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Sliding prices may force govt to adjust property curbs

Posted on 27 Jan 2016 | Comments Off

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.

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Posted in Property Market / Real Estate

Tagged Cooling measures, Property curbs

An opportune time to ease cooling measures

Posted on 24 Dec 2015 | Comments Off

With the residential market stabilising, analysts believe that this could be an opportune time to tweak the property cooling measures.

Private resale home prices have fallen by around eight percent, while HDB resale prices have dropped by about 10 percent from their 2013 highs, reported Channel NewsAsia.

In fact, one analyst feels that a slowing economy could offer the best environment to ease some of the curbs without fear of market spikes.

“If the Government’s main concern or restrictions against removing or lessening some of the cooling measures are fears that once the measures are reduced, prices will again rebound and grow quite rapidly, then perhaps the best environment for the Government to ease off on some of the cooling measures is when the economy is in the slow state of growth or even maybe in a recession,” noted Nicholas Mak, Executive Director of Research and Consultancy at SLP International.

“In such a situation, housing demand will naturally be weaker if the Government were to remove any of the cooling measures in such an environment, then the chances of prices growing strongly are minimised,” he added.

Although potential home buyers are concerned about the normalisation of interest rates, one observer believes that the market has already factored this in.

“The only kind of risk is maybe interest rates increasing in the coming year. However the market would have already factored that in, because loan approvals are based on a 3.5 percent interest rate calculation, whereas current housing rates are at two percent, or if even there was any increase, it would possibly be quite less than 2.5 percent in total,” said ERA Realty Key Executive Officer Eugene Lim.

“So you’d still be paying less than what your approval was based on. There’s still quite some buffer. There is no danger of people being priced out of the market because of interest rate increase.”

Looking ahead, another consultant expects 2016 to pick up where the market has left off this year, with transaction volumes continuing to improve as “50-50” buyers could come back into the market.

“In 2016, we’ll see buyers starting to come back into the market because in the new sale market, prices will remain pretty firm. And it has been remaining pretty firm for areas like the RCR (Rest of Central Region) and OCR (Outside Central Region), the mid-tier and mass market for new sales, because land costs have not really fallen that much. In fact it’s gone up for some recent tenders,” said Alan Cheong, Research Head at Savills.

“It’s only in the resale market that transaction volumes may start to pick up (as) the number of buyers who’ve been sitting on the sidelines start to see value emerge in the resale market.”