Spore Subprime: 10,540 Uncompleted Property Units Under Deferred Payment Plan

[sgnewsalte]

http://www.easybourse.com/bourse-ac...completed-property-units-under-payment-585197

Singapore:10,450 Uncompleted Property Units Under Payment Plan Nov
Friday December 19th, 2008 / 6h18

SINGAPORE -(Dow Jones)- The Singapore government said Friday that 10,450 residential units that were sold but are uncompleted were built under a deferred payment scheme as of Nov. 30.

Under the scheme, implemented during the property slump in 1997 and suspended in 2007, buyers of new properties were able to make a downpayment of 10% or 20%, with the rest due only when a project was completed - typically about three years later.

According to the Urban Redevelopment Authority, developers of 605 private housing projects, comprising 72,384 units, were granted approval to sell the units under the plan.

As of Nov. 30, 48,814 units had been completed. From the 23,570 uncompleted units, 18,208 have been sold, and 10,450 units were still under the scheme, the agency said.

That number can change over time if developers don't extend the scheme if a unit is resold by the buyer before completion, it added.

-By Patricia Kowsmann, Dow Jones Newswires

 

[sleaguepunter]

er... can some one please explain what is deferred payment scheme. what benefits it bring to the buyers or sellers? what the big deal?

 

[theblackhole]

big storm coming lah....

 

[DerekLeung]

Yeah I said it in May !

 

[DOM the Clown]

big storm coming lah....

I say it'll be a succession of storms arriving...........:(

 

[ArtBoon]

What is the number during the last recessions, I wonder...

Also, I think property sellers are still offering a way to go round the system. Buyers don't pay the interim interest (ie the developer picks up interest payment until TOP) When TOP comes, if buyers walk, the developers might take a greater hit.

--
As of Nov. 30, 48,814 units had been completed. From the 23,570 uncompleted units, 18,208 have been sold, and 10,450 units were still under the scheme, the agency said.

 

[pia]

What is the number during the last recessions, I wonder...

As of Nov. 30, 48,814 units had been completed. From the 23,570 uncompleted units, 18,208 have been sold, and 10,450 units were still under the scheme, the agency said.

What a bummer. Wonder what % of the 10,450 will be hard-luck cases. :(

 

[gonjeng]

LOL.
They deserved it.
Buying properties based on pure speculations and greed.
It obvious when the so called "property boom" a year ago is just purely based
on speculations and everyone are rushing to buy a property in hope to get rich quick.
Now that the bubble have burst, lets see all the "victims" crying for help.
The best part it is just a tip of the iceberg and it is just started.

 

[Cestbon]

er... can some one please explain what is deferred payment scheme. what benefits it bring to the buyers or sellers? what the big deal?

Deferred payment mean buyer only make payment/loan insatallment when the property/house completed.
Benefit for seller easy to sell off the unit. For buyer can delay payment for 2 year as normally construction taking 2 year some may want to make big money/profit if property price up can sell off before make payment just like contra in stock market.

 

[Merl Haggard]

I disagree with all of you that these 10,540 DPS buyers would default to cause the property market to collapse.

The DFS was banned by the govt in Oct 2007 to prevent speculation. Most of these 10,540 DPS units were sold
in 05/06 when property price was still low. The big surge in property price came in late 06 and early 07.

 

[Mruss70]

Deferred payment mean buyer only make payment/loan insatallment when the property/house completed.
Benefit for seller easy to sell off the unit. For buyer can delay payment for 2 year as normally construction taking 2 year some may want to make big money/profit if property price up can sell off before make payment just like contra in stock market.

You forgotten about the upftont stamp duty payable within 2 weeks. This eat into their profit as well.

 

[makapaaa]

Too bad! Daddy oready said they'd gone in with their eyes wide open, OK? *zzzz*​

 

[batman1]

Culture of greed and scheming led by the MIW.

 

[ArtBoon]

The source is from URA: http://www.ura.gov.sg/pr/text/2008/pr08-119.html

Ok. So now I know that there are 10,450 private properties that were bought with 10% - 20% money upfront. Some of these guys I'll call them contra players (ie speculators) because they have no intention of paying for the balance. What is the percentage of contra players? I have no idea. Maybe 10-15% (because that is the subsale vs overall sales number from URA).

I also know that, since deferred payment scheme was scrapped, some properties were sold whereby the developer, instead of buyers, pays banks the interest till TOP, after the 10%-20% downpayment by buyers. I am not sure whether buyers need to arrange financing beforehand in these cases. Maybe whatever arrangement will depend on the risk appetite of the developers or its banker. Will just assume that the number is small, for now.

Let's take a look at transaction volume of the private property market.

3Q numbers are here: http://www.ura.gov.sg/pr/graphics/2008/pr08-107d.pdf
URA's analysis is here: http://www.ura.gov.sg/pr/text/2008/pr08-107.html

I am seeing about 4,000 to 4,500 units sold (either through primary or secondary market) per quarter in Q2 and Q3 this year. The volume has come down from the peak of more than 10,000/quarter in 07.

This post (http://propertyhighlights.blogspot.com/2008/11/dismal-sales-of-private-homes-in-oct.html) cited ST's report of a steep drop in caveat numbers, and someone reportedly said, ‘The average number of monthly transactions for the last 10 years is about 1,300 per month, so we should be seeing lower than average transaction volumes.’ So maybe the 4Q quarterly volume might see another shrink of up to 50%, to 2,000-2,500?

Let's go back to the deferred payment scheme numbers. It is stated that about 4,500 units are "expected to be completed" in 2009. Another 2,500 are coming up in 2010. I am going to assume that there is no reason for developers not to complete the units, unless they run out of money to build.

So come 2009, against the dwindling say 10,000 units that the market is trying to digest, a certain number of the 4,500 will have to be off loaded by contra players (10%-15%?) or those that suddenly find themselves with no bankers (8%? HDB 3 month bad loan number is 8%). The current big picture of recession and job loss is not helping those 900-1,000(?) sellers. And who knows? 2010 might get worse.

Contracting volume, force selling and bad sentiment. I am wondering how this will affect the price of that condo that I am looking at. And there are potentially 11,000 or more that the agents are trying to sell.

 

[Soul_Reaper]

Looking to buy a 2nd property as gift to my son, can any property experts here advice when is it a good time to buy?

 

[ArtBoon]

Whoever that knows, they probably won't say.
Whoever says, they probably have their own reason why they want to say

Looking to buy a 2nd property as gift to my son, can any property experts here advice when is it a good time to buy?

 

[Mruss70]

Looking to buy a 2nd property as gift to my son, can any property experts here advice when is it a good time to buy?

Try looking for one, whether new or resale pte property after June 09, should get a pretty good bargain by then. This is general market info, not own reasons anyway.

 

[chinkangkor]

Try looking for one, whether new or resale pte property after June 09, should get a pretty good bargain by then. This is general market info, not own reasons anyway.

How about HDB resale market?

Hopefully when the condo prices crash, there will be more HDB home owners upgrade to condos, in the process pushing down HDB resale market. When that happens, many S'poreans couples will be able to get more affordable housing to start families.

 

[zhihau]

I say it'll be a succession of storms arriving...........:(

bro,

leng puah not out yet...

 

[Mruss70]

How about HDB resale market?

Hopefully when the condo prices crash, there will be more HDB home owners upgrade to condos, in the process pushing down HDB resale market. When that happens, many S'poreans couples will be able to get more affordable housing to start families.

HDB resales is coming down, only at a gradual pace unlike pte pty. Reasons being the few recent condo-lookalike HDB projects @ Bishan, Boon Keng and a few of it, you name it, selling at around $430 - $480/sft or even higher. HDB had to substain the price and the controlled media had to report it in good light as a lot of people rush in to grab especially young couples who have the aspiration to own a condo but couldn't make it and settle for that but at a rather high price for a designer HDB flat. Imagine if HDB prices drop drastically, the pty re-valuation kicks in, will affect even a larger group of people. Young couple, top up cash difference, how many got such capability? Their debts will escalate further and this will becomea social problem.

Commonly, everyone view HDB (public housing) as part govt and govt is viewed as PAP. LHL or the govt keep on announcing last year and even up to 2nd qtr this year that the economy grow by leap & bounds on so many occasions and now is a total turn around. A lot of ill-informed people place their trust on these reports to be assured of job stability, etc, etc and thus invest or buy. If with this premature HDB price drop, what do you think will happened?

When condo price crash (which is definate and effect will show by 2nd qtr 09), if I can afford a HDB resale price at current, i wouldn't be looking at HDB by then either, look at pte pty, should be afforable. When the tide goes, you'll miss the boat again.

BTW, we knew the economy is coming down since Dec 07 when reports came in from various group of industry people, it just that we didn't know it was this bad!