Singapore Eases Property Curbs After Housing Prices Decline

Singapore Eases Property Curbs After Housing Prices Decline

by Pooja Thakur Mahrotri
March 10, 2017, 12:06 PM GMT+8 Updated on March 10, 2017, 2:51 PM GMT+8

Singapore is rolling back some property-market curbs after a three-year decline in prices made homes more affordable in the city state.

Shares of property developers surged after the surprise announcement by the government Friday that stamp duty imposed on sellers will be reduced and some mortgage restrictions eased. City Developments Ltd. jumped as much as 10 percent and CapitaLand Ltd. climbed to the highest in almost two years.

“Singapore’s property market had been quite weak for a period, this is more reactionary for the Singaporean government to prop up the market,” said James Soutter, a portfolio manager at K2 Asset Management Ltd. in Melbourne.

Sellers’ stamp duty, currently payable on residential properties sold with four years of being purchased, will now only apply for three years, the government said. The rate of duty will also be lowered, to 4 percent for properties sold in the third year, to a maximum of 12 percent for dwellings sold within one year.

More details in https://www.bloomberg.com/news/articles/...oan-ratios

As an investor, I feel that our Govt and business leaders are "off" in terms of their messages pertaining to the property market. CapitaLand CEO Lim, City Dev billionaire Kwek, Minister Wong and Minister Heng mentioned about property industry is going to remain muted and it's "pre-mature" to cool the market. Look at what happened today?

If there is any time to announce easing and revised rules, it's the Budget Speech. But it did not happen.

Look below:

"We see volume picking up and the price declines have slowed," Lim Ming Yan, the president and CEO of CapitaLand, said in a Bloomberg Television interview on Wednesday (Feb 15).
"We see this trend continuing for 2017. There is no compelling reason for the government at this point to make major changes," to property curbs, he said.

- http://www.straitstimes.com/business/pro...d-ceo-says

Property curbs on homes are likely to stay for some time as demand in the market remains "very resilient", National Development Minister Lawrence Wong has said.
This has put paid to any hopes for the cooling measures to be rolled back any time soon, amid expectations that this year's Budget would have offered some reprieve to developers here.

- http://www.straitstimes.com/business/pro...-some-time

To me, this is Govt telling us

"Expect economy to be bad, we are not penalising you if you sell your investment property (2nd or more property onwards), or if you wana downgrade to grace yourself for possible recession. But if you wana re-enter the market after selling, think twice, think about the supply coming up in the next two years, think about the increasing interest rates."

Gd thing is they also plugged the loopholes for developers to sell off remaining units before deadline cheaply, so we should see property prices that are more reflective, rather than the current "fake" transaction prices fueled by discounts.

What I cannot understand is, with what I speculate above, how come their share prices still surges...

The easing seems to be like only for people who are richer. I dun see property speculators benefit from this.

Just like the finance company news few weeks back, market is irrationally reacting to this news

Let's see how rational it is next week if fed raises rates again.

Sent from my MotoG3 using Tapatalk

I read the article. The ABSD and LTV limits are the killing parts and will remain.

Extra stamp duty levied imposed. I reckon it is to patch the hole. Few transactions recently have escaped the stamp duty by acquiring PHEs, rather than properties itself.

Govt relaxes SSD, TDSR rules for residential properties; introduces new stamp duty for property-holding entities

SINGAPORE (March 10): Even as Singapore’s property cooling measures look set to remain, the government on Friday announced a reduction of Seller’s Stamp Duties (SSD) and changes to the Total Debt Servicing Ratio (TDSR).

In addition, Second Minister for Finance Lawrence Wong in parliament on Friday introduced a new stamp duty levied on the purchase and sale of residential property in property-holding entities (PHEs).

The changes will kick in from March 11.

Meanwhile, there will be no changes made to the current Additional Buyer’s Stamp Duties (ABSD) rates and Loan to Value (LTV) limits as “transaction volumes in the private residential property market remain healthy,” say the Ministry of National Development (MND), Ministry of Finance (MOF), and Monetary Authority of Singapore (MAS) in a joint release.
http://www.theedgemarkets.com.sg/article...y-property

More residential units will be heading into secondary market earlier than expected , so should see weakening home prices !

(10-03-2017, 07:57 PM)cfa Wrote: More residential units will be heading into secondary market earlier than expected , so should see weakening home prices !

When SSD was first introduced, the intention was to dampen short term speculation (those rushing in to buy and then flip) and hence stabilize a rising market. But such 1-sided cooling measures would in practice, withdraw supply from the secondary market, further distorting the supply-demand (demand could be created faster than actual supply could come online) and resulting in further price increases in the short term. Hence, as you mentioned, the inverse could be true with SSD taken away now.

Of course, the relaxation of cooling measures could also been seen as pre-cursor to "how bad things may be". There is always some sort of suspicion that Gov (Big Daddy) has all the leading indicators (no. of ships docking in SG ports? the operating numbers from many of its businesses that GIC/Temasek holds around the world?). In recent years since the loss of Aljunied GRC, it has also seem to act more pre-emptive than reactive in nature - further supporting this conclusion.

Aug2013 short commentary on SSD: http://www.todayonline.com/business/prop...dged-sword
Housing price index: http://www.singstat.gov.sg/statistics/vi...rice-index

Yah that was my first thought, gov may know how bad the economy is going, we were saved by higher oil prices and strong semicon and pharma manufacturing last q. but other sectors are not good at all. So with the pre Chinese new year and christmas manufacturing spike over, we could dip back even into recession.

May see further spike in unemployment too.

Gov does seem more proactive nowadays. Guess that have no choice, things are so volatile nowadays, need them to stabilise and help out sometimes..


Sent from my MotoG3 using Tapatalk

I concur on the unemployment view. The scale of unemployment is already pretty (or rather ugly) bad if we take away the "subsidy" measures (eg: 50-70% of salary for job conversion).
To me, it reminds me of restructuring of a company core businesses (from manufacturing to services to high tech). The transition is tough and messy. But imho it is inevitable for future survival. At least spore is moving ahead of all SEA countries in trying to catch the future. It may fail, but it is better to fail fast and while having a buffer (reserve) for such failure.

1. new SSD rules only applies to those property purchased on or after 11 Mar 2017.
    aka, those brought earlier does not benefits from the new rules.

2. refinancing thou intended for retirees will actually benefits a larger group of home owners.

3. loophole... yes, that's the reason why ACD bill was passed within a day (half a day technically).

With the official fine-tuning of property cooling measure, 
    (the final nail is on the coffin)
we can conclude that no chance for SG property to go up.
The only way is down.

How bad is it, will depends on how bad the global economy...

If I were you, I will watch PM Lee's every steps careful
.... from now on. 

Love Compassion