Tweaks to some property cooling measures will not have significant impact: Analysts

The Government’s tweaks to some residential property cooling measures on Friday (Mar 10) are a timely move, but observers said these adjustments are unlikely to have a significant impact on the local property market.

Even as the announcements marked the Singapore Government’s first relaxation of the property cooling measures rolled out since 2009, market participants should not expect further easing, analysts told Channel NewsAsia.

In a joint statement on Friday, the Ministry of Finance, Ministry of National Development and the Monetary Authority of Singapore (MAS) said “calibrated adjustments” will be made to the seller’s stamp duties (SSD) and total debt servicing ratio (TDSR) framework.

With effect from Saturday, home owners will only have to wait three years before selling their properties to avoid paying the SSD, down from four years currently. This applies to residential properties which are bought on and after Mar 11. The rate will also be cut by four percentage points for each tier.

The TDSR will also be eased, with the 60 per cent TDSR threshold no longer applicable to mortgage equity withdrawal loans with loan-to-value (LTV) ratios of 50 per cent and below. These refer to loans where borrowers borrow against the value of their properties.


Cushman & Wakefield’s research director, Christine Li, said the cut in the SSD is timely given that newer measures, including the Additional Buyer’s Stamp Duty (ABSD), have “overlapped” with the SSD’s aim to clamp down on speculative property investments. The SSD was first introduced in 2010.

“There’s no need to have different sets of measures that do the same thing … but the Government will want to introduce changes gradually. They don’t want the market to have a knee-jerk reaction.”

Meanwhile, the SSD has been “rather punitive” for home owners looking to sell their properties in circumstances such as death, divorce and job losses. Amid a slowing economy with rising redundancies, this adjustment will be welcome news for people looking to cash out of their properties to tide over a difficult period, Ms Li added.

“The previous four-year holding period is just too long and such home owners have been hit by a double whammy. They have had to sell their properties at a loss and the SSD made it worse,” she explained.

Similarly, ERA’s key executive officer, Eugene Lim, said the lowered stamp duty will “bring relief and a way out” for home owners who have to dispose their properties within three years. But given that the new rule is only applicable to all homes bought on and after March 11, the adjustment is a “forward-looking measure” and is unlikely to have the effect of pushing up property prices in both the primary and secondary market, Mr Lim said.

“This is because there is still abundant supply in the residential property market and the demand-cooling ABSD rates and loan-to-valuation limits remain unchanged. Developers and sellers are expected to remain realistic when pricing their units for sale,” he explained.

PropNex Realty’s CEO Ismail Gafoor agreed, noting that the change is also unlikely to have a significant impact on transaction volumes. He attributed that to the presence of “minimal speculative activities” in the market, with most buyers now taking a “mid- to long-term view” towards property investments.

Likewise for the TDSR, most observers said the latest adjustment emulates previous rounds of “targeted tweaks”, such as the fine-tuning of refinancing rules in 2016 to allow borrowers more flexibility in managing debt obligations.

The latest tweak is similarly a minor change and will only affect a small group of home owners, said Mr Ismail. “We feel that changes to the TDSR framework will help home owners to monetise their properties in their retirement years.”

Still, some observers like R’ST Research’s director, Ong Kah Seng, think the cut in the SSD could have a “positive knee-jerk effect” on new home sales for some property developers.

“We may see developers (being) able to clear stock rapidly at least in these two months. This includes projects that were launched a while ago and saddled with substantial unsold stock, as well as projects with strong selling points.”

Mr Ong Teck Hui, national director of research and consultancy at JLL, echoed that view, noting that the adjustments are sending out a positive signal.

“The policy relaxation is likely to be seen as the beginning of the unwinding of cooling measures and this is expected to lead more buyers back to the market. Buyers would perceive the market as bottoming and be hopeful of a price recovery,” he wrote in a note.


Even with Friday’s surprise announcement, most observers noted that a broad-based easing of property market curbs remains unlikely in the near term.

“The statement from the Government shows a holistic review, with the mention of other measures like the ABSD and how they remain relevant,” Ms Li told Channel NewsAsia. “With responses for recent property launches being quite positive, the Government will remain cautious and that’s why they’ve made the small moves today which will have minimal impact on the property market.”

For ERA’s Mr Lim, the odds of further easing remain a “wait-and-see game” after authorities maintained the current ABSD rates and LTV limits. “It’s a calibrated step-by-step approach that the Government is adopting so as not to unravel the stabilisation efforts that have (borne) fruit over the last three years. I do not think further easing will come so soon.”

UOB’s senior economist, Alvin Liew, expects the cooling measures to remain in place unless significant changes, such as a spike in Singapore’s interest rates and unemployment figures, occur.

For the former, Mr Liew expects the three-month Singapore Interbank Offered Rate (SIBOR) to follow US interest rates higher and reach 1.45 per cent by end-2017. But even so, it may not be “high enough for the Government to unwind some of the measures like ABSD or LTV”, he said.


Nonetheless, shares of property developers, which have already been on an upward trend, got a further boost following the announcement.

Among the biggest gainers in the sector, City Developments (CDL) jumped 5.62 per cent to close at S$10.15. UOL Group rose 4.53 per cent to finish at S$6.92, while CapitaLand gained 3.64 per cent to S$3.70.

An index of 44 Singapore real estate companies rallied to the highest since July 2015, according to Bloomberg.

CDL said in a statement that it welcomes the adjustments, which are “both measured and prudent”. The revised SSD, in particular, “will provide flexibility for property investment and is expected to inject increased activity into the residential property market”, the spokesperson added.

Source : Channel NewsAsia – 10 Mar 2017

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