Several property developers in Singapore, including Southeast Asia’s largest developer, CapitaLand Ltd. and the country’s second-largest homebuilder, City Developments Ltd., recorded declines yesterday amidst concerns that the government’s latest move to curb speculation in the residential market will affect demand.
“The mass-housing segment will be the hardest hit,” said Wilson Liew, an analyst from Kim Eng Holdings Ltd. “We’re expecting mass market prices to drop as much as 5 percent in the next 12 months.”
The Singapore government has increased the minimum down payment for second home purchases and the stamp duty on properties has been raised to three years from the previous one year. The new set of property measures comes after housing prices in the country increased by 38 percent in Q2, and after China and Hong Kong also imposed property measures to avert asset bubbles in the property market.
Shares of CapitaLand fell 1.8 percent to S$3.91 at noon yesterday, while the market value of City Developments dropped 3.3 percent to S$11.08, making them the biggest decliners on the Straits Times Index, which also fell 0.7 percent.
Prices of Singapore properties have surged, as the country’s $182 billion economy rebounded from the global slump last year, and expand 17.9 percent in the first half of this year.
The government has been trying to rein in prices in the housing market since 2009 when it halted interest-only loans for some projects and stopped allowing property developers from absorbing interest payments for homes still being built.
In February, the government said it will levy a seller’s stamp duty on residential properties that are being sold within one year from the date of being acquired, followed by lowering the loan-to-value limit from 90 percent to 80 percent for mortgages provided by financial institutions.
“We twice attempted to cool the property market, once last year and once in February this year, but the prices are still rising,” said Prime Minister Lee Hsien Loong, in an interview.
“Our purpose is to make sure in the long term, Singaporeans can own their homes and afford it and it will be a gradually appreciating asset which will grow as Singapore grows.”