Tag Archives: cooling measure

Property watchers unhappy about lack of goodies in budget

The government has repeatedly emphasized that it’s too early to review the property curbs. 

Some prospective property buyers are unhappy over the lack of any measures in the recently announced budget to help Singapore’s sluggish housing market, reported The Straits Times.

Singaporean businesswoman Leena Ganesan, 41, and her husband who is a permanent resident, were upset that the authorities did not repeal or ease the Additional Buyer’s Stamp Duty (ABSD), as they were considering the purchase of a two-bedroom condo.

“We have put our investment plan on hold now for two years. If we don’t see anything moving in the next one year, we may invest in India instead,” said Ms Ganesan, who lives in a landed cluster home in Bukit Timah, which she purchased for $3.05 million four years ago.

According to experts, if the government had relaxed some of the curbs, people like Ms Ganesan would have been encouraged to invest. This could have boosted transaction levels slightly, which would have some positive spillover effect on other sectors.

“It will have some spin-offs in other areas: contractors, banks, property agents, furniture retailers. If foreigners come to view properties here, then the tourism sector may also benefit,” said Mohamed Ismail, CEO of PropNex.

In addition, a rise in transaction levels would spur developers to divert capital back to Singapore, shared EL Development’s Managing Director Lim Yew Soon.

“The market is slow, so you see investors and developers investing overseas. There is an outflow of funds from Singapore.”

Developers have repeatedly urged the government to ease its property cooling measures, as these have led to a sharp decline in home sales. Annual transaction levels have plunged to about 7,000 units in the past two years compared to 14,948 units in 2013.

Home builders are also struggling to find buyers for many units, which puts pressure on rental prices and negatively affects the earnings of these companies, noted Tan Zhiyong, Managing Director of MCC Land.

In Q4 2015, there were 5,736 private housing units launched but not sold, according to data from the Urban Redevelopment Authority (URA). Overall, there were 23,271 uncompleted units still unsold last year.

During the same quarter, the vacancy rate for such homes also reached 8.1 percent, the highest in 10 years. Furthermore, prices dropped by 3.7 percent in 2015, following a fall of four percent in 2014.

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Why encourage rent-seeking?

Mr Conrad Raj suggests, in his commentary “One size does not fit all” (June 18), that “(property cooling) measures should be targeted to impact those (foreigners) we desire less, not all and sundry”.

Who are the undesirable foreigners he thinks should be the target of exorbitant stamp duty?

Mr Raj believes that we should welcome “ultra-rich” foreigners who invest in extremely expensive property. He suggests that modestly priced private property should be the subject of additional stamp duty on foreigners.

This targets middle-class, professional foreigners and their families; foreigners who contribute productively to the economy, foreigners who buy property here because they need a place to live here, not because they need a place to park their money.

It targets foreigners who pay income tax, Goods and Services Tax, Certificates of Entitlement, maid levies and other fees and taxes, which subsidise the “goodies” doled out to citizens in the Budget each year.

If differentiation is to be made in the private property market and among different sorts of foreigners, then Mr Raj’s suggestion is exactly the opposite of what the Government should consider doing.

Money streaming here from the world’s ultra-rich skews the property market, driving up prices across the board. In a market with limited supply, it signals to developers to build housing geared towards investment, such as shoebox units, rather than family home ownership. It also encourages rent-seeking rather than productive investment capitalism.

We should encourage the ultra-rich to invest productively in Singapore, such as in start-up companies, not encourage unproductive rent-seeking.

Recently, I lunched with an intelligent woman in her 20s from China who received a master’s degree from the National University of Singapore. She is keen on pursuing a career in journalism.

She sought a job here over the past year but was consistently turned away because she is neither a citizen nor permanent resident, a status she has little chance of achieving nowadays. After four years here, she left for Guangzhou to build her career there.

Singapore’s housing, transportation, education and other infrastructure have been put under strain by the rapid population expansion through immigration. This is something the Government is properly addressing.

But targeting middle-class professional foreigners as undesirable and driving away talent while encouraging rent-seeking, rather than productive investment capitalism, is not the way to do it.

From Eric Thompson

Source : Today – 2012 Jun 25