So far the market seems to have taken in its stride the removal of the interest absorption scheme (IAS) for properties. The knee-jerk decline of 43 points by the STI on Monday was followed by a sharp rebound on Wednesday as broader economic recovery factors continue to dominate. But there is an impending overbuilding of residential property in Singapore. According to Leong Wai Ho,director and senior regional economist at Barclays Capital, some 62,000 units are in the pipeline between now and 2013. In the first eight months of this year, almost 12,000 units were taken up compared to just over 4,000 units for the whole of last year.
However sales were already slowing month on month even before the government’s latest measures. What is the impact of this inventory on corporate Singapore?
The initial impact could well be felt by the banks. Mortgages represented the only area of loan growth for the banks this year, up 6% year to date, versus a contraction of 0.1% for total loans. According to Trevor Kalcic, regional banking analyst at RBS Securities, it will reduce the sector’s future growth by around 0.5%, through a negative impact on both volumes and margins. Continue reading
Lush Dream Home 