The government may ease some of its property cooling measures this year in light of the sizeable upcoming supply, according to comments made by Kwek Leng Beng, Executive Chairman of City Developments Limited (CDL), and reported by Bloomberg and TODAYonline.
“Developers hope that the government presses the button sooner than later,” he said after announcing the company’s latest financial results on Thursday (25 Feb).
“I would think that they would do something this year. That’s my speculation, especially this year, when you have a lot of mid-end and low-end homes coming up. I suspect it will be the abolishing the Additional Buyer’s Stamp Duty (ABSD).” Another existing measure is the Total Debt Servicing Ratio (TDSR) framework.
The TDSR limits mortgage repayments to 60 percent of a borrower’s monthly income, while ABSD are stamp duties that individuals have to pay based on their residency status and the number of properties owned. The ABSD rules also impose a fine of 10 to 15 percent of the land cost if developers fail to build, complete and dispose all units within five years of acquiring the land.
With the aforementioned curbs and heftier real estate taxes, the government has been able bring down the high cost of housing.
In Q4 2015, prices of private homes fell by 8.4 percent from their peak in Q3 2013, while the number of transactions plummeted by around 50 percent from three years ago.
However, the overall drop in home prices following nine straight quarters of declines is still short of the over 60 percent surge seen in the aftermath of the 2008 Global Financial Crisis.
On Wednesday, National Development Minister Lawrence Wong also said it isn’t the time yet to relax the cooling measures.
Looking ahead, Kwek believes that prices of mid- and low-end homes could fall further this year, while weakness in the high-end segment will likely persist.