Proposed changes to Residential Property Act not expected to weigh down on prices

Proposed changes to foreign ownership of landed residential property in Singapore and a seven-day cooling period for HDB resale flats are not expected to weigh down on property prices, according to analysts.

Over 80% of Singapore’s population resides in flats. Hence, proposed amendments to the Residential Property Act will have little impact on the overall market, said experts.

The Act regulates foreign ownership of restricted properties, namely landed homes, strata-landed housing and vacant residential land.

The proposed changes to foreign ownership of landed homes were outlined in the Residential Property (Amendment) Bill, introduced in Parliament on Monday.

Commenting on the changes, Nicholas Mak, executive director of property consultancy firm SLP International, said: “This is not a cooling measure; this is to bring some of the rules in line with modern practices and keep them more current and effective…There are about 70,000 landed properties (in Singapore), only 3% or about 2,000 are owned by foreigners. Most of these have plans to stay and live in Singapore for a long period of time, so the rules that affect them are not really that great.”

Separately, HDB has announced a 7-day cooling period for flat buyers and sellers before completing transactions.

Mohamed Ismail, CEO of PropNex, said: “I don’t think this measure will in any way further bring down prices, simply because I see this as another step of prudence measures.

“On the other hand it could be open to abuse because the sellers have cooling off period. During the 7 days he may choose not to sell and during the 7 days there may be another buyer that comes along to up the price by $500 or $1,000, and the first buyer may lose out.”

However, analysts added that cooling measures implemented by the government at the end of August will still have a greater impact on the overall property market. And some experts said that as a result, prices in mass market properties could see a decline of 8% in the next six months.

The government introduced the recent set of property measures to pre-empt a speculative bubble from forming, to encourage greater financial prudence and to reinforce the objective of long-term owner occupation for public housing.

Speaking in Parliament on Monday, National Development Minister Mah Bow Tan said: “By taking these calibrated steps one at a time, we are able to let the air out of the bubble…. gradually, rather than to prick the bubble and then have it burst, because when the property bubble bursts, a lot of people will be hurt, not to mention the economy as a whole.”

Some experts note that the volume of property transactions in private and public sector has gone down by 30% since the measures were implemented.

Source : Channel NewsAsia – 18 Oct 2010

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