purchasers.

-CNA/wk

TODAY: Enjoy the convenience of living in the CBD

Guys! Call me if you fancy owning/renting the SOHO-styled units at this exciting newly completed condominium. Many choice units available.


Enjoy the convenience of living in the CBD

Aug 27

Lumiere, BS Capital's latest residential property, welcomes high-flying executives who want the convenience of living in Singapore's Central Business District.

Located in the Shenton Way strip, the 45-storey development boasts 168 units. The freehold apartment complex consists of 33 studio units from 506 square feet each, 99 one-bedroom with study units from 624 sq ft each and 33 two-bedroom units from 969 sq ft each. The other three units are a penthouse and two duplexes.

The property sits on a site of about 15,000 sq ft. Facilities include an infinity pool, a jacuzzi, a tennis court, a basketball half-court, a floating gym and a sky garden on the 34th floor.

Lumiere is situated right behind Tanjong Pagar MRT Station and is a few minutes' walk from Marina Boulevard and Marina Bay Sands.

TODAY: The key to investing in homes

Totally in agreement with Colin, he usually have a rather neutral-bearish leanings in his articles.

Some points I would like to highlight:

• your own home should be treated as an investment, I know some who sold their home earlier this year thinking the market has topped and is now renting, facing a
The key to investing in homes

• timing is everything in life, the old adage that if you can hold it will eventually go up, remember '97, some properties are just recovering to that price right now! Its been a good 13 years, almost half the time of the tenure of the mortgage loan.

• when done right, rolling the proceeds forward and accumulating properties and generating cash flow is amazing. But done wrongly, leverage can kill. Double-edged sword that is very sharp. Know where you stand, your balance sheet, reserves etc learn from the banks in the financial crisis.

Enjoy the article...
by Colin Tan | Aug 27

Most of us have heard it all before from the experts. Investing in homes is one of the safest and surest forms of investment. If you cannot re-sell the property for a good profit within a couple of years, you can always hold it for the long term because it will always appreciate.

But if everyone follows this advice, will it still work? Surely it is a recipe for disaster. If everyone is going to earn it the easy way, who will do all the hard work?

Given today's price levels, the vast majority of Singaporeans who own their homes are sitting on large paper profits. Many are paper millionaires; for them to become real millionaires, they would have no roofs over their heads.

Nevertheless, it is hard to argue against such a track record. In fact, the earlier the property was purchased, the greater the capital appreciation.

Most of us have bought our homes to live in, rather than as a get-rich-quick investments. When you buy for owner occupation, you have a guaranteed tenant - yourself. Instead of rentals, you are paying monthly mortgage payments.

It is a vastly different scenario when you are buying for investment. You do not have a guaranteed occupier. If you are not able to sell your property before its completion, you will have to look for tenants.

You will need to look at the yields and compare that with other forms of investments. You will need to assess the overall housing demand-and-supply situation. You will need to know how the economy is doing - now and in the future.

This means that you will need to do your homework and not go by herd instinct. The herd never gets it right all the time - hence economic and property cycles.

When an owner-occupier times his purchase right, he has one fewer big worry in life.

When an investor gets it right, he gets a windfall and lives the good life, but it never stops there, does it? The euphoria of earning big in a short few months or over one to two years what he could not earn in 10 or 15 years is intoxicating, to say the least. The profits will be re-invested in, what else, but property.

We read of success stories of people starting with a single property and having a string of them within a decade or two. How do they do it? We see many advertisements these days offering courses that will teach us how to make it big by investing in property. It is not a big secret: It is called leveraging - using other people's money to work for you.

When the value of your home rises significantly, as they always do during an up-cycle, you can secure a loan from banks by pledging your home as collateral. This is because your property's market value is much more than your outstanding loan.

You can use this loan to re-invest in property. In Singapore, buying a property under construction allows the investor to maximise his leverage. Since only a 20-per-cent down payment is required upon purchase, the investor can, in theory, play with an asset which is worth five times his initial capital.

Some people can own a number of properties in a short time because they are fully invested and fully leveraged. Profits are almost immediately re-invested. Like a person who buys his furniture on hire purchase, it looks like he is the owner, but the furniture is not yet fully his, even though no one else knows that.

This brings me to my last point. When an owner-occupier mis-times his purchase, he spends his whole working life paying for it. When a fully-leveraged investor gets it wrong, like in the real estate board game Monopoly, he becomes a bankrupt and retires from the game.

The writer is head of research and consultancy at Chesterton Suntec International.

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Roubini Says Third Quarter Growth in U.S. to Be ‘Well Below’ 1%

Yes, we all know that economic growth in the third, and likely, fourth quarters will be anemic. The question is how will 2011 be? Any soothsaying economist want to put your head out and give us your take?


Aug. 25 (Bloomberg) -- Nouriel Roubini, the New York University economist who predicted the global financial crisis, said U.S. growth will be "well below" 1 percent in the third quarter and put the odds of a renewed recession at 40 percent.

Roubini, chairman of Roubini Global Economics LLC, said his forecast assumes the government will lower its estimate for growth in the second quarter to an annual rate of 1.2 percent "at best."

"All the growth tailwinds of the first half of the year become headwinds in the second half," he said in an e-mail message, including the government's $814-billion stimulus plan, hiring for the census, and incentives such the cash-for-clunkers program and tax credits for first-time home buyers.

In the best scenario, he said he expects an "anemic, sub- par, below-trend U for many years given the need and process of deleveraging" by households, governments and the financial system.

"With growth at a stall speed of 1 percent or below, the stock markets could sharply correct, and credit spreads and interbank spreads widen while global risk aversion sharply increases," he said. "Thus a negative feedback loop between the real economy and the risky asset prices can easily then tip the economy into a formal double-dip," he said, referring to two recessions in a quick succession.

The Commerce Department may report revised figures in two days showing the economy grew at a 1.4 percent pace in the second quarter, according to the median estimate of economists surveyed by Bloomberg News. That's down from an earlier estimate of 2.4 percent, because of a widening trade deficit, a smaller buildup of inventories and weaker construction.

TODAY: Still hungry for land

Still hungry for land

by Ephraim Seow | Aug 25

SINGAPORE - A residential site on Miltonia Close, next to the Orchid Country Club, attracted seven bids by the close of the public tender yesterday, in an indication that property developers still have a healthy appetite for land, property analysts said.

Hoi Hup Realty and Sunway Developments jointly submitted the highest bid of $165 million, which translates to about $406 per square foot per plot ratio. This is about 31-per-cent higher than the next highest bid at $126 million submitted by Master Contract Services.

The remaining bids, ranging from $97.9 million to $125.3 million, came from developers like Allgreen and MCL Land unit Superport.

On Hoi Hup's bullish top bid, Ngee Ann Polytechnic real estate lecturer Nicholas Mak said the developer had failed at least eight times in other tenders since the beginning of the year and hence might have had a greater need to build up its land bank.

The Miltonia Close site was launched by the Housing and Development Board (HDB) on July 2. The land parcel spans 291,000 sq ft and can yield a maximum gross floor area of about 407,000 sq ft.

With a 99-year lease term, the site can be developed into strata landed housing, condominium housing or flats.

Mr Leonard Tay, director of CBRE Research, noted that the site's good location beside the Orchid Country Club Golf Course would offer an unblocked view of Lower Seletar Reservoir. It is also close to Yishun HDB town.

He added the winning developer would likely develop a five-storey low-rise condominium.

Mr Tay said the top bid reflected a breakeven cost of around $700 to $750 psf should a low-rise condominium be built.

"Condominium units in this new project could possibly sell above $800 psf," he said.

This would put it at the higher end of recently transacted prices in the area from April to this month. Units in The Estuary, which was launched in April, sold for $650 to $850 psf, Mr Tay said.

Singapore Bond Sales Beat Record as Economy Fires, Costs Plunge

Good news for those with variable mortgages, looks like rates will remain low for 'an extended period of time'.

Aug. 25 (Bloomberg) -- Singapore bond sales are accelerating as companies on an island vying for the title of world's fastest-growing economy exploit the lowest funding costs in at least two decades to finance expansion.

Temasek Holdings Pte. and CapitaLand Ltd. led borrowers that raised $14.1 billion this year, topping the record $13.2 billion of notes sold in 2001, according to data compiled by Bloomberg. The benchmark three-month interbank lending rate was last at 0.54889 percent, the lowest since 1987, when data on the Monetary Authority of Singapore's website starts.

"Singapore is going through an outstanding period of economic growth with most sectors performing well," Aaron Russell-Davison, head of Asia debt syndicate at Standard Chartered Plc, said in a phone interview from the city-state. "In this context it makes sense that companies are looking to borrow longer-dated money at historically attractive levels."

The economy of Singapore, Asia's second-smallest country after the Maldives, may be the world's fastest-growing in 2010 after ballooning demand for goods and services prompted the government to raise forecasts three times since January. Gross domestic product increased 17.9 percent in the first half, ahead of the trade and industry ministry's full-year prediction of between 13 percent and 15 percent and surpassing India's expectations of 8.5 percent growth and China's of 9.5 percent.

Leisure Visitors

Companies added about 63,000 jobs in the six months to June 30, according to the Ministry of Manpower, a year after Singapore exited its worst recession since independence in 1965. Monthly tourist arrivals exceeded 1 million for the first time in July after Las Vegas Sands Corp. and Genting Singapore Plc opened the city's first casino resorts.

Property developers, shopping mall operators and hoteliers accounted for 26 percent of Singapore's 113 bond issues this year, Bloomberg data show.

CapitaLand, Southeast Asia's biggest developer, sold S$1.25 billion ($917 million) of bonds this month in maturities ranging from four to 10 years. The company paid a 4.3 percent coupon when it sold S$350 million of 10-year bonds at par on Aug. 17 compared with 4.4 percent when it sold S$100 million of eight- year notes in 2003, the data show.

"Our approach has been to grow the orchard not squeeze the orange," said Olivier Lim, CapitaLand's chief financial officer. We "nurture the group's access to markets and raise money when markets are conducive, not when we need the funds."

Lower Coupons

Temasek is Singapore's most prolific borrower this year after it issued notes in British pounds and Singapore dollars with maturities of between 10 and 40 years, according to Bloomberg data. The state-owned investment company is paying a 4.2 percent coupon for its 40-year notes, 10 basis points less than the 4.3 percent it paid for 10-year money in 2009.

Temasek sells bonds "as public markers of our credit quality," spokesman Jeffrey Fang said in an e-mailed response to questions. As well as improving capital efficiency and funding flexibility, they "foster the discipline of engaging with both international and Singapore bondholders," he said.

"With reasonable growth coming back into Asia, locking in a low coupon for the next 10 years is a pretty smart thing to do," said Sean Henderson, Hong Kong-based head of Asia debt syndication for HSBC Holdings Plc, the No. 3 arranger of Singapore bond sales this year. "Singapore borrowers tend to be rare and very high quality names, so investors have been comfortable about extending durations in order to get a bit of extra yield."

Smaller Sales

When Singapore's AAA rated Housing & Development Board sold S$500 million of three-year bonds in July it paid a 1.15 percent coupon, according to Bloomberg data. No Singapore borrower has paid more than 7.5 percent this year, the data show.

Olam International Ltd., the Singapore-based commodities trader, paid 7.5 percent this month when it sold $250 million of 10-year bonds, its longest-maturity notes. The bonds traded at 101.13 cents on the dollar to yield 7.338 percent yesterday, according to Royal Bank of Scotland Group Plc prices. Olam declined to comment in an e-mailed response to questions.

While companies can typically borrow larger sums in the U.S. dollar bond market, according to HSBC's Henderson, they pay slightly less to sell bonds in Singapore. Companies completed 35 U.S. dollar-denominated sales that raised $500 million or more in Asia excluding Japan this year compared to nine corporate sales of at least S$500 million.

Interbank Costs

The Singapore interbank offered rate that banks charge each other to borrow U.S. dollars was last at 0.31944 percent, its lowest in at least 23 years. The rate rose to as much as 5.7775 percent during the global financial crisis as banks hoarded capital after the collapse of Lehman Brothers Holdings Inc.

Borrowers sold $2.5 billion of bonds in the city in 1999 and issuance ranged between about $5 billion and $7 billion a year for much of the last decade, Bloomberg data show.

"The regulators in Singapore have been working hard to make this market appealing to both investors and issuers," said Clifford Lee, head of fixed-income for DBS Group Holdings Ltd., the top-ranked underwriter of Singapore dollar bond sales. "There's no withholding tax and the approval process for foreigners to sell bonds is simple and quick if it's just an offering to accredited investors," he said.

VTB Group, Russia's second-largest bank, raised S$400 million from two-year notes this month. It was the only Russian issuer to target Asian investors apart from Moscow-based gas company OAO Gazprom, which sold yen-denominated bonds in 2007.

Agricultural Bank of China Ltd., China's biggest lender by customers, sold $50 million of floating-rate notes through its Singapore unit in April. The lender has offices in the city- state as well as in Hong Kong, London, Tokyo, Seoul, Frankfurt, Sydney and New York, according to its website.

"We are seeing an increased maturity and sophistication in the Singapore capital markets," Standard Chartered's Russell- Davison said. "2010 is set to be a big year, reflecting the confidence of both issuers and investors."

To contact the reporter on this story: Katrina Nicholas in Singapore at knicholas2@bloomberg.net

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Properties near MRT appreciate in value

(C) mypaper - Monday August 23, 2010

For the full article, please visit Page A6 of http://myepaper.mypaper.sg/ebook/web_php/fvbrowserjs.php?urljs=http://myepaper.mypaper.sg/ecreator/sphopf/mya230810cnd_opf_files/mya230810cnd.js&ver=Gen

Decrease in default rate

I find it hard to agreed with those who say a market crash is imminent.

"The number of mortgagors defaulting on their property loans has reduced over the last two years, according to DP Credit Bureau (DPCB). It said in a report that the average default rate across all age groups fell to a low 0.43% in March 2010, down from the 0.89% in March 2008. DPCB general manager Lincoln Teo said this represents an improvement in the property market, leading to more positive sentiment which indirectly drives better payment behaviour."

Read more at http://www.channelnewsasia.com/stories/singaporelocalnews/view/1076643/1/.html

TODAY: New kid on the block is good news

New kid on the block is good news

by Png Poh Soon of Knight Frank | Aug 20

When the show flat of a new residential project is ready, the new kid on the block often creates a buzz among the residents living nearby. People are generally curious about what the project looks like, its launch and completion date, and most importantly, the launch price.

Homes in these new projects are often priced higher than the average transacted value of resale units in the neighbourhood because of several factors, such as newer designs and longer tenures.

Many homeowners have asked how these new launches affect the value of their homes. Does the pricing of these new properties affect the prices of nearby resale units and, if so, to what extent?

Knight Frank has carried out a study to examine the pricing effects of new projects on resale properties in their vicinity. Our study is adjusted against the benchmark Urban Redevelopment Authority (URA) price index in the respective regions to take into account the effects of broad general market movements.

The price effect is based on the change in transacted prices per square foot over time of selected new and resale properties over the period from 2004 to last year in the Core Central Region (CCR), the Rest of Central Region (RCR) and the Outside Central Region (OCR), according to the URA's geographical classification.

The average transacted prices of similar-sized units in developments adjacent to the new project were studied and compared over a three-month period before and after the new launch. Sizes were controlled to reduce price distortion where smaller units command higher prices on a psf basis and vice-versa.

Anecdotal comparisons showed that new projects were generally priced 20 to 40 per cent higher than the average transacted prices of nearby developments of similar sizes. This was especially so in the CCR and the RCR region and during property market upturns.

The new developments were found to have a positive effect on the transacted values of resale units after adjusting for broad market movements.

Resale prices moved up in tandem following the launch of higher-priced developments. The average resale unit price appreciation was 12.98 per cent in the CCR, 19.14 per cent in the RCR and 4.23 per cent in the OCR over and above the benchmark price index.

Prima facie, new launches do seem to have a positive effect on resale prices.

For example, when Marina Bay Residences was launched in December 2006 at a premium of 38 per cent to the average price of similar-sized units in the neighbouring development, transacted prices of the already-launched The Sail went up by some 21 per cent after adjusting for broad market movement. Likewise, the transacted prices of The Metropolitan went up by 12.2 per cent after The Ascentia Sky was launched at a premium of 36.3 per cent in July last year.

Arguably, the positive effect arises because resale units take reference from the transacted prices in the vicinity, including the higher priced new projects.

Higher priced launches raise the selling price expectations of the owners of resale units, particularly if they are located near the new project.

From the buyers' perspective, resale units may also appear to offer value for money if they cost lower than their new neighbours. Inadvertently, this results in price appreciation for these resale units.

The real estate adage of "location, location, location" also applies in this instance, where the price effects of new launches have greater impact in the CCR and the RCR rather than the OCR.

Apparently, older properties in better locations benefited more where buyers have deeper pockets vis-a-vis buyers in the suburban regions.

But before you decide to jump on the property bandwagon, we would like to add a caveat. We noticed in our study instances where new launches did not result in a positive effect on the prices of nearby resale units.

Broadly, these instances occur during periods where home buyers' sentiment was weak, such as when the broad market was awash with negative news or in the doldrums. There were also periods when buyers' sentiment turned cautious after the announcement of public policies aimed at cooling the property market.

For example, in September last year, the Government announced the withdrawal of the interest absorption scheme and interest-only loan as an attempt to pre-empt a speculative bubble from forming.

The property market turned quiet for a while as buyers adopted a cautious stance. Resale units near new launches during this period did not exhibit much price movement compared to the market before the announcement.

To sum up, while new projects are still popular with potential home buyers, resale properties may be worth a second look, whether it is for owner-occupation or for investment.

Gems can be uncovered, especially for properties near sites with potential for new developments.

Perhaps it may help to look at yet-to-be launched sites that had been tendered between last year and this year.

If your sums, market conditions and timing are right, a pot of gold may be waiting at the end of the rainbow.

The writer is senior manager at Knight Frank's consultancy and research department.

NODX exports register slowest growth for year

Not surprise by this piece of news, the economy can't grow at the rate like the first half of this year, simply not sustainable.

Other notable nugget of news includes a pick up on en bloc deals, a surge in property sales for last month, a huge supply of homes by the way of government land sales and of course the Seventh-month.

My guess is there might be a moderation in the buying mood, this month and probably the next. The market here comes in fits & starts. So you won't know when it will suddenly pick up again.

from TODAY: NODX exports register slowest growth for year

by Ephraim Seow | Aug 18

SINGAPORE - Singapore's non-oil domestic exports (Nodx) registered their slowest growth so far this year, dragged by a lagging pharmaceutical sector.

Data released yesterday by the trade promotion agency, International Enterprise (IE) Singapore, showed that Nodx grew18 per cent last month from July last year, lower than the 28 per cent growth in June.

On a month-on-month seasonally adjusted basis, Nodx fell 3.9 per cent, compared to the 0.1 per cent contraction in June.

Action Economics director David Cohen said: "The pharmaceutical sector is a big factor contributing to the smaller growth ... Besides, Singapore's economy is moderating after getting ahead of itself."

The volatile pharmaceutical sector contracted 23.5 per cent last month compared to July last year, retreating from the 29.7 per cent gain in June. Industry experts say this year is appearing to be a year of two halves. After the stellar performance in the first six months, last month's Nodx presages a slower second half. They say Nodx growth will likely plateau at the lower end or even slightly under IE Singapore's forecast of 17 per cent to 19 per cent.

"With concerns of the sustainability of the global recovery in the coming months, unemployment remaining stubbornly high in G3 markets and lingering Europe sovereign debt concerns, we could yet see more significant moderation in Nodx growth in the second half this year," said Mr Alvin Liew, economist at Southeast Asia, Global Research, Standard Chartered.

Uncertain external conditions will impact demand for electronics in the next few months. However, this is buffered by demand arising from the recent launches of smartphones and Apple's iPad, the experts said.

Last month, electronic Nodx rose 26 per cent, after the 44 per cent increase in June and non-electronic Nodx grew by 14 per cent, after the previous month's 21 per cent rise.

London’s Rich Use New Breed of Broker in House Hunt

An interesting development in the UK market but it's quite a common practice here in Singapore. Visit Bloomberg.com for more useful and balanced articles.

Aug. 17 (Bloomberg) -- Beverley Kirby gave up trying to buy a house on her own in London's Chelsea neighborhood after twice getting burned by owners reneging on agreements to sell to her.

The night before Kirby was due to sign for one 4.5 million- pound ($7 million) house a year ago, she was trumped by an offer that was 500,000 pounds higher. The aborted deal cost her 4,000 pounds in fees and left her with a few months to vacate the apartment she had sold.

"I was getting desperate," said Kirby, who bought and sold seven other homes previously with her former husband. "There was madness in the market. People had no ethics at all."

That experience, along with the surge in prices for a dwindling number of top-end properties for sale, led Kirby to hire Robert Bailey, a type of broker known as a buying agent. Bailey is one of several hundred operators in a field that barely existed in the U.K. 15 years ago. He found her a home that wasn't advertised. Kirby moved into it in early April after Bailey helped her carry out refurbishments and get planning consent to use the top of the garage as a roof terrace.

The brokers are a response to a flaw in Britain that favors sellers, said Phil Spencer, who hosts property-search shows on U.K. television with fellow agent Kirstie Allsopp.

Typically, potential U.K. homebuyers register with "estate agents," who show them properties but are ultimately paid by the sellers. In the U.S., both buyers and sellers usually hire brokers, though only the sellers pay commission. These fees are shared by both sets of brokers.

'No Help'

"A buyer has nobody to help them with the biggest financial decision of their life," said Spencer, 40.

The new breed of advisers charge the potential purchaser a retainer plus commissions of as much as 2.75 percent of the sale price. It's a cottage industry largely used by the wealthy because it's too expensive for most people with budgets of less than about 500,000 pounds.

Buying agents have proliferated in the luxury markets of London and southern England as a weaker pound has lured overseas investors. They do everything from locating the home and negotiating the price, to arranging legal and survey work and researching potential pitfalls such as noisy neighbors.

They are prized largely for speeding up the process to reduce the chance of getting "gazumped," a British term for being trumped by a higher bid before signing contracts.

Agents Quadruple

"Over the past five years especially, there has been a quadrupling in the number of buying agents in the prime central London market and their numbers increase all the time," said Noel de Keyzer, head of house sales at broker Savills Plc's Sloane Street branch.

There are fewer luxury properties for sale in prime London neighborhoods even as demand is rising. Residential purchases in the Westminster and Kensington & Chelsea boroughs, where average house prices exceed 1.3 million pounds, are down 23 percent from the average since 1996, according to London Central Portfolio Ltd., which buys and manages prime rental property investments.

About 100 properties worth at least 20 million pounds have been purchased since 2006 -- a category that's less than 10 percent of the prime central London market. Most deals of that size are now handled by buying agents, de Keyzer said.

The scarcity of prime homes for sale lifted prices in central London by 23 percent since a yearlong slump, triggered by the worst recession since World War II, ended in March 2009, Knight Frank LLP estimates. Property values in the U.K. as a whole rose about 12 percent, according to the Nationwide Building Society.

Jackpot Deals

Agents have to court private banks or wealth managers to generate new leads to sustain the deal flow. Dozens of individuals, many former brokers, have set up on their own as overseas buyers flocked to London.

"All you have to do is two or three deals a year and you earn as much as you did before," said Johnny Turnbull, who has worked independently since 2006 after heading the London arm of Prime Purchase, Savills's buying-agent arm.

Competitors include Property Vision, a unit of HSBC Private Bank since 1991 -- and the biggest with a staff of 60 -- and Knight Frank's The Buying Solution.

Some independent buying agents say rivals owned by brokers have a conflict of interest because their companies represent both the buyer and the seller.

"They're trying to milk the fees at both ends," said Francis Long, who set up buying agency Hanslips 12 years ago covering London and southeast England.

'Chinese Walls'

Savills and Knight Frank say there are "Chinese walls" and enough transparency to avoid conflicts, and that few customers have problems with the arrangement.

Buying agents rely on relationships with brokers, developers and owners to get their clients first in line for a home. Providing a superior service is vital if they want steady business, said Bailey, who helped Madonna buy a home in Mayfair in 1999 and also works with hedge-fund managers and bankers.

Agents research an area and prepare reports that may reveal whether a rock-star neighbor has loud soirees or whether planning authorities are hostile to tennis-court floodlighting.

"What worries me is that people don't deliver and start to give the rest of us a bad name," said Bailey, who has covered the prime London market for 25 years.

One morning in early July, Camilla Dell and Grant Aitken, of Black Brick Property Solutions LLP, dodged workmen refurbishing a three-bedroom apartment in the Knightsbridge district to see whether to make an early offer.

Feng Shui

Dell, 32, set up the London-based company in 2007 and has generated business through regular trips to visit potential buyers in countries including India and Nigeria.

"It helps us to understand them, to see them in their home and their culture," said Dell, whose requests from clients have included properties with feng shui compliance.

Competition for high-end homes within commuting distance of London is also fierce. Here the agent's research has to be even more exhaustive, said Mark Parkinson, who helped set up Middleton Advisors LLP in 2008 covering country homes in southern England.

The efforts aren't always appreciated.

"You prepare a detailed report -- down to reminding the buyer of an old rectory that the church bells chime every 15 minutes -- and they probably don't even read it," said Parkinson, 37, as he drove a sport-utility vehicle that allows his customers to see properties over hedgerows.

Spencer and Allsopp

Spencer and Allsopp have encouraged buyers with smaller budgets to use agents, said Jo Eccles, who set up Sourcing Property four years ago and has handled about 70 purchases or rentals in London worth about 40 million pounds combined.

Not all the agents will survive, according to Andrew Giller, who heads London searches for The Buying Solution. Competition and the slump in deals since the financial crisis mean individual operators, in particular, may struggle.

Spencer's own London search company filed for insolvency in February 2009 after a four-month deal drought left it unable to cover the costs of running an office, marketing and staff.

He's no longer involved in the business, parts of which were bought by Garrington Country, a company created from its former regional arm. Garrington has since expanded in northern England, said Managing Director Jonathan Hopper.

"The market is an emerging one," Hopper said. "Who you are dealing with is key -- there's a mixture of very capable, experienced agents out there and then there are those who are just going out to spend other people's money."

To contact the reporter on this story: Simon Packard in London at packard@bloomberg.net .

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Higher and higher prices

Fans of new launches, fasten your seat belts, looks like there is an unabated rise in price.

The reported average selling price of about $1,150 psf for The Scala (99year LH) is about 1.5 times the prices of existing apartments in the area. And yet it is almost sold out, if not already all gone.

The jump in prices are definitely going to flow through into the third quarter private housing statistics.

Separately, the launch price for The Greenwich was at $980 psf on average, rising to $1,025 psf over the weekend - a record for a location so far away from the city centre.

One consultant was spot on when he was quoted as saying "the buyers are those who really like this corner of Singapore".

Moving forward, launches near MRT like Lakeside and Simei could easily be more than $1000psf.

Low interest rates for longer

After concluding its two-day meeting, the Fed decided to hold rates at record low and to reinvest proceeds of mortgage-backed securities back into long dated bonds.

MarketWatch: China's July exports rise

Looks like the Chinese economy is still humming along, but it makes you wonder where all those exports are going?

MarketWatch BULLETIN: China's July exports rise 38.1% vs. year-earlier period, beating forecasts
08/09/2010 11:08:22 PM EDT

Visit http://marketwatch.com/bulletins/redirect/go?g=B70ADB9DDDD04F75A527D2847CBF51AD&d=bnbt for updates to this story and more

Bloomberg: China Property Prices Rise 10.3%, Least in Six Months

Looks like its cooling but probably not fast enough to allay fears of a bubble. And certainly not quick enough to cause a crash either.

Below is an excerpt of the article, for the full article please visit Bloomberg.com.

Aug. 10 (Bloomberg) -- China's property prices rose at the slowest pace in six months in July as the government cracked down on speculation to prevent asset bubbles.

Prices in 70 major cities climbed 10.3 percent from a year earlier, the statistics bureau's newspaper, China Information News, reported today. The value of sales fell 19.3 percent from a year earlier.

Today's data showing sales cooling faster than prices suggests the government will maintain real-estate curbs even as the economy slows, according to Credit Agricole CIB and Mizuho Securities Asia Ltd. China's banking regulator has ordered stress tests for lenders to gauge the impact of home prices falling as much as 60 percent in the hardest-hit markets, a person with knowledge of the matter said last week.

The "clamp down is not having as much of an effect so far - - at least on the country-wide basis -- as policy makers had hoped," said Credit Agricole economist Dariusz Kowalczyk in Hong Kong. "The data increases the risk of more policy action."

Extra low interest, anyone?

Two-year US treasury yielding only 0.4977% and ten-year at 2.82%.

Time to refinance to SOR rate mortgages, contact me for more details.

PIMCO's Gross Says Fed Unlikely to Raise Rates for 2 to 3 Years

Good news for those with SOR rate mortgages, feel free to call me to find out why!

Aug. 6 (Bloomberg) -- Pacific Investment Management Co.'s Bill Gross said the Federal Reserve is unlikely to raise interest rates for two to three years.

Gross, Pimco's founder and co-chief investment officer, made the comments in a radio interview today with Tom Keene on Bloomberg Surveillance. A yield of 0.50 percent on two-year Treasury notes signals that investors should buy longer-maturity securities, he said.

Companies in the U.S. added workers in July for a seventh straight month at a pace that suggests the labor-market recovery will be slow to take hold.

Private payrolls that exclude government agencies rose by 71,000, less than forecast, after a gain of 31,000 in June that was smaller than previously reported, Labor Department figures in Washington showed today. Economists projected a 90,000 rise in private jobs, according to the median estimate in a Bloomberg News survey. Overall employment fell 131,000 and the jobless rate held at 9.5 percent.

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China easing off on the brakes?

News reports says that Beijing may ease bank credit later this year to support economic growth, as well as by the banking regulator's clarification on its stance toward its property loan policy. Look out for July inflation data due Wednesday.

Bloomberg: China Said to Tell Banks to Stress Test for 60% Home-Price Drop

Whoa!!! 60% drop?!

Ok, its just a stress test. The tested scenario needs to be as extreme as possible. If the banks & economy passes, then alls well.

The following is the full article:

Aug. 5 (Bloomberg) -- China's banking regulator told lenders last month to conduct a new round of stress tests to gauge the impact of residential property prices falling as much as 60 percent in the hardest-hit markets, a person with knowledge of the matter said.

Banks were instructed to include worst-case scenarios of prices dropping 50 percent to 60 percent in cities where they have risen excessively, the person said, declining to be identified because the regulator's requirement hasn't been publicly announced. Previous stress tests carried out in the past year assumed home-price declines of as much as 30 percent.

The tougher assumption may underscore concern that last year's record $1.4 trillion of new loans fueled a property bubble that could lead to a surge in delinquent debts. Regulators have tightened real-estate lending and cracked down on speculation since mid-April, after residential real estate prices soared 68 percent in the first quarter from a year earlier, according to estimates from Knight Frank LLP, the London-based property adviser.

A deep slump in China's property market may further slow the nation's economy, which grew at a less-than-forecast 10.3 percent pace in the second quarter. China is still the fastest growing major world economy. Concern that China's economy may cool due to a real-estate slump erased an early rally in U.S. stocks. The market rebounded on economic data showing stronger- than-estimated growth in American service industries.

Non-Performing Loans

The China Banking Regulatory Commission said in a July 20 statement that banks should "continue to deepen" stress tests on lending to property and related industries, citing a speech by Chairman Liu Mingkang during a meeting attended by regulatory officials and bank heads. The release didn't give details. Officials at CBRC didn't return calls seeking comment.

Results from previous stress tests show that the ratio of non-performing real estate loans among Chinese banks would rise by 2.2 percentage points if home prices drop 30 percent and interest rates rise by 108 basis points, the person said. Pre-tax profits would fall 20 percent under that scenario. A basis point is 0.01 percentage point.

Measures to cool property-price gains included raising minimum mortgage rates and down-payment ratios for second-home purchases, and a suspension of lending for third homes.

Property prices in 70 Chinese cities dropped 0.1 percent in June from the previous month, the statistics bureau said July 12. Prices rose 11.4 percent from a year earlier, the second monthly slowdown after April's record expansion.

Bad Loans

Bank of China Ltd.'s bad-loan ratio would climb 1.2 percentage points under the worst-case scenario drawn up in the latest stress tests, Li Lihui, president of the nation's third- biggest lender by market value, said May 27.

Record lending last year in China and the ensuing surge in home prices have stoked concern that a bubble is forming that may threaten the banking industry. Property stocks are the worst performers on the Shanghai Composite Index this year with an average 21 percent drop, data compiled by Bloomberg show.

"There is a perception in the real-estate development community that banks and the market cannot tolerate much more than a 25 to 30 percent drop in prices," said Nicholas Consonery, an Asia specialist at Eurasia Group in Washington.

Still, the government probably doesn't expect prices to drop by 60 percent, Consonery said in a phone interview. It's seeking to "signal to the market that banks are sound even with a significant drop in prices," he said.

Rogoff's Warning

China's property market is beginning a "collapse" that will hit the nation's banking system, Kenneth Rogoff, a Harvard University professor and former chief economist of the International Monetary Fund, said July 6.

Average prices may fall as much as 20 percent over the next 12 to 18 months, with declines of up to 40 percent in "big bubble" cities, Nomura Holdings Inc. said in a July 2 report. The impact on banks' asset quality will still be "limited" as long as borrowers have adequate income to keep paying their mortgages, Nomura said.

Regulators testing banks for a 60 percent correction in "only the most bubbly markets" will probably find lenders "will not pose a systemic risk to the banking system," said Daniel Rosen, principal of the Rhodium Group, a New York-based advisory company.

The banking regulator has reminded lenders that some developers with high debt burdens and large land reserves already face the risk of a funding collapse, the person said. Banks were told to gauge developers' real borrowing needs by monitoring the progress of projects under construction and to "strictly" control the pace of lending, the person said.

"Special mention" real-estate development loans have climbed in Shanghai since April and rose by 1.4 billion yuan ($207 million) in June, Xinhua News Agency reported Aug. 1, without saying where it got the information.

To contact the Bloomberg News staff for this story: Philip Lagerkranser at lagerkranser@bloomberg.net

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AP News - What earnings reports have revealed about ads

Spending on advertising is an indicator of how corporations view the economic health going forward. Based on the recent earnings report, ad spending has been quite robust thus pointing to an upbeat view of the US economy.

To read the full article, pls visit:
http://m.apnews.com/ap/db_8596/contentdetail.htm?contentguid=E3hp4ntV

Hong Kong Property Market Update

Property prices in Hong Kong increased by 10.5% for the first half of this year versus an increase of 5% for the Hang Seng Index.

This mirrors the rise of 11% for the Hang Seng Property Index. Experts worry that the HK property market may be facing a bubble when price has appreciated a staggering 42% since the start of 2009.

But property consultants are predicting a further increase of 10% for the second half of 2010. With developers still paying record prices for land auctions, this prediction look set to come true.

Inventories build up & hiring

Data complied by the US Commerce Department showed that inventory-to-sales ratio hit a record low of 1.23 versus 1.46 in December 2008. Any increase in demand would cause a surge in activity and could easily boost hiring.

In a separate note, analysts also expect unemployment to remain high until the end of the year.

Economic update

BULLETIN: China's manufacturing sees first contraction since March 2009, HSBC survey shows.

Although economic data from China has indicated their economy is slowing, it has probably been priced into the market. Moreover the pessimism in the market could very well be overdone, just like most reaction is an overreaction.

Have a great week!!