Pre-emptive measures a tad later than expected: JLL

The latest set of anti-speculative measures released by the Ministry of National Development through the URA and HDB are aimed at eliminating potential speculation instead of affecting first time homebuyers and genuine home occupiers, said Jones Lang LaSalle (JLL).

For instance, the increased holding period for the imposition of the Seller’s Stamp Duty (SSD) from one to three years will increase costs for short term speculators, but will have limited impact on genuine long term investors.

Some of these pre-emptive measures are not unfamiliar, said JLL, citing that the increase in the holding period from one to three years was first introduced in May 1996.

However, the current measures have been introduced a tad later than expected, said JLL. While market sentiments have been soft due to the Hungry Ghost Festival along with the eurozone and double-dip fears, the level of short term speculation is also relatively low. Subsales transactions have lost 600 basis points from 16 percent in Q2 2009 to 10 percent of total transactions in Q2 2010.

While the level of transactions in absolute terms has increased 3.5 percent, the subsales volume has declined from 1,303 in Q2 last year to 825 in Q2 this year. And while the private property market has seen a 38.2 percent increase in prices since Q2 last year, the rate of growth has been moderating gradually to 5.3 percent in Q2 this year.

“We believe the latest introduction of measures are motivated largely by the unabated rise in public housing prices where HDB Resale Price Index recorded a stunning high of 4.1 percent in 2Q10, after a continual rise averaging some 3.0 percent per quarter since 2Q09, stripping the affordability of public housing,” commented Dr. Chua Yang Liang, JLL's research head for Singapore and South East Asia.

“Overall we welcome this policy adjustment, as the impact is more targeted at reducing speculative buying and not affecting occupier demand. This would promote a healthier investment climate for the Singapore residential market in the longer term.”