Property consultants believe the government may finally be persuaded to tweak some of the cooling measures as home prices are expected to drop further this year, reported Bloomberg.
JLL National Director of Research & Consultancy, Ong Teck Hui, expects home prices to fall by as much as eight percent this year, while Knight Frank predicts a three to six percent decline in residential values.
“All the noises from the Government are that cooling measures are here to stay,” noted Nicholas Holt, Singapore-based Asia-Pacific Research Director at Knight Frank.
Nonetheless, he reckons that “behind closed doors they are talking about possible tweaking of some of the cooling measures,” especially given rising mortgage rates, slowing macroeconomic growth and falling home prices.
With prices falling for a ninth quarter over the last three months of 2015, the city-state has been successful in cooling its once red-hot property market.
The measures, which include higher stamp duties on home sales and acquisitions, as well as a cap on real estate loans at 60 percent of a borrower’s monthly income, have earned the ire of Singapore’s biggest developers. In November, City Developments urged the government to review the measures as demand for apartments weakens.
Home prices declined 3.7 percent in 2015, almost matching the four percent drop seen in the year before, the first year-on-year decline recorded since 2008. Prices climbed to a record high in 2013, which prompted the government to introduce additional curbs as demand from foreign buyers and low interest rates raised concerns that the market could be overheating.
Ong stated that tweaks to the measures will likely be gradual in order to prevent the market from overheating again.
For a progressive easing, the seller’s stamp duty, additional buyer’s stamp duty and loan-to-value ratio may be adjusted gradually, he said. Holt, on the other hand, said that the government can slowly scale back the high stamp duty, starting with permanent residents and locals.
“The government has maintained that it is not yet time to ease the cooling measures and our sense is that it is more likely to be later rather than earlier in 2016,” shared Ong.