Of course in such risky business, there are times when bad decisions are made, sums calculated wrongly and losses are part of the territory. Such costly mistakes do not only hurt the individuals or groups that go into such business, but the economy and society as a whole. Artificially inflating the market to achieve personal gains are what speculators do, and that is why for the general health of the real estate market and the economy as a whole the government has to step in to cool the buoyant property market, which started to move again in January this year.

The tightened rules on the mortgage loans only allowing 80% of the purchase price doesn’t have such a great impact on the speculators, but rather hitting some marginalised (and genuine) buyers. I truly disagree with this move. As it really hurts those that are not trying to artificially inflate the market, but buyers who are looking to buy for their own, especially those that are wanting to start a family. The impact won’t be that great on sales figures though. Buyers will just have to stick to buying property which they can truly afford, and not try to over-stretch themselves.

The global economy is recovering, US economic data shows improvement, and hence our Singapore government is concerned that the global economic recovery will cause an overheating of the property market, and the risky global economic factors may hurt many should the market correct itself. I seriously doubt so. Its a little far fetched, but as usual, in Singapore, we’re all Kiasu, so its better to be prepared then not to be.

The Sample Household Survey (SHS) 2008 – which polled almost 8,000 households – found that 85.8 per cent of residents considered their flats worthwhile. HDB said yesterday that this was mainly because of ‘the appreciation in flat value, good location, proximity to facilities, and affordability’.

And what is there not to be pleased about your HDB flat? Singaporeans are a pragmatic group of people. It all comes down to – what am I going to get when I sell this place, how much money am I going to stand to profit from the sale. If it ain’t enough, I ain’t selling – seems to be the response of some individuals (about 15 of them, aged between 35 – 50s).

Then I asked, would you pay more for your HDB flat if it was an upgraded estate or a non-upgraded estate, you’ll surprisingly find that the response comes back mixed. ‘Its outside my flat, so why do I care’ was one response. Many estate upgrading projects to provide more aesthetic features such as landscaped parks and gardens, modern playgrounds for the kids, bbq pits and improved walkways with ramps and hand rails is lost on some.

But truly, no one likes living in a run down neighbourhood. Behind the facade of nonchalance, HDB dwellers are proud and happy with what they’ve got.

The marketing agent Credo Real Estate announced the tender for the freehold residential development with the asking price of between $15 million and $16 million. This translates to a land price of between $1,038 per square foot (psf) per plot ratio (ppr) and $1,107 psf ppr.

The real estate market has been really buoyant in the recent months. Especially in popular spots like Beijing and Shanghai and several other provincial capitals. The easy bank loans, tax breaks and lower downpayments which were introduced last year to support the market amid the global economic slowdown has probably fueled the sky rocketing property prices, and there are whispers that these measures sparked the property bubble.

Given that signs of the US economic recovery aren’t clear, its understandable that everyone is still on their toes, and do not wish any thing to derail a global recovery (which is squarely resting on the shoulders of China).

Our public housing project in Singapore has received kudos and awards, and architects around the world have applauded us in being able to build public housing for our citizens that are seriously out of this world! And anything that has been given such a label does come with a price. The price of which has been heading skywards recently and does not seem to loose any forward momentum.

According to The Business Times, which reported that “The median Cash-Over-Valuation (COV) amount among all resale flat transactions jumped to $12,000 in Q3 2009 – from a median COV of $3,000 in Q2 this year.”

Perhaps the MND would soon rein in this runaway lamb that refuses to comply. MND could let loose the herding dogs that snap and nip at the legs of the lambs and sheep. That would be a sight to behold.

I was in fact surprisingly able to entertain my friends who came over for study groups (of about 4 of us). My room had a 14′ TV, VCR, electric airpot, rice cooker, oven toaster, a 4-foot long study table, a single bed, a fridge and a built-in wardrobe.

I didn’t cook much except for chicken rice, porridge, noodles, toasted sandwiches, grilled chicken, nuggets and other junk. Another compatriot who was living a few doors away cooked and fried food on her portable electric stove – just because she prefers the comfort of her room to the common kitchen 15 steps away.

But I digress…

What I am trying to do is paint a picture that living in a less than 300 sqft apartment the size of a “shoebox” is quite all right for young upstarts. I would love to move out from my parent’s place and live in a place just like that again, and live life as if I was still in university (yes I do love spending long nights cooped up with my books).

And to those comments by people who think living in “shoebox” apartments is detrimental to family life – I think not. In fact, giving young upstarts like us the freedom, may just push us in the right direction of setting up a family. It may just give that young couple much needed private space away from annoying and “nagging” parents (and perhaps grandparents).

What was shocking for me to read in The Business Times this morning was the comment by an analyst – here it is:

If ‘normal’ tenants like expatriates, foreign students and Singaporean yuppies do not wish to live in such small units, shoebox unit owners may push their properties to those who prefer shorter-term usage, including those in ‘hourly-rate businesses’, as one analyst put it.

Small units in the CBD or along the fringe of the CBD is very common in all metropolitan cities around the world. Many small families start out in such small units before they are financially ready for a bigger unit.

The main gripe by most observers is that the trend towards smaller units may continue to fuel more property investments as the quantum of such units is lower (despite a higher $psf). As statistics have proven that small units around 500sqft and below tend to get sold out first. Prior to the smallest ever apartment unit – at 258 square feet – being put on the market at the Suites@Guillemard project, most developers built units from lofts, to studio units around and about 450 – 510 sqft, and in limited quantities, normally making up less than 10% of the total number of units in the development.

It will take some 3 years before we can see these “shoebox” units at the Suites@Guillemard.

It is not unexpected that the Singapore government will come up with more ways to cool the upbeat property market. And in a knee jerk reaction on property stocks yesterday, closed lower after a sharp sell-off.. Leading the pack was Allgreen properties (fell 7.9%) with CDL next in line (fell 7.6%). The latest measures announced by National Development Minister – Mah Bow Tan in Parliament yesterday “It is in everyone’s interest to have a steady property market where prices move stably in line with economic fundamentals. “

These measures that Mr Mah had announced affects the Interest Absoption Scheme (commonly known as IAS) and the Interest Only Housing Loan (commonly known as IOL), were banned to curb the rocketing prices and sudden surge of property buyers in recent months.

The ban however DOES NOT affect property projects that have been launched and offer IAS. The scheme can continue to be offered to buyers at these developments.

The government’s strategy is a two pronged approach, on the demand side the removal of the IAS and IOL will impact buyers, on the supply side, it has reinstated the confirmed list of the Government Land Sales programme in the first half of 2010.

Our analysis of the situation is this. The government can reinstate the GLS programme, it is still for the developers to want to buy – which is likely that they will to add to their land bank. We believe that the removal of IAS at new launches will have minimal impact, as it has proven that only about 15-20% of buyers at property launches choose IAS. It is too early to claim that this tactic of removing IAS will or will not work. There are of course genuine buyers (not speculators or specuvestors), who are in need of these schemes.

Take Trevista for example, situated in the mature town of Toa Payoh, with limited new flats in that area, first time property buyers that missed the boat for The Peak @ Toa Payoh, could try their luck with Trevista, and yes it is still offering IAS. Speculators and Specuvestors, especially experienced ones know that with IAS, the effective price of the property is higher, hence affecting their margin. So it is unlikely that they use IAS when trying to flip, at Trevista, only 20% of buyers opted for IAS.

Bubble Bubble, burning trouble, in the Couldron of Wealth. While everyone is still wondering about an uncertain future, real estate agents (such as oursleves), are running from pillar to post at nearly all property launches, with unbelievable number of units sold, sometimes before the property is launched (in the case of 8@woodleigh, Optima, Centro and Trevista). Is it a bird, plane…no it  might be….no it can’t be a Real Estate Bubble.

Or at least whatever it is, its giving those at the ministry of national development – especially our esteemed Mah Bow Tan a royal headache! Just in the space of 2 months Mr Mah had given the market some heads-up about government land sales in 2010, hoping that this news will help send much needed coolant to the heated real estate hummer.  Specu-vestors and property buyers don’t seem to bother what Mr Mah has to say. Perhaps they aren’t so bothered about  land sales. Its too far up the value-chain for them to relate perhaps.

Our government has always worked on the principle that the market will correct itself in time, and in due course, the market will take into consideration economic factors and variables and re-align supply and demand, the most recent move seems to be a supply-side manouver. Unfazed buyers are still showing in droves at showflats, and activity has also trickled into the secondary market, affecting property valuations and transacted price.

Property analysts that still hold on to their contrarian opinion that property prices will come down any moment, seem to be proven wrong at this stage. But what other moves does Mr Mah have up his sleeve. Well my guess is as good as yours.

Being an agent in ERA is both exciting and exhausting at the same time. We always have exciting new residential projects for sale, and frequently offered to jointly market the project (which is the case for Waterfront Key, Vista Residences, 8@woodleigh and Trevista).

The most recent project we are marketing – Trevista at Toa Payoh is impressive, with about 410 of the 490 units released sold at the pre-launch stage. The launch for Trevista is slated for this weekend, much of the choice units have already been snapped up. The attractive price of less than $1000 psf at the pre-launch stage, is one of the reasons for units being snapped up at a record rate. It is reported that Singaporeans picked up 87 per cent of the total 410 units. Permanent residents made up 7 per cent and non-PR foreigners, 6 per cent, of buyers. 70% of buyers held HDB addresses, the remainder private addresses.

The remainder units left for this weekend’s release will be 3 and 4 bedroom units and units with prime pool-view orientation. It is still expected to be snapped up, as units in Toa Payoh have always been favoured for its prime central location, amenities & quick access to PIE and CTE, be it for own-stay or for investment, it is equally attractive.

Despite what many analysts are saying, the property market seems to be unfazed by the government’s moves to cool down the heated property market. Other property launches such as Trizon, the 289 freehold development by Singapore Land at Ridgewood Close is reported to have sold 100 units so far.

40 per cent of the units are studios, 2 bedroom and 2 bedroom + study, while the rest are three and four bedroom units. The studio units fetched about $400,000, while the 2 bedroom cost between $650,000 and $670,000.

8@Woodleigh is next to the future Stamford American International School and hence gives it a strong investment appeal. ERA is one of the joint marketing agents for this project.