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Actually the killer is TDR, not ABSD for local. With TDR, a lot of property investor has no firepower.
ABSD is mainly for the high end. With ABSD, developers are paying the Govt for it via the discount. Without it, Govt gets cut out of the picture, developers get to keep it.
So what benefit does Govt gain in the ABSD removal scenario?
"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster
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I understand from those with outstanding property loans with banks that it is much more difficult to refinance now.
So the TDR is not only affecting the new 1st/2nd property buyers but are affecting existing owners as well, even for those with good credit history but near the limits of TDR. Rates can jump from 2.X% to near 6%(board rate) if borrower is unable to refinance or negotiate for fairer terms.
Unless for own occupation, generally it is a very bad time to look for residential property now. There is nothing going for it in the near to mid term.
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I'm not sure if ABSD is removed, developer will increase their price and get to keep what would have gone to Govt as ABSD.
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I think demand is a factor and they wouldn't want to price them too high amid competition among other developers too.
From an economist point of view, controlling house prices and not leaving them to the forces of free market is not beneficial to economic development. However from social point of view, who doesn't want affordable housing? The key is finding a balance between them.
Nonetheless, I believe Singapore's housing market has past the worst of policy intervention, and could see rolling back of measures soon
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The removal of curbs such as Additional Buyer's Stamp Duty ( ABSD)
seems to be the 1st line that could be removed.
Developers could lower prices as well, though that would reduce margins.
And developers bought land at higher costs than in previous times.
The assumption is that there is a lot of demand waiting on the sidelines.
Or is it just an "interest", since property ownership is one
of the BIG 3 in Singapore? ( BIGS 3 = Car/Condo/Club )
Is demand greater than supply here, or is it just
plain old acquiring an assest class besides dividend, growth shares?
I had the impression from recent media reports that office space was
oversupplied and consquently rental rates have been pushed down...
same too with residential space.
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Government intervention is necessary to control the price volatility, I don't think it will be a total removal of ABSD, but perhaps to loosen a little, I guess the move is not to encourage rebounce in prices, but rather to align prices into soft landing zone. TDSR is something won't be removed forever, imo.
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Agree with valuebuddies. It's improbable that TDSR be removed in the next ten years. Our govt encourages financial prudency.
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Due to our own irrational behaviour, some of us have nearly put ourselves into a financial spiral by overleveraging to earn property gains. There have been instances where a single household owns 3-4 ppty, employing the trick of leverage.
The TDSR was in place to protect us. Developers rampantly supplied and tried to match the demand in the run up from 2009 to 2011, only to be "frame" by the TDSR in 2012, resulting in an overhang of condo units. Some even continued from 2012, to bid crazily in land bids doing enbloc, thinking the boom period is still in song. The area in Tanjong Rhu sees many new developments with more than 50% unsold. To save themselves and to continue ensuring such sky high profits are kept at stained level, lobbying for TDSR removal is now in vogue.
From my own lens of this side of the story, removing such thing will result in Singaporeans piling in again and killing ourselves. This is because as Asians, property is seen as one of the best wealth accumulator and removal of TDSR/ABSD is a very bad hint that the govt is allowing prices to appreciate. We are humans and most humans make mistakes
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