The authorities are likely to review the existing property curbs later this year to ensure a soft landing in Singapore’s residential market, according to a recent Business Times report citing UOB Research.
In light of the bank’s forecast that home prices could suffer a drop of 5.0 to 10 percent in 2015, the government may reduce the seller’s stamp duty (SSD) and lower some selected tax rates under the additional buyer’s stamp duty (ABSD).
“In our view, it may make sense to tweak some of the stamp duty measures such as the ABSD and SSD as market speculation has fallen significantly,” it said.
Aside from that, home buyers are already barred from borrowing beyond their means due to the Total Debt Servicing Ratio (TDSR) framework and the caps on loan quantum.
However, UOB feels the government will only ease the existing cooling measures once prices have fallen by at least 10 percent.
“The government is unlikely to act in the absence of a larger price decline as the sharp rise in property prices was a key flash point during the last ‘watershed’ general elections,” explained the report.
Looking back, the authorities only responded when Singapore’s residential market was impacted by major external shocks like the Asian Financial Crisis in 1998 and the dotcom bubble that happened thereafter. Home prices here dived by 45 percent and 20 percent respectively during those periods.