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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

Call for review of property curbs increasingly insistent

Posted on 18 Nov 2015 | Comments Off

Singapore’s second-biggest property developer, City Developments, has been calling on the government to ease the property cooling measures “as soon as possible”, reported the Singapore Business Review.

The company saw its profit fall 16 percent in Q3, on the back of lower contributions from its property development unit. “The Group continues to hold the view that the property cooling measures need to be reviewed as soon as possible, given that the home ownership rate in Singapore is over 90 percent. Timing is the most important factor to achieve a healthy and sustainable property market,” it said in a statement.

Notably, the quarterly Real Estate Sentiment Index released by the Real Estate Developers’ Association of Singapore (REDAS) and the National University of Singapore (NUS) earlier this month showed that market sentiment among property developers had fallen further in Q3 2015. “The sentiment in the market continued to weaken in Q3 2015,” said NUS associate professor Sing Tien Foo.

As such, more respondents called for the removal of “some of the cooling measures, such as ABSD and SSD to arrest the worsening market condition”.

In fact, 83.1 percent of the respondents believed the government should tweak or lift the cooling measures in the next six months. 56.7 percent of them felt the sellers’ stamp duty (SSD) should be lifted, while 60.8 percent said the additional buyers’ stamp duty (ABSD) should be removed.

“ABSD should be removed due to the tight supply of housing in the market. It should not be a permanent policy, as it creates inefficient market equilibrium. Furthermore, it does not encourage financial prudence. MSR and TDSR are based on ratios and percentages; percentages only address the issues of the average category, and could be too harsh or too lenient,” noted one survey respondent.

“The ABSD should be lifted as private residential property prices dropped by about eight percent in Q2 2015, compared to the third quarter of 2013. However, the TDSR Ratio should be retained,” said another respondent.