2007 homebuyers at risk

BUSINESS ANALYSIS

Tay Huey Ying

THE islandwide property price index registered a decline of 14.1 per cent in the first quarter, slightly steeper than the flash estimate of 13.8 per cent.

This is the worst quarterly decline to date. It's also worse than the 13.1 per cent quarter-on-quarter drop recorded in the third quarter of 1998 when the residential market was adversely affected by the Asian financial crisis.

Private home prices have now fallen for the third consecutive quarter, with a total decline of 21.2 per cent since peaking in 2Q 2008.

Based on the URA's statistics, the private home property index is now almost back to 1Q 2007's level. Hence, purchasers who bought their properties after 1Q 2007 are at risk of having the valuation of their properties fall below their purchase price. For those who bought their properties on the deferred payment scheme and have yet to secure a loan, this would limit the loan-to-purchase price ratio that they can secure from financing institutions.

Nevertheless, anecdotal evidence has thus far shown that a majority of such buyers are able to cough up the amount of purchase price not supported by valuation in cash. This has helped to keep the number of distressed sales at a controllable level.

Moving forward, although private home prices are expected to remain depressed, the rate of decline is forecast to moderate from the high of 1Q 2009, as developers have already marked down prices substantially in the quarter. Mass-market homes could see more gradual price corrections averaging in the region of 8 to 12 per cent over the next three quarters, as more sellers in the secondary market and developers of unsold units from earlier launches could be expected to adjust their prices to near-current levels.

The mid-tier and high-end segments could witness larger average price declines ranging from 10 to 15 per cent over the same period.

The writer is director for research and advisory at Colliers International.

From TODAY, Business – Weekend, 25/56-April-2009

What if it had been rush hour?

COMMUTER SAFETY
Letter from Raymund Koh Joo Guan

I REFER to the report about the serious accident between a tour bus and an SBS Transit double-decker bus along Selegie Road on Tuesday at around 10am (“Bus-ted”, April 15).

The entire front left portion of the tour bus was mangled beyond recognition, showing the amount of damage an accident causes at speeds of around just 60kmh.

Every day, during peak hours, public buses are packed to the point where passengers are standing on the buses’ front steps. The safety of commuters, especially those squashed at the front, is at stake. With the added weight of an overcrowded bus, the distance needed to break would definitely be more.

Should an accident similar to the Selegie Road one have involved a public bus packed to the brim, hitting another vehicle from behind, the passengers on the steps and around the left wheel arch area would likely be killed or badly injured. Those standing anywhere on the bus would likely be affected by whiplash.

Can the Land Transport Authority or the Public Transport Council address this issue? Why should bus commuters be put in jeopardy daily? Isn’t there a limit as to how many standing passengers a bus can safely carry? Can’t the public bus operators put more buses on the road to prevent overcrowding?

As a First World nation, to ensure the safety of all commuters, everyone should be seated and no one forced to stand. Why does our first-class public transport system allow for a bus crammed full of passengers?

From TODAY, Voices – Friday, 17-April-2009