Why home is now where the work is
by: By Neil Keene From: The Daily Telegraph February 29, 2012 7:48am

AUSTRALIANS in the pursuit of a better work-life balance are abandoning full-time office jobs and embracing part-time positions and careers where they can work from home.

Research released yesterday by business information analysts IBISWorld found that while full-time employment grew by just 1.5 per cent in the five years to 2011-2012, part-time employment enjoyed double that growth.

It’s a trend set to continue for at least the next five years, and senior industry analyst Naren Sivasailam said there were a number of factors at play.

“Employers and employees are both starting to favour this idea of working part-time or flexible hours,” he said.

“It’s been driven partly by the fact that the economy is moving towards more service-based industries and away from traditional manufacturing industries which don’t lend themselves as well to part-time work.”

The recent financial crisis may have also played a part, Mr Sivasailam said, with some companies scaling back their full-time staff and replacing positions with part-time workers.

Technology is also helping the shift away from the traditional 9-5 grind.

Never before has it been so easy to job-share or work from home, thanks to the internet, email and “smart” mobile devices.

Newcastle City Council is among the many large employers in NSW to have increased part-time positions and flexible working conditions in recent years.

Job-sharing, work-from-home agreements, unpaid leave breaks, flexible hours and 19-day months where slight increases in daily work hours allow for an extra day off each month are among the options offered.

A council spokeswoman said 14 per cent of the organisation’s workforce now worked part-time.

That includes senior council strategist and mother-of-two Ruth McLeod, who said the decision against full-time work meant she had more time to spend with her family and do volunteer work.

“By having time in my week for my family and community commitments, I can focus on my work as a strategic planner while at council,” she said.

The council has also introduced phased retirement, where employees ease into retirement by switching to part-time.

Mr Sivasailam said it was a trend that would only continue with Australia’s ageing population.

“There is a proportion of people who are working longer than they perhaps would have before,” he said.

“Once they cross that 55-60 age some of them are choosing to scale back from 40 hours a week to 20-25 hours.

Wilmar sets Goodman takeover plan in motion
by: Neil Wilson From: Herald Sun February 29, 2012 12:00am

WILMAR International’s move to buy a major stake in Australian food maker Goodman Fielder is a prelude to a major takeover, analysts say.

The manufacturer of breads and spreads was blindsided by the share raid that has seen Singapore’s Wilmar International quickly become the company’s largest shareholder with a 10 per cent stake.

Investors anticipating the giant Asian oils and sugar conglomerate would be forced to pay a premium in any takeover battle sent Goodman Fielder’s share price rocketing up by more than 30 per cent yesterday.

Wilmar International said it was still assessing whether to buy more shares in the company behind food brands such as White Wings, Helga’s, Meadow Lea and Praise.

But most analysts are convinced Asia’s biggest agribusiness operator would not have offered 60c a share to more than double its stake to 10.1 per cent in a single blow if it did not have bigger plans in mind.

“You would have to assume it is the start of a takeover, it’s bizarre to spend $115 million buying a stock to get a buying position for assets worth just over double that,” said one analyst.

Wilmar justified its acquisition by stating that Goodman Fielder’s baking, dairy, home ingredients and edible oils brands were complementary to its own Asian consumer businesses.

“We look forward to working with Goodman Fielder and its management team to improve Goodman Fielder’s performance over time,” Wilmar’s chairman Kuok Khoon Hong said.

Goodman Fielder said, so far, its only discussions with Wilmar had been limited to its non-core assets.

Wilmar spent $1.75 billion in 2010 buying CSR’s sugar and energy business.

Goodman Fielder is dwarfed by Wilmar, which has 300 plants across 53 nations, employing 50,000 people and last year made $1.53 billion profit.

Yesterday, Goodman Fielder closed at 68.5c, its highest price in six months, up 33 per cent on the day’s trading.

Greg Thom From: Herald Sun February 27, 2012 12:00AM

AVALON airport visitors could soon be riding a driverless monorail linking a new train station to the terminal building.

The $200 million plan would enable commuters to catch a train from Melbourne direct to Avalon for the cost of a zone 2 ticket.

In an Australian first, passengers could then check their bags and obtain a boarding pass at the new Avalon airport station, before taking a five-minute monorail ride to the terminal.

The bold initiative, revealed exclusively to the Herald Sun, would make Avalon the only airport in the nation to boast a monorail and train station check-in facilities.

The concept is one option the State Government is considering in its bid to build a rail line to Avalon by 2016.

It comes amid calls to make Avalon the city’s second international airport behind Tullamarine.

Avalon operator Linfox and airport management, have urged Spring St to back the monorail proposal over heavy rail-only alternatives.

They said not only would the monorail be cheaper to build, but offered more flexibility and would help fuel the airport’s future growth.

Avalon airport CEO Justin Giddings said the number of passengers using Avalon was expected to grow from about one million a year to more than five million by 2016.

He said a rail link would ensure passengers no longer missed flights because of traffic congestion.

“The airport experience would actually start at the Avalon train station,” he said.

The monorail could drop passengers at several stops, including an enhanced retail precinct, and workers at aircraft maintenance facilities.

Mr Giddings estimated a rail service to Melbourne airport could cost commuters as much as $20 a trip, making Avalon an affordable alternative gateway into the city for budget-conscious backpackers, families and tourists.

“By 2016, we’ll be the only airport in Melbourne with a direct rail link and (that will) give us a huge advantage.”

Transport Minister Terry Mulder confirmed an Avalon monorail was on the table.

“I’ll be very interested to see the types of options that the study team comes up with and am happy to consider a monorail or any other viable option that will get the job done,” he said.

A monorail is also backed by the Victorian Employers Chamber of Commerce and Industry and the Transport Tourism Association.

Melbourne should keep a low profile in future

by: Anne Wright From: Herald Sun February 29, 2012 12:00AM

MELBOURNE should focus on its vibrant street culture and mix of architecture when planning future growth, a planning expert has advised.

Melbourne University’s Alan March said Victoria’s captial had the opportunity to become Australia’s premier city, if it gathered inspiration from cultural hubs such as London and Paris rather than New York.

“There are other great cities that we could quote, London being one example and Paris is another … which don’t use high-rise towers but have huge amounts of character, and tourism and vibrancy and business within them,” Dr March said.

Rushing into a design based on New York’s metropolis, without planning for future services other than apartments, could backfire, he said.

“Once you build it, it is quite difficult to change. Once you build a tower there, it’s going to be there for the next 50 to 100 years probably,” he said.

“So we need to go into the future with a lot of thought and deliberation in what we do.”

Planning Minister Matthew Guy this month launched a plan to expand Melbourne’s CBD into a Manhattan-style metropolis, with the city’s tallest building proposed for Fishermans Bend or north of the Docklands.

Parts of the plan outlined a possible expansion of the underground loop and installing New York-style rooftop parks.

Dr March said big urban centres worked for a world city like New York, but Melbourne was different and needed a unique approach.

The Age
26 Feb 2012

WE’RE not Greece, in case you were confused. I suppose our government’s about as stable.
But our collective fiscal funk has recently compelled Treasury supremo Martin Parkinson to point out this obvious geographical fact. So let’s cut through the persistent gloom and doom and look at how our country stacks up.

1. Government debt and deficit

As a proportion of gross domestic product, the IMF says we owe 24 per cent. The US has racked up 100 per cent, Italy 120 per cent and Greece 152 per cent.
Yes we have a deficit – tiny by world standards. The IMF says it was minus 2.8 per cent in 2011 and the government has crossed its heart and hoped to (ahem) die that it will be a surplus by 2012-2013.
France’s comparable figure was minus 5.7 per cent, Spain’s minus 8 per cent and the US’s – tut tut – minus 9.5 per cent. Greece’s is ratcheting up so fast it will be wrong before I type it: the 2012 forecast is 6.7 per cent.
That country is now widely expected to default and Fitch’s credit rating of ”C” reflects it. Ours is ”AAA”.
2. Resources and economy
Remember we were the only Western nation that didn’t go into recession during the global financial crisis. One of the reasons was mining.
An embarrassment of riches from resources means we can feed the insatiable industrialisation of developing Asia. Indeed, the governor of the Reserve Bank, Glenn Stevens, told Friday’s parliamentary economics committee the boom is ”still building” and ”will take the share of business investment in GDP to its highest level for 50 years”.
The mining tax – whatever you think of it – is designed to spread the proceeds.
Meanwhile, most commentators believe the EU is back in recession and Greece never climbed out of it.
3. Interest rates
Here they are relatively high on a world scale, precisely because our economy is strong and needs to be kept in check, but they’re also far lower than they were in the 1980s.
As a consolation to mortgage holders, the RBA has a loaded gun if it needs to shoot its way out of another crisis. And if you are cashed up, you are laughing all the way to the proverbial.
4. Employment and wages
This is what’s really making us uneasy. And it is hard to ignore headlines about mass redundancies in industries struggling due to factors like the high Australian dollar – for example, manufacturing – as they scramble to stay viable. Others – think retail and media – are under pressure because they’re at the pointy end of dramatic consumption shifts.
But it’s important to keep it in context. Unemployment last month actually fell slightly to 5.1 per cent, which boffins consider close to full employment. Although that is expected to tick up as global growth slows, some industries, like tourism and mining, are even reporting worker shortages.
Perhaps it’s our comparatively cushy existence in Australia that causes us to fixate instead on cost-of-living pressures, however it seems we should stop our whinging. CommSec research using The Sydney Morning Herald archives shows we have far more purchasing power for goods – wages relative to prices – than our parents and grandparents 30, 40 or 50 years ago. Housing is another story.
Want a little more perspective? In Greece they’re contending with unemployment of more than 20 per cent and a 22 per cent cut to the minimum wage.
5. Retirement
God bless super. As controversial as its introduction was – and however inadequate it ends up being – it’s a salvation for our sunset years. What’s more, it’s in our names and our control. Many Greeks are instead getting 12 per cent wiped off their pensions.
So it seems Australians’ confidence – which a global Nielsen survey of 56 markets has just found is the highest in the developed world – is justified.
Nicole is the editor of www.afrsmartinvestor.com. Follow her on Twitter @NicolePedMcK.

The Age

Confidence returns to residential property market
Nicole Lindsay
February 27, 2012

CONFIDENCE returned to the residential market over the weekend with the auction clearance rate climbing to 63 per cent from 772 auctions, according to the Real Estate Institute of Victoria.

It was the first major sales weekend for the year, and was widely seen as a ”litmus test” for the health of the market.

Agents and buyer advocates reported their results with some relief yesterday, saying the improved rate showed greater confidence on the part of buyers and realism from Vendors
While some reported fabulous successes, other agents continued to experience slow bidding. Also several properties were in the auction column with undisclosed prices, which raises questions about controversial higher or lower than expected results.

One property with an undisclosed price is 6 Highbury Grove in Prahran, which reportedly sold for $1.54 million. The low end of its expected price range was initially quoted at below $1 million before it was upgraded to between $1.1 million and $1.3 million.

Marshall White director John Bongiorno defended the difference between the result and the quoted prices.

”The issue of underquoting will always crop up when you get runaway results. This year we’ve had three, four and five bidders on each property. The market has bottomed and is picking up.”

His group had maintained an 80 per cent clearance rate over the past three weekends, he said.

Wakelin Property Advisory director Richard Wakelin said confident first home buyers were inspiring people to ”trade up” their existing homes.

”It’s not unusual to see people in Northcote, Clifton Hill and Fitzroy moving to Kew and Hawthorn for the schools. But there’s also a strong sense of community among people who are staying in the area and trading up to a double-fronted house from a single-fronted,” Mr Wakelin said.

Jas H Stephens agent Tate Moore said there were plenty of couples with young families out in the market. ”It’s still a bit hard to gauge but results across the board are reasonably good,” Mr Moore said.

However, there is still a slowness in the market above $2 million.

In East Melbourne, a two-storey terrace at 112 Powlett Street sold after auction for $2.045 million after a slow auction with only two bidders.

Last sold in 1977, it had been sympathetically restored and had escaped modern renovations.

Bennison Mackinnon agent Nathan Waterson handled the property and another two-storey terrace around the corner, at 125 Gipps Street, which was passed in on a vendor bid of $3.85 million.

One genuine bid was made for the renovated property at $3.775 million.

Mr Waterson said offers were made at the selling price but the sticking point was the longer settlement period demanded by the vendor.

Its neighbour, 123 Gipps Street, is also for sale through an expressions-of-interest campaign with Jellis Craig.

It has an asking price of more than $6 million but was last sold 13 months ago as an unrenovated shell for $3.2 million.

The Age

Andrew Heasley
August 13, 2011

Ted Baillieu at Avalon airport. Photo: Jason South
A $250 million rail link to a near-deserted Avalon airport will be built ahead of one to Melbourne Airport, a senior government minister confirmed yesterday.

Melbourne Airport is the nation’s second busiest, handling about 28 million passengers on 200,000 thousand flights a year, while Avalon sees six Jetstar flights a day now that Tiger has pulled out from operating there.

State aviation minister Gordon Rich-Phillips justified putting the Avalon rail link first on the grounds it was easier and was a long-term investment, while routing a train to Melbourne Airport was complicated by surrounding urban development
”Avalon is a clearer project than Melbourne in terms of the logistics associated with doing it,” Mr Rich-Phillips said.

”The reality is … the lack of development around its [Avalon's] immediate vicinity makes a lot of those logistics questions at Avalon easier than they are for Melbourne.

”There are challenges around an airport link for Melbourne.”

For its first term, the Baillieu government has committed $50 million for the design and planning, land acquisition, and preliminary construction works for the $250 million Avalon rail link, but is allocating just $6.5 million for a study, due by the end of next year, into the feasibility of getting a train to Melbourne Airport.

When pressed on which one was the priority, Mr Rich-Phillips said: ”We have committed to work at Avalon and we’ve committed to feasibility at Melbourne.

”We don’t have a project for Melbourne [Airport], we have a feasibility study for Melbourne.”

The Avalon rail link was part of the Baillieu government’s vision for it to become the state’s second international airport, Mr Rich-Phillips said, something the Victorian Employers’ Chamber of Commerce and Industry has called for.

”We think it would be great for Victoria to have two international airports,” he said.

”The Victorian government’s commitment to Avalon is looking in the long term and the long-term potential of that site.”

Heraldsun

Jason Cadden From: AAP February 24, 2012 5:18pm

THE Australian economy is in good shape despite the floods and cyclones of last summer, Reserve Bank of Australia says.

Facing the House of Representatives economics committee hearing today, Mr Stevens said most economic data showed Australian economic growth over the past 12 months managed to stay at an average pace despite the headwinds.

“This outcome was weaker than we had expected a year ago,” Mr Stevens said in Sydney.

“It was partly due to the effects of flooding on resource production but also due to softer outcomes in the non-resource side of the economy.

“Inflation has come down, as expected, as the impact of last summer’s floods on food prices reversed.”

Mr Stevens said he expects economic growth to be around trend and inflation to stay within the bank’s 2 to 3 per cent target band.

In this economic environment Mr Stevens said the official interest rate is at about the right level.

The cash rate is currently 4.25 per cent, after the RBA made to two consecutive quarter per cent cuts at its November and December board meetings.

Commsec economist Savanth Sebastian said the RBA’s confidence in the Australian economy is encouraging.

“The Reserve Bank governor has delivered the clearest message yet that the central bank has a strong degree of confidence in the outlook for the domestic economy,” he said.

“The tone and comments from the testimony is consistent with CommSec’s view that the cash rate will remain on hold until at least the May meeting,” Mr Sebastian said.

On the biggest overseas economic hurdle – the euro zone government debt crisis – Mr Stevens said the worries have eased.

“The palpable fear before Christmas that Europe was on the brink of some sort of very bad financial event has lessened over our summer,” he said.

“The actions of the European Central Bank contributed greatly to the stabilisation of financing conditions, essentially by removing, for a time, questions over the funding of European banks.

“The anxiety has not gone entirely away, and nor will it for some time. But the worst has not happened,” Mr Stevens said.

HSBC chief economist Paul Bloxham said the RBA testimony made it clear that the main driver for the November and December rate cuts was because of global risks.

“Over half the words in the opening statement were about global developments and particularly European developments,” Mr Bloxham said.

“This pays to remind us that the global economy is typically the key driver of RBA moves.”

“While global financial markets have stabilised in recent months, it is clear that the very difficult set of problems Europe faced are still not solved.”

Mr Bloxham said he expects another RBA rate cut in the June quarter and for the RBA to start raising the cash rate at the beginning of 2013.

Source: Business Times – 23 February 2012

Hotspots for completed properties

THE private housing market in Singapore scaled new heights in 2010 and 2011 as prices escalated past previous peaks, while the volume of new home sales hit fresh highs. Though attention was mostly focused on the primary market, the secondary market was also active with healthy price gains.

Secondary market transactions of private residential property totalled some 16,357 units last year. Although 27.7 per cent lower than the 22,608 units sold in 2010, secondary market transactions still made up more than half of all private home sales for 2011, at 50.7 per cent.

Prices of private homes in the secondary market also strengthened. According to the National University of Singapore’s Singapore Residential Price Index Series (SRPI), prices of such properties rose by 25 per cent between end-2009 and end-2011. The SRPI tracks price changes in its basket of completed non-landed private homes.

This outperformed the 24.4 per cent rise for all private residential property types and the 19.2 per cent gain for non-landed private homes, going by the Urban Redevelopment Authority’s (URA) price indices over the same period. These URA indices include completed and uncompleted homes.

Hotspots in Singapore

In 2011, buyers who bought from completed non-landed private residential projects at least five years old were particularly keen on five districts. Ranked in terms of transaction volume, they were 15, 23, 16, 10 and 19. Based on caveat records in the URA’s Real Estate Information System (Realis) on Jan 30 this year, these districts chalked up the highest transaction volume for secondary market non-landed homes.

Singaporeans accounted for more than 54 per cent of all such transactions in each of these hotspot locations.

Buyers from China were most active in districts 23 (covering areas such as Hillview, Diary Farm, Bukit Panjang and Choa Chu Kang) and 19 (including Serangoon Gardens, Paya Lebar, Hougang and Punggol). They accounted for a significant 31.8 and 27.7 per cent respectively of all foreign purchasers of resale non-landed residential properties in these locations last year.

Homebuyers from India favoured the eastern part of Singapore, where they formed the largest proportion of foreigners who picked up resale non-landed homes in districts 16 and 15 – at 31.7 and 26.7 per cent respectively.

Indonesians were the largest group of foreign buyers in district 10, with a 20.3 per cent share.

District 15: The three most actively transacted developments in the secondary market in district 15 were Costa Rhu, Mandarin Gardens and Water Place. In Costa Rhu, units from 990 square feet to 5,813 sq ft were sold at between $1.18 million and $5.05 million last year. Water Place commanded prices of $1.1 million to $1.94 million for units between 904 sq ft and 1,636 sq ft. At Mandarin Gardens, prices ranged from $700,000 to $1.93 million for units measuring 732 sq ft to 2,034 sq ft.

These three 99-year leasehold developments are sought after for their proximity to the city, the waterfront as well as the green lungs at the Marina Bay Golf Course and the East Coast area. They are also close to established lifestyle and food and beverage haunts in the Katong and Geylang neighbourhoods.

Buyers are also likely to be attracted to the spacious living and dining areas of Costa Rhu units. In Mandarin Gardens, residents get to enjoy an Olympic-sized swimming pool and four tennis courts. Over at Water Place, all apartment blocks are widely spaced out, providing a sense of space.

Buyers are also known to purchase units in these developments for potential capital appreciation and rental income. For instance, those who bought units in Costa Rhu and Water Place in the Tanjong Rhu area in 2010 and sold them in 2011 saw capital gains of 18-19 per cent, according to caveats lodged.

This is before taking into account the seller’s stamp duty (SSD) payable on all residential properties bought on or after Feb 20, 2010 and sold within 12 months from the date of purchase. The stamp duty rates applicable are one per cent for the first $180,000 of the sale price, 2 per cent for the next $180,000, and 3 per cent for the balance.

However, prospective investors should note that under the prevailing SSD regime effective Jan 14, 2011, aimed at dampening speculative activity, the holding period for the imposition of SSD has been extended to four years. The SSD rates have also been hiked to 16 per cent, 12 per cent, 8 per cent and 4 per cent of the sale price for residential properties bought on or after Jan 14, 2011, and sold within the first, second, third and fourth year of purchase, respectively.

In the leasing market, units at Costa Rhu and Water Place garnered net rental yields of 2.5 per cent to 4.1 per cent last year. Prices at Mandarin Gardens in Siglap appreciated by about 17 per cent last year and net rental yields ranged from 2.4-3.7 per cent during the year.

District 23: In this district, the three most sought-after developments last year were Regent Heights, Northvale and Palm Gardens. According to caveat records, units measuring 689 sq ft to 2,594 sq ft found in these 99-year leasehold developments changed hands at prices ranging from $705,000 to $1.6 million last year.

Those who bought units in these developments in 2010 and sold them last year enjoyed capital gains of between 11 per cent and 30 per cent. They also reaped rental yields ranging from 2.8-4.5 per cent.

District 16: In this district in the east, buyers in the secondary market last year were mostly keen on The Bayshore, Costa Del Sol and Bayshore Park. These 99-year leasehold developments are close to established housing estates such as Bedok and Marine Parade as well as the airport. They also boast impressive views of the nearby East Coast Park and the sea.

Buyers of apartments at Costa Del Sol are also likely to have been attracted to the large living and dining areas of the units as well as the functional and regular layout of the rooms.

In 2011, units in these developments were transacted at prices ranging from $580,000 to $3.6 million for units measuring 624 sq ft to 3,800 sq ft. Those who bought units in The Bayshore and Bayshore Park in 2010 and disposed of them in 2011 realised capital gains of about 8 per cent to 20 per cent.

Those at Costa Del Sol saw a price increase of about 17 per cent to 30 per cent. Rental yields for the three projects ranged from 3-5 per cent in 2011.

District 10: Valley Park, The Tessarina and Duchess Crest were the three most transacted developments in the coveted district 10 last year. Units measuring 753 sq ft to 1,808 sq ft in the 999-year leasehold Valley Park in River Valley Road were transacted at prices ranging from $960,000 to $2.77 million in 2011.

At the freehold Tessarina on Wilby Road, buyers bought units ranging from 969 sq ft to 1,367 sq ft, at prices ranging from $1.31 million to $2 million last year. At Duchess Crest, a 99-year leasehold condominium on Duchess Avenue, buyers bought units of 936 sq ft to 2,088 sq ft at prices ranging from $1.14 million to $2.63 million in the same year.

Valley Park is popular as it is conveniently located next to Valley Point Shopping Centre and is close to Great World City. Units in the project also have large living and dining areas as well as service yards. Similarly, units at The Tessarina have large bedrooms and good layouts.

Those who bought units at Valley Park and The Tessarina in 2010 and sold them last year saw capital gains of between 10 and 20 per cent. In Duchess Crest, price gains in the same time frame were higher – between 25 and 29 per cent. Units in these three developments provided rental yields of 2.1-3.7 per cent in 2011.

District 19: Secondary market buyers in this district mostly opted for Kovan Melody, Rio Vista and Compass Heights last year. These 99-year leasehold developments are popular largely for their attractive locations. Kovan Melody, for instance, is adjacent to the Kovan MRT station. Units measuring 872 sq ft to 1,518 sq ft in size were transacted at prices ranging from $845,000 to $1.51 million last year. Investors in such units achieved rental yields of 3.1-3.8 per cent.

Compass Heights is integrated with the Compass Point mall, the Sengkang MRT station and the Sengkang bus interchange. Such integrated developments have proven to be popular. In 2011, Compass Heights commanded prices ranging from $675,000 to $1.68 million, for units between 667 sq ft and 2,519 sq ft. Rental yields for this development were in the range of 2-3.9 per cent.

Meanwhile, those who bought units in Kovan Melody and Compass Heights in 2010 and sold them a year later reaped capital gains of 13 per cent to 33 per cent.

Rio Vista is situated adjacent to Sungei Serangoon, the Serangoon bicycle track and park connector, and is close to Punggol Park. The location offers residents a green and park-like living environment. Units in the development also offer large service yards and private enclosed spaces. In 2011, units measuring 1,055 sq ft to 2,573 sq ft were sold at prices ranging from $785,000 to $1.8 million. Prices of units at the development appreciated by about 14 per cent in 2011 and rental yields ranged from 3-3.9 per cent.

Prospective buyers, however, need to be clear about the pros and cons of buying homes in the secondary market and assess if the available options meet their needs.

Those who buy such properties will have the advantage of occupying the property immediately or getting immediate rental returns. Another draw of buying into an older project is the availability of larger units compared with what’s on offer at most new launches these days. In addition, buying a completed unit allows one to visually assess the unit as compared to buying an uncompleted unit off the plan. The downside, particularly with older units, is dealing with potential problems with electrical fittings and plumbing and general wear and tear. There may be a need for extensive renovations in some cases.

Some buyers may be put off by the higher initial monthly repayments required for resale homes compared with progress payments for uncompleted units. Another drawback could be the more stringent rules for financing properties whose leases are running low. For such properties, there are limitations on the withdrawal of funds from the Central Provident Fund as well as for financing loans.

Overall, options abound in the secondary market and the hotspot locations highlighted here can point potential homebuyers and investors to some attractive choices.

Source: Business Times – 23 February 2012

ECs: Easing your way into private housing

THE Housing and Development Board (HDB) moderated its 17-year-old income ceiling policy when Prime Minister Lee Hsien Loong announced during the 2011 National Day Rally that the monthly household income ceiling would be increased from $8,000 to $10,000 for those buying HDB’s build-to-order (BTO) flats, and from $10,000 to $12,000 for executive condominiums (ECs). This announcement brought relief to the middle-income group, also known as the ‘sandwich class’, whose monthly household incomes are in the range of $8,000 to $12,000.

Couples in such households now have a wider option of homes – new BTO flats or EC units – where they used to be limited to the option of purchasing HDB resale flats or mass market private condos.

For the past five years, from Q4 2006 to Q4 2011, HDB’s resale flat price index has risen 83.8 per cent.

However, with the release of about 28,000 new flats under the BTO system and Sale of Balance Flats exercise in 2011 plus another 25,000 BTO units in 2012, we are expecting prices to stabilise and have a cooling effect on the resale market as more young couples turn from resale HDB flats with high cash over valuation (COV) premiums to a wider choice of new BTO flats with a lower price tag or executive condominiums (ECs).

ECs are favoured by many homebuyers with the recent increased income ceiling as they cater to Singaporeans aspiring to own a private property. The government’s ramping up of supply of new EC units through the Government Land Sales Programme is definitely of great help for higher-income Singaporeans to own private condominium units in an affordable way.

Let’s take a look at how ECs came about in the earlier days. In the mid-1990s, the spike in private property prices was so fast that much of the young generation found their dream house out of reach. To meet the hopes of these younger people, ECs were introduced, targeting young graduates and professionals who wanted more than a HDB flat but could not afford a private property.

ECs are a hybrid of public and private housing with initial buyer eligibility and resale conditions similar to HDB homes for the first five years. These restrictions are completely lifted 10 years after the completion of an EC project. Similar to private condominiums in terms of facilities and designs, ECs are developed and sold by private developers on 99-year leasehold sites under the Government Land Sales Programme.

When ECs were first introduced, they were very popular. However, from 2005 to 2009, no EC project was launched in Singapore as demand for private property dropped significantly after the Sars epidemic in 2003 and the economic crisis in 2008. The demand for ECs was depressed as 99-year leasehold suburban private condo prices were affordable.

Homebuyers were opting for mass market private condominiums as these do not have buyer eligibility and resale restrictions. Thus, the government left it to the works of the market and did not see a need to make EC sites available during that period of time.

Making a comeback

EC projects made a comeback in 2010, mainly due to the fact that many first-timers have higher combined incomes exceeding the $8,000 monthly household income ceiling for HDB’s BTO flats. At the same time, however, prices of 99-year mass market private condos recovered sharply after the global financial crisis, once again slipping out of the reach of many first-time buyers.

Many young couples are getting married at a later age, which puts them into the middle-management pay group and these are the ‘sandwich class’ who may have little choice but to consider getting either the highly-priced HDB resale flats or shoebox units in mass market private condo projects. Many in this segment of homebuyers were priced out of the EC market due to the $10,000 monthly income ceiling policy at the time.

In the 2011 General Elections, affordable housing was a key concern for many Singaporeans and many dreams will be shattered if Singaporeans’ aspiration of owning a private property becomes unattainable. Thus, with the escalating private home prices, the government had decided to increase the income ceiling and augment the supply of ECs to cater to the needs of the ‘sandwich class’.

The total stock of completed EC units was 10,430 at end-Q4 2011. In addition, there are 6,058 EC units in the pipeline. Another 2,900 units could be generated from EC sites that will be released for sale via the first half 2012 Government Land Sales Programme.

It is an unprecedented move to increase the supply of so many ECs within a year, compared to approximately 15,000 ECs introduced in the last 15 years. Let’s look further at the attractiveness of ECs.

In general, such properties are 20 to 25 per cent cheaper than similar-sized 99-year leasehold private condos. The other perk associated with EC ownership is the ability to qualify for a CPF housing grant of $30,000 to be used as part of the downpayment for first timers. Second-timers can save on the resale levy on the sale of their HDB flats when they purchase new EC projects which were launched from 2009 onwards.

Affordablility of ECs

ECs are relatively more affordable compared with private properties because of the restrictive criteria in qualifying for ownership and the minimum occupation period. Couples earning $12,000 (combined monthly income) or above do not qualify to buy a new EC unit from a developer. Also, EC buyers cannot sell their units within the first five years from the date of the Temporary Occupation Permit (TOP) of the project. It is only after the fifth year that these EC owners are allowed to sell their units, and that too only to Singaporeans and Singapore Permanent Residents (PRs). After the 10th year from the TOP date, EC owners can then sell their units in the open market, including to foreigners and companies.

In 2010, many sites were released for EC development. It is clear that whenever there is a need, ECs will play their role in bridging the gap between the HDB and private property markets. The new launches of EC projects in 2011 include the Arc at Tampines, which was the first EC project to benefit from the increase in income ceiling, with 220 of 574 units sold on the first day of the launch.

In line with HDB’s plan to increase the supply of ECs, prices of ECs are expected to moderate from the current range of $750 per square foot to $700 psf in the coming months. This is definitely lower than current mass market condominium prices averaging at about $900 psf. Currently, more than 20 EC projects have passed the five-year period and about half of them have fulfilled the 10-year requirement, which means foreigners can buy into such projects. Thus, the capital appreciation from owning an EC unit is rather positive, especially after it is privatised, allowing it to be sold in the open market.

Based on statistics in Table A, ECs that were completed in the 1990s have seen their prices almost double compared with the prices when the first owners bought them, especially after they were fully privatised. Capital appreciation is 100 per cent in projects such as Eastvale, Westmere, Simei Green, Windermere and Chestervale. ECs are definitely a good option for many to consider especially for HDB upgraders, due to the limited supply and their value after 10 years. Some ECs that are in the five to 10-year completion period (Table B) are already seeing their prices escalating to as high as $919 psf such as Bishan Loft, based on the last transaction in December 2011.

In conclusion, Singaporeans are looking forward to the opportunity of owning a private property at more affordable prices and the alternative of upgrading to an EC will definitely be fulfilling many Singaporeans’ dreams. HDB flats have reached their peak and are likely to undergo a correction – or at least see muted price growth – in the next few years.

On a longer-term perspective, upgrading to an EC that is six to eight years from completion will definitely reap greater benefits as upon its 10th year, the capital appreciation and returns are expected to be higher.

Source: Business Times – 23 February 2012

The Age

Reserve Bank open to forex intervention to weaken Australian dollar
BY: ENDA CURRAN From: Dow Jones Newswires February 24, 2012 11:25AM

THE RBA could move to weaken the Australian dollar if conditions required it, but it does not foreshadow forex intervention now.

Australia’s central bank governor, Glenn Stevens, today told the House of Representatives economics committee hearing in Sydney he was not attracted to the idea of intervening to weaken the Australian dollar, but the bank did retain it as an option.

The Australian dollar has surged in recent years and remains well above parity against the US greenback, hurting trade-exposed sectors such as tourism and manufacturing. The local unit is now trading near $US1.0728.

Mr Stevens pointed to the example of Switzerland, which placed a cap on the Swiss Franc, and said such a move would not apply in Australia because it was experiencing different economic conditions to those In europe

“The exchange rate forces acting there are more powerful, I would say, than what we faced,” Mr Stevens told the parliamentary hearing.
“I am not attracted to attempting to do that at the moment because I am not sure it would be effective. We haven’t done any intervention to try to hold the Australian dollar down.
“I’m not saying we never would, we have been known to intervene on both sides but we certainly don’t foreshadow it,” he said.

“I’m not saying we would never do it, but we haven’t done so to date, but we do continue to ask ourselves whether what’s happening in the currency makes sense,” Mr Stevens said.

“I would observe the most recent bout of strength is happening at a time when the terms of trade has peaked and is starting to come down…that is a bit odd, but we will see what happens,” he added.