S’pore govt to cool property prices by boosting supply: analysts

Enough land to generate 14,300 private residential units has been released in Singapore under the government land sales programme for the first half of 2011.

This came as the Monetary Authority of Singapore (MAS) said that more measures may be taken, if necessary, to cool real-estate prices.

Analysts said the Singapore government’s move is aimed at preserving sanity in the property market by boosting supply.

Policy makers across the region are taking action to either meet or curb heavy demand.

The Hong Kong government clamped down on speculation in the property market recently by introducing a special stamp duty levied on all properties sold within two years of purchase.

And with unrelenting demand continuing in Singapore, more cooling measures to calm the market could be on the cards. This, according to Chua Yang Liang, Head of Research South East Asia for Jones Lang Lasalle.

“Every city has their own policies, for Singapore we are not ruling out other measures that they could put in, but for now they continue to pump in the supply to keep sufficient supply to ensure prices are in check. Should prices continue to rise unabated, then of course they may continue to adopt further tightening measures on the demand side – loan to value ratio,” he said.

In August, Singapore asked banks to demand more upfront cash from home buyers with existing home loans. While the government’s measures has had an impact, MAS said that there is a possibility that transaction activity and prices could pick up again given strong global liquidity and low interest rates.

Alvin Liew, Economist (Global Research) with Standard Chartered Bank said: “What we could envisage is, they could possibly limit the foreigners out from the domestic mortgage market. You can see the reason. First, if the person can afford to pay for the house in full, it doesn’t matter how prices crash or not. And another reason is, if its not on the banking sector’s balance sheets, it will not matter to the domestic banks.

“You could also limit PRs in Singapore who’d probably be high net worth, to just one housing loan. And the third measure, which we think may be the least likely, is the capital gains tax on property, which was removed a few years ago.”

Going forward, analysts said that with major economies reluctant to roll back stimulus measures, excessive liquidity in the market will continue to slosh into property markets in the region, prompting governments to take further action.

Source : Channel NewsAsia – 25 Nov 2010

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