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International Property

Singapore developers’ group attacks latest government measures to cool state’s property prices

DBS analysts warns the curbs could potentially see the buoyant ‘en-bloc’ market, where groups of owners band together to sell a collection of flats, ‘grinding to a halt’

PUBLISHED : Monday, 09 July, 2018, 7:01pm
UPDATED : Tuesday, 10 July, 2018, 6:09pm

A leading developers’ group in Singapore has challenged the government’s latest round of property-cooling measures, saying that there’s no rationale for the planned steps as the market is only in the early stages of a recovery, The Straits Times has reported.

Singapore’s renewed clampdown on speculative property demand sent real estate stocks reeling at the end of last week, as analysts predicted the end of a nascent home price rebound and the deflation of a buoyant market for collective sales.

Singapore’s market started to pick up only last year, and the volume of transactions is within expectations, the Real Estate Developers Association of Singapore said in the statement, according to the report.

But the group has described the measures as tough, and said the market should be allowed time to find its own course without official intervention.

Singapore home prices rise fastest in almost eight years in the first quarter

The Singapore government has a history of stepping into the property market to restrain demand and prices, and announced its latest measures late on Thursday before they came into effect hours later.

The tightened rules, which were rolled out after the central bank noted “euphoria” in the market, raised buyers’ stamp duties for entities such as developers and tightened borrowing limits for individuals taking their first housing loan.

Singapore’s benchmark Straits Times Index dropped 2 per cent on Friday as property developers and banks led declines, with City Developments and UOL Group sliding more than 13 per cent each.

As major property markets from New York to Sydney show signs of cooling, Singapore and Hong Kong prices continue on a tear, causing unease among local policymakers.

In the Southeast Asian island state, a sudden rebound in speculative demand, however, stoked by record land bids and redevelopment deals now threatens to undo years of carefully implemented curbs that had given the city state an edge over Hong Kong in quality of living.

Irvin Seah, an economist at DBS Group Holdings, called the government’s actions “a pre-emptive move to cool down the market before it gets too hot”.

The city’s buoyant “en-bloc” market, especially, where groups of owners band together to sell a collection of flats, has surged especially in recent months.

Given the extent of the new cooling measures, we expect the home loans demand to be subdued
Koh Ching Ching, head of group corporate communications for Oversea-Chinese Banking Corp

Officials have repeatedly warned that such exuberance was unsustainable and Ravi Menon, managing director of the Monetary Authority of Singapore, sounded a cautious note on en-bloc developments as late as last Wednesday.

DBS analysts led by Derek Tan wrote in a report the latest curbs could potentially see the en-bloc market “grinding to a halt”.

Individuals taking up their first housing also now loan will face tighter borrowing limits under the new rules, meaning they have to put up more cash to buy property.

Singapore property could see double-digit rise in 2018, analysts say

For foreign purchases of residential property, the additional buyer’s stamp duty increases to 20 from 15 per cent, while for Singapore citizens the extra charges apply only from their second home purchase, the MAS, Ministry of National Development, and Ministry of Finance said in a joint statement Thursday.

For entities buying any residential properties for development, the additional buyer’s stamp duty rises by 10 percentage points to 25 per cent, with a further five percentage points imposed for developers.

“Given the extent of the new cooling measures, we expect the home loans demand to be subdued,” said Koh Ching Ching, head of group corporate communications for Oversea-Chinese Banking Corp.

The rebound in home prices has prompted some aggressive recent land bids from developers. The government in February raised taxes on home purchases exceeding S$1 million ($730,000) as collective flat sales rose.

Singapore home sales jumped to the highest in nine months in May as developers sold 1,121 units.

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