The new property curbs are a “big setback” for Singapore’s property sector, according to the Real Estate Developers’ Association of Singapore (REDAS) in a report by the Business Times.
These new cooling measures will impact the confidence of property developers, investors and home buyers, said REDAS President Augustine Tan.
“Property markets are driven by both economic fundamentals and market sentiment. It is thus imperative to monitor the impact of the new measures as the unintended consequences could have broader ramifications.”
He aired this sentiment during the property market update seminar organised by the REDAS on Tuesday (17 July), following the implementation of the new curbs earlier this month.
The new property cooling measures include higher remissible additional buyer’s stamp duty (ABSD) for entities purchasing residential property, a non-remissible five percent charge for developers when they acquire residential sites, as well as higher ABSD for Singaporeans and permanent residents (PRs) buying their second home.
Even first-time homebuyers are negatively affected as they need to fork out more cash or money from their Central Provident Fund (CPF) account when paying their downpayment due to the tighter loan-to-value (LTV) ratio.
As such, Tan warned that the projected softer demand from those buying two or more properties could worsen the high supply situation in city-state.
However, JLL Singapore’s research head Tay Huey Ying believes that a glut can be avoid as long as developers pace their launches to meet market demand during the five-year period before the ABSD penalties kick in.
She forecasted that unsold units across Singapore could reach 50,526 units over the next four years, or 12,632 units per annum.
But this amount can be absorbed by the market as demand is approximately 10,566 to 12,159 units per year, based on the sale volume in 2017 and the average annual demand for new houses over the last decade.
Furthermore, Tay thinks that the private housing market can still see moderate price growth as Singapore’s stable economic growth continues and there’s no external shocks such as full-blown trade war.
Senior Content Producer, Christopher Chitty, edited this story