Goh Eng Yeow on traders’ reactions to the move to dampen some speculation.
PROPERTY counters are reeling from the much anticipated move by the Government to deflate the bubble now brewing in the residential property market.
As I write, City Developments has fallen 74 cents to $10.34, while rival CapitaLand is down 17 cents at $3.70.
What surprises me is the strong reaction by traders to the Government’s move to disallow the interest absorption scheme by developers to lure buyers to purchase new properties.
Essentially, the interest absorption scheme is a variation of the deferred payment scheme which was scrapped in October 2007. It allows a buyer to defer making the bulk of the payment on the property he buys until TOP, once he has come up with the agreed down-payment.
Given the scare at the end of last year when there were fears that large number of buyers on the deferred payment scheme might default on their uncompleted property purchases, it is surprising that traders should have reacted so strongly to the scrapping of the interest absorption scheme. Continue reading
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