S’pore may ease cooling measures in second half of 2016

Posted on 17 Dec 2015 | Comments Off on S’pore may ease cooling measures in second half of 2016

Property cooling measures in Singapore could be eased as early as the second half of 2016 if private home prices continue falling, revealed Donald Han, Managing Director of Chesterton Singapore, at a luncheon hosted by Credit Suisse for its Singapore investors.

He believes a price drop of around 15 percent is likely to prompt an adjustment of current housing policies, given the small buffer before property owners slip into negative equity.

The Urban Redevelopment Authority’s (URA) residential price index has recorded an eight percent slide from the peak in Q3 2013.

As a result, property measures could be relaxed in 2H 2016, with rising interest rates acting as the “9th cooling measure”, shared Han.

“A reduction in the ABSD (Additional Buyer’s Stamp Duty) is most likely, but a reduction in the SSD (Seller’s Stamp Duty) could also materialise, should there be higher instances of mortgagee sales. The TDSR (Total Debt Servicing Ratio) is unlikely to be removed, however.

“Despite the easing of cooling measures and demand from PRs waiting to purchase, prices are only expected to bottom in 2018. New sales of 7,000 to 8,000 units are likely to be the new norm, with current unsold stock of around 24,000 units requiring three years to clear.”

Easing of cooling measures

Meanwhile, mass market homes are expected to see the fastest erosion in prices as the bulk of private supply is within the Outside Central Region (OCR), said Han. In addition, he predicts the large supply of up to 20,000 HDB flats in 2016 will put further pressure on suburban home prices.

This comes on the back of the “Bidadari” effect, where strong demand was seen in the November Build-To-Order (BTO) launch, which saw 5-room flats oversubscribed by 23 times.

In a report, Credit Suisse added: “We believe the stage is set for a pre-emptive re-calibration of cooling measures in 2H 2016, given persistent oversupply, speculative activity and foreign demand that have been curbed, while income growth has outpaced home prices. This would be a key re-rating catalyst for the sector.”

The Zurich-based firm has rated City Developments Limited (CDL) as its top pick among property developers, as “CDL is also best positioned for a turnaround in the Singapore residential market sentiment in 2016″.

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S’pore among 10 most expensive cities for construction

Posted on 17 Dec 2015 | Comments Off on S’pore among 10 most expensive cities for construction

Singapore is the third most expensive Asian city to build in after Hong Kong and Macau, according to the latest International Construction Costs Index published by Arcadis, a global design and consultancy firm for natural and built assets.

Globally, Singapore is ranked 10th. New York is the world’s most expensive city for construction, followed by London and Hong Kong.

The annual Arcadis index analyzes the relative cost of construction across 44 major cities, and found that strong currency performance and significant resource constraints have seen these places command premiums of up to 60 percent compared with many European locations.

However, this price inflation comes at a cost, with the viability of major commercial and public sector schemes put at risk in these cities as prices continue to soar. Furthermore, rising costs and the falling value of currencies could restrict demand from emerging market investors in these areas, potentially triggering a shift in interest to lower-cost cities in the long term, noted Arcadis.

The consultancy stated that every construction market this year saw overall cost inflation restricted due to the drop in commodity prices. Particularly with oil, growing uncertainty over prices will have a long-term impact on the global construction industry.

Alan Hearn, Head of Buildings Solutions, Asia, said: “Singapore’s construction market has enjoyed a strong recovery since 2010. It is for this reason that the recent slowdown in residential and commercial markets represents something of a correction. In the private sector, both the residential and industrial sectors were relatively weak in 2015 and the office market also suffered due to oversupply.

“Looking ahead, continued investment in road and rail can be anticipated as these aspects of infrastructure have not received as much investment in recent years in Singapore.

“For Asia, China’s economic slowdown and weakening demand in many cities, including Singapore and Jakarta, mean that growth in the region is expected to ease as we enter 2016.”

Ho Chi Minh City, Kuala Lumpur, Bangkok, Bangalore and Taipei are among the world’s cheapest cities for construction, added the report.

The full report can be downloaded here.

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