Two in three Singaporeans want the government to maintain the property cooling measures, but many home buyers hope some curbs will be relaxed, according to a recent consumer sentiment survey by PropertyGuru.
Conducted in Q4 2014, the survey polled 940 people.
The top three measures they’d like to see loosened are:
– Additional Buyer’s Stamp Duty (ABSD) on a second or subsequent property;
– Total Debt Servicing Ratio (TDSR) framework;
– Mortgage Servicing Ratio (MSR) on HDB loans.
Currently, Singapore citizens pay an ABSD rate of 7.0 percent for a second residential unit and 10 percent for a third or more property. Foreigners buying private homes in the city-state have to pay a higher ABSD of 15 percent.
In June 2013, the Monetary Authority of Singapore (MAS) implemented TDSR to ensure financial prudence among borrowers. The policy specifies that total monthly payments of a borrower, including car and home loans and even credit card debts, should not exceed 60 percent of the borrower’s income.
Two months later, HDB cut the MSR limit to 30 percent of the borrower’s gross monthly salary from the previous limit of 35 percent.
As such, buyers are more restrained if their MSR is over 30 percent or TDSR is near 60 percent.
However, some analysts feel chances of the government relaxing these regulations in 2015 are slim as it wants further stabilisation in the market.
In his Budget 2014 statement last February, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said it is still too early to start relaxing the property cooling measures given the run-up in prices in the last few years.
Agreeing with this decision, Getty Goh, Chief Executive Officer, Co Assets & Director, Ascendant Assets, told PropertyGuru that the Minister is looking at the overall stability of the market and prices have not significantly corrected yet.
“Up to this point, prices are down by about 4.0 to 5.0 percent which is not that big a drop. Median prices of private homes in the CCR (Core Central Region) and RCR (Rest of Central Region) are going for more than $900 psf and that is something the majority of upgraders are finding a bit of a stretch,” Goh shared.
He believes the government would want prices to decline further so that the aspirations of Singaporeans can be met.
Commenting on what could cause the measures to be removed, Goh noted that a significant price drop similar to levels seen during the 2008 financial crisis would play a part.
“During the Global Financial Crisis, property prices came down by as much as 20 percent within a year, but right now we are seeing more of a gradual decline. So unless there is a sudden drop of more than 20 to 30 percent within a short period of time, then we believe it will warrant the government coming in to repeal some of these measures.”
Goh also thinks the timing is too soon to reduce some policies given that it has only been a down market for four quarters.
Comparatively, other down markets have lasted between three to five years which means it has not reached a point where the government feels it needs to take action, he said.