What impact does China’s latest rate cuts have on the market? We speak with Vasu Menon of OCBC Bank for his insights.
March 3 — Frederic Neumann, an economist at HSBC Holdings Plc in Hong Kong, talks about China’s economy, its government and central bank policies, and currency. He speaks with Angie Lau on Bloomberg Television’s “Asia Edge.”
SINGAPORE, March 3 (Reuters) – The era of ultra-easy money is drawing to an end for Singapore mortgage holders, with domestic interest rates rising at their fastest pace in a decade in a country that already ranks among the world’s most expensive places to live.
The three-month Singapore interbank offered rate (Sibor), used to set floating-rate mortgages, climbed to 0.78756 percent on Tuesday. It has gained 33 basis points so far this year, exceeding all the annual increases since 2005. Analysts expect the rate to end 2015 at around 1.0 percent. The surge has been fuelled by the Singapore dollar’s weakness against the greenback. A softer Singapore dollar can put upward pressure on local interest rates as investors seek higher yields as compensation for holding a weakening currency.
Exacerbating the Singapore dollar’s fall and boosting Sibor, the central bank in late January allowed the currency to appreciate at a slower pace. Most economists polled by Reuters expect the Monetary Authority of Singapore to further ease policy next month. Analysts say three-month Sibor may stabilise as the Singapore dollar adjusts to the policy shifts. Mortgage borrowers will probably feel more impact from the rising Sibor in the second half of 2015, as interest rates on mortgages tend to be set every three months, said Michael Wan, an economist at Credit Suisse.
Singapore’s real estate has already been stung by government measures aimed at cooling the market, particularly in the high-end private-homes segment. Higher mortgage rates will dampen the broader home market dominated by government-built housing now in the private sector and owned by ordinary Singaporeans. The impact on discretionary spending by households will likely be more evident in the second half, Wan said. Read more >>
SINGAPORE : Investors from Singapore remained Asia’s biggest buyers of international real estate last year as capital outflows from the region hit a record.
Asian investors shelled out US$40 billion (S$54.5 billion) on property around the world in 2014, up 23 per cent over 2013.
Singaporean buyers accounted for a third of the total, said consultancy CBRE yesterday, with investors outlaying US$11.9 billion, up US$2.5 billion from 2013.
Chinese investors were next, with spending of US$10.1 billion as new players such as insurers sought to increase their allocation of funds to international real estate.
Hong Kong was in third place, with US$6.3 billion.
But Singapore fell out of favour as an investment destination, falling out of the top five places for Asian real-estate dollars last year after being fourth in 2013.
“Singaporean investors looked offshore as a result of compressed yields in their home market and a shortage of investible assets,” said Ms Ada Choi, senior director for CBRE Research Asia. Read more >>
The Southeast Asian city-state of Singapore retained its title as the world’s most expensive city for the second consecutive year, the Economist Intelligence Unit (EIU) said in a new survey.
In fact, the top five priciest cities ranked in this year’s Worldwide Cost of Living Survey remained unchanged from 2014: Paris ranked second followed by Oslo, Zurich and Sydney.
“This façade of relative stability is deceptive, however, and it is extremely rare for an identical top five to be achieved in ranking the global cost of living,” the EIU said.
Melbourne ranked sixth, with Geveva, Copenhagen, Hong Kong and Seoul rounding out the top ten. 2015 marks the debut of South Korea’s capital on the list as its cost of living now matches that of Hong Kong.
However, the EIU notes that the Swiss franc’s (CME:Index and Options Market: ZCF*) recent unpegging from the euro (Unknown: EURBA=)means that Zurich and Geneva would actually be the world’s most expensive cities at current exchange rates.
Noticeably, major Japanese cities like Tokyo and Osaka – usually among the world’s most expensive during the past two decades – were missing from the EIU’s list due to weak inflation and the yen’s devaluation.
The bi-annual survey ranks cities based on price comparisons across a basket of goods, including food, drink, clothing, home rents, transport, utility bills, private schools, domestic help and recreational costs.
Read more here >>
SINGAPORE : AS the Central Provident Fund (CPF), Singapore’s pension scheme, was in the news recently, I was having a debate with a colleague on whether restrictions should be placed on the use of CPF savings to buy property, especially private property. It was not financially smart to commit that money – meant for retirement savings – to buy a pricey apartment, I said.
She responded: “Why deny people the chance to break into the upper classes? You’ll exacerbate inequality if you prevent people from buying private property.”
But the bigger issue is retirement adequacy, which is the original goal of the CPF – and remains the main goal – I argued. After wiping out your CPF savings to help pay for the S$240,000 downpayment on a S$1.2 million home, as well as your monthly CPF Ordinary Account contribution to help pay for the $4,000-a-month 30-year mortgage (on a 3 per cent interest rate), how much will you have left by the time you’re 55 when you have to pay for CPF Life? You might still be paying the mortgage by then. Will you still have a job?
People can choose to pay their mortgage in cash instead of using their monthly CPF contributions, she countered. And the mortgage won’t necessarily last 30 years if people pre-pay after some more years of working and saving. Salaries can still go up. And as for prudence concerns, loan curbs are already in place.
What is important, she maintained, is that people be allowed to use the CPF to help with the lump-sum downpayment first. And as for whether CPF should be allowed to be used to buy private property, that ship has sailed a long time ago – in 1981, to be exact, when the Residential Properties Scheme was introduced to let people do so.
The CPF has become such a big part of most people’s savings that people expect to be able to use it to pay for whatever they wish, including an expensive piece of physical property.
Property always goes up? But so do other assets Read more >>