Property Update (18 March 2015)

Housing Slump a Problem for China’s Economy: Lewis | bloomberg.com

Peter Lewis Consulting (China) Founder Peter Lewis discusses the slowdown in China’s housing market and what it means for the economy with Bloomberg’s Rishaad Salamat on “Asia Edge.”


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Rate cuts fail to buoy Chinese property market | afr.com

CHINA : Chinese property prices fell at the fastest pace on record in February, despite two recent interest rate cuts and government pledges to support the economy.

The average price of new homes fell by 5.7 per cent from a year earlier, according to calculations made by Reuters, based on data from the National Bureau of Statistics.

It was the sixth consecutive month of declines and comes after prices fell at an annual rate of 5.1 per cent in January.

“The new [home] market across every tier remains visibly weak,” said Westpac’s international economist Huw McKay.

“Developers continue to discount aggressively to clear stock on hand and sellers are maintaining abundant supply in the secondary market.”

Economists are however forecasting a slight rebound and cited the Chinese New Year holiday for having a dampening effect on sales during February.

“Judging by the seasonal changes in recent years, the total sales in March often see a significant improvement,” said Liu Jianwei a senior analysts at the NBS.

The NBS data showed average new home prices fell in 66 of the 70 surveyed cities in February, while prices were flat in two cities and unchanged in another two.

This is slightly worse that the 64 cities which recorded price declines in January. Read more here >>

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Economists Lower Singapore Growth Forecasts | nasdaq.com

SINGAPORE–External economists surveyed by the Monetary Authority of Singapore expect the economy to grow slower than previously estimated and inflation to be more benign this year.

Singapore’s economy is expected to grow 2.0% year-on-year in the January-to-March quarter, according to the median estimate in the MAS Survey of Professional Forecasters released Wednesday.

That compares with a first-quarter forecast of 2.5% growth in the previous survey in December, the central bank said in a statement.

The slowdown in growth is a function of a weak global economy, which Singapore is heavily exposed to through its manufacturing and export sectors, and government efforts to restructure Singapore’s economy to a productivity-led growth model.

Economists surveyed by the central bank now expect Singapore’s economy to grow 2.8% in 2015, slower than the 3.1% predicted in December, it said. The forecast is in line with the government’s estimate of the economy growing 2% to 4% this year. Read more here >>

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Lending curbs deal heavy blow to home sales in Singapore | scmp.com

SINGAPORE : Home sales plunged 48 per cent in Singapore last month from a year earlier as lending curbs stemmed purchases.

Developers sold 382 units, down from 739 in February last year, according to data released by the Urban Redevelopment Authority.

Last year, home sales dropped to a six-year low as property policies hurt demand.

Sales fell by half to 7,316 units from 2013, the lowest since 2008, according to data from the authority.

The government began introducing residential property curbs in 2009 as low interest rates and demand from foreign buyers raised concerns that the market was overheating.

Prices surged 40 per cent in the five years to 2013 to a record, prompting some of the strictest measures, including a cap on debt at 60 per cent of a borrower’s income, higher stamp duties on home purchases and an increase in real estate taxes.

Residential prices dropped 4 per cent last year, the data showed. Read more here >>

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Looming residential supply prompts Medini Iskandar to stop selling land for now | businesstimes.com.sg

MALAYSIA : Looming residential supply at Iskandar Malaysia has prompted the master-planner for Medini – the designated Central Business District of Nusajaya – to take stock of its plan for the remaining land bank.

Medini Iskandar Malaysia Sdn Bhd (MIMSB) managing director and CEO Khairil Anwar Ahmad said on Tuesday that the Board has decided to stop selling land and develop the commercial plots first, which make up half of the 55 unsold plots.

“The last thing we want to do is to cannibalise the market. Most of the developers who have bought land in Medini are developing residential properties so that’s the last thing we want to do,”Mr Khairil told the Singapore media in Nusajaya. “We would rather work with them to make them successful because their success is Medini’s success.”

MIMSB is 60 per cent owned by Iskandar Investment Berhad, with the remaining 40 per cent equally held by Dubai’s United World Infrastucture and Japan’s Mitsui & Co Ltd. Read more here >>

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Fitch Affirms the Philippines at ‘BBB-‘; Outlook Stable | reuters.com

PHILIPPINES : (The following statement was released by the rating agency)

Fitch Ratings has affirmed the Philippines’ Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at ‘BBB-‘ and ‘BBB’ respectively. The issue ratings on the Philippines’ senior unsecured foreign and local currency bonds are also affirmed at ‘BBB-‘ and ‘BBB’ respectively.

The Outlooks on the Long-Term IDRs are Stable. The Country Ceiling is affirmed at ‘BBB’ and the Short-Term Foreign Currency IDR at ‘F3’. KEY RATING DRIVERS The sovereign rating of ‘BBB-‘ for the Philippines reflects the following key rating drivers: – Strong macroeconomic performance. The steady inflow of worker remittances and growth of the business process outsourcing industry underpins the country’s economic growth.

Fitch forecasts real GDP to grow at 6.3% in 2015 and 6.2% in 2016. The Philippines’ five-year real GDP growth was estimated to be 6.3% at the end of 2014, which is far above the ‘BBB’ median of 3.0%. – External finances as a key credit strength. Sustained current account surpluses since 2003 have supported the build-up in FX reserves and turned the country into a net external creditor. Fitch estimates the country was a net external creditor at 15.4% of GDP at the end of 2014, compared with the ‘BBB’ median net external debtor position of 4.7% of GDP. Public finances as a neutral factor.

Fitch’s assessment balances declining general government debt ratios against limited progress in widening the government revenue base. Fitch expects general government debt to reduce further to 34.4% of GDP in 2016 from an estimated 36.4% at the end of 2014. Sustained fiscal discipline and the propensity of the government to underspend keeps the fiscal deficits low. The Philippines’ revenue and grants at 15.1% of GDP at end-2014 was much lower than the ‘BBB’ median of 28.6% of GDP. – Weak governance standards and low per capita incomes. Governance standards as measured by international organisations, such as the World Bank, remain below the ‘BBB’ median. Governance standards have strengthened under the Aquino administration since 2010.

However, the Philippines continues to score especially low on the World Bank’s Ease of Doing Business and Political Stability metrics, at levels that are far below the ‘BBB’ median. Read more here

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