The Total Debt Servicing Ratio (TDSR) framework will not be removed any time soon, according to the latest Singapore residential property report by OCBC Investment Research.
“We believe that the TDSR framework is here to stay, while other measures, such as the Additional Buyer’s Stamp Duty (ABSD) and the Seller’s Stamp Duty (SS), appear to be more probable candidates for easing if the authorities potentially look to reverse property curbs ahead,” said the bank.
“In our view, however, this scenario of policy reversal is only likely to occur when residential price declines in the market have exceeded a meaningful threshold of about 10 percent,” it added.
The report also foresees an oversupply of units in the years to come. Including HDB, DBSS and EC completions, 50,000, 49,700 and 73,600 homes are expected to come into the physical supply in 2014, 2015 and 2016, respectively.
Based on the Population White Paper’s target of 6 million people by 2020, OCBC forecasts an average population growth of 86,000 individuals per annum from 2014 to 2020. “Assuming a conservative three persons per household, this translates to an incremental demand of ~29,000 physical homes per year, which points to a fairly clear physical oversupply situation ahead,” said the report.
However, the unsold pipeline held by developers is not onerous as the level of unsold pipeline held by developers, which forms the primary supply, is currently at 36,000 units. This is lower than the historical 10-year average of 41,000 units. OCBC said, “While developers are likely to ease prices ahead to move inventory, we do not foresee a fire-sale situation, similarly because of the strong balance sheets for large developers.”
Muneerah Bee, Senior Journalist at PropertyGuru, edited and wrote this story. To contact her about this or other stories email muneerah@propertyguru.com.sg
Related Stories:
Three residential sites released
Developer selling off remaining condos at Vermont on Cairnhill
Home prices to dip 10 to 20%: OCBC
