Singapore out to cool market

       Singapore yesterday announced measures to curb speculation in the red-hot property market after warnings that a new housing bubble might be forming.
       The Ministry of National Development signalled it was ready to sell more state land for property projects, and announced an end to bank loan schemes that let buyers put down just 10 or 20%of a home's assessed value.
       "Demand for uncompleted private housing units has picked up strongly since February 2009," the ministry said in a statement.
       The 10,017 units sold by developers in the first seven months of 2009 had already exceeded the 4,260 units sold for the whole of 2008, the statement said.
       Singapore's economy is officially forecast to shrink by 4 to 6% in 2009, but the city-state is now technically out of recession and back on a growth path.
       Analysts say the current property frenzy is largely driven by people who were unable to buy homes when prices spiralled in 2007 and then again in 2008 when a global banking crisis exploded.
       From now on, the Monetary Authority of Singapore "will no longer allow developers to offer cut-price mortgages such as interest-only loans for uncompleted residential projects," the government statement said.
       "These schemes could encourage property speculation in a buoyant market where prices are rising rapidly," it said.
       Under the schemes, a deposit of only 10 to 20% of the value is needed to buy a house or apartment.
       The removal of the easy financing schemes "will also encourage prospective home-buyers to consider carefully their ability to afford the properties over the long term and not rush into any purchases."
       "This will promote a more healthy and sustainable property market in the long run," the ministry added.
       In addition, some market-stabilising measures that were announced in January, when the property market was at rock bottom, will be phased out starting January 2010.
       These measures include allowing developers to seek extensions of project completion deadlines and rent out unsold units for up to four years.
       Li Hiaw Ho, executive director of property advisers CB Richard Ellis in Singapore, said curbs on lending were key to keeping the property market from bubbling over.
       "This would remove much of the speculative element from the burgeoning sales volume," Li said."Despite these measures, residential home prices and sales volume will continue to improve,only now the pace of increase would be moderated to more sustainable levels with less volatility."