Government withdraws Deferred Payment Scheme for property purchases

The government has withdrawn the deferred payment scheme for property purchases.This applies to all residential, commercial and industrial properties.This is seen as the clearest move yet to cool the property market.

Amid the strong growth in the property sector, there have been calls on the government to step in.

Analysts say the latest move did not come as a total surprise.

Tay Huey Ying, Research and Consultancy Director, Colliers International, says: “Just as the government has been watching the market, the market has also been watching the government very closely to see when they will be implementing measures to cool down the market. So I would say that this is something that the market is expecting. It’s just a matter of time.”

Under the Deferred Payment Scheme, developers could offer buyers of uncompleted private properties the option to defer part of their payment for the units they buy.

When the scheme first started, buyers had to pay an initial 20 percent downpayment in full.

They were allowed to defer payment on the remaining 80 percent of the purchase price.

But subsequently, they were allowed up to half of the downpayment.

These deferred payment plans have been seen as key to driving growth in the property market.

Property watchers say withdrawing the scheme will keep speculation in check but they expect the market to remain buoyant.

Mr Tay says: “Genuine purchasers are likely to continue to carry on with their purchases. And since demand fundamentals remain healthy, I think the level of activity will remain active especially since sub-sale currently accounts for only 12 per cent of total transactions. And in the mass market, sub-sales currently only account for only 5 per cent of total transactions.”

Private home prices have risen almost 23 percent so far this year. – CNA/ch

Source : Channel NewsAsia – 26 Oct 2007

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