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Govt may review cooling measures by year-end

Posted on 3 Jul 2015 | Comments Off

The authorities are likely to review the existing property curbs later this year to ensure a soft landing in Singapore’s residential market, according to a recent Business Times report citing UOB Research.

In light of the bank’s forecast that home prices could suffer a drop of 5.0 to 10 percent in 2015, the government may reduce the seller’s stamp duty (SSD) and lower some selected tax rates under the additional buyer’s stamp duty (ABSD).

“In our view, it may make sense to tweak some of the stamp duty measures such as the ABSD and SSD as market speculation has fallen significantly,” it said.

Aside from that, home buyers are already barred from borrowing beyond their means due to the Total Debt Servicing Ratio (TDSR) framework and the caps on loan quantum.

However, UOB feels the government will only ease the existing cooling measures once prices have fallen by at least 10 percent.

“The government is unlikely to act in the absence of a larger price decline as the sharp rise in property prices was a key flash point during the last ‘watershed’ general elections,” explained the report.

Looking back, the authorities only responded when Singapore’s residential market was impacted by major external shocks like the Asian Financial Crisis in 1998 and the dotcom bubble that happened thereafter. Home prices here dived by 45 percent and 20 percent respectively during those periods.

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Posted in Cooling Measures

Tagged ABSD, additional buyer’s stamp duty, Cooling measures, Property curbs, seller's stamp duty, Singapore residential market, Singapore Residential Property, SSD, TDSR, Total Debt Servicing Ratio

Cooling measures to stay until prices fall to 2008 level

Posted on 5 Dec 2014 | Comments Off

Property prices will have to be affordable and match prices in 2008 before it would be reasonable to relax some of the current cooling measures, said a recent report by HSR Research.

“We believe that the government will continue to utilise the cooling measures as a means to influence the market in future, by relaxing or tightening the cooling measures to ensure the income to price ratio stays within an acceptable range. The range will likely be determined by referencing data from recent years. We postulate that the reference year could be within recent history, such as 2008.”

To match 2008’s level of affordability, prices need to fall by six percent for resale HDB flats and nine percent for resale condominiums.

“Our analysis indicates that the appropriate levels will be reached in Q3 2015 for resale HDB and in Q3 2016 for resale condo, based on current price and income trends. The affordability ratios might match their 2008 level earlier if prices decline at a faster rate and/or income rise at a higher rate.”

The report added demand is expected to rise due to greater affordability if price and income continue on increase: “Higher income coupled with lower prices will mean that a lower proportion of income is needed to service mortgages. This means that residential property will become more affordable to more people, leading to increased demand. This could potentially lead to higher transaction volume and prices.”

The report defines “affordability” as the ratio of average annual household income to the prices of HDB or private non-landed residential, from the perspective of first time Singapore buyers.