More calls to tweak the property cooling measures.
With house prices under considerable pressure, given the subdued economic outlook both locally and globally as well as the expectations of rising interest rates, now could be the right time to consider property cooling measures, said JLL in a report.
This is to enable the residential market to resume a course for moderate growth, and eventually “avoid a sharper correction down the line”, it said.
Singapore saw private home prices ease further in Q4 2016, its 13th consecutive quarter of decline, and its lowest level in six years, revealed flash estimates from the Urban Redevelopment Authority (URA).
JLL estimates that prices for luxury prime properties corrected by 18 percent on average, while those in the mass market moderated by around 10 percent. Some residential projects, particularly those in the prime districts, witnessed a price correction of between 25 and 30 percent since the market’s peak in 2011.
With this, JLL’s Head of Southeast Asia Research, Chua Yang Liang, called for a reduction or removal of the Additional Buyer’s Stamp Duty (ABSD) for Singaporeans, replacing it with a tax based on the investment period.
He believes that this would be a “sustainable way to revive demand, bring some activity back into the market and prevent prices falling further”.
“With (the) TDSR in place, it is unlikely that removing (the) ABSD will cause prices to run away,” he said.
“Taking a long-term view, this approach will align property prices with real income growth instead of keeping prices artificially low. If prices become too low relative to affordability, it becomes increasingly difficult to remove cooling measures as prices will rapidly rebound to open market levels,” he added.
Continuing with the measures will force Singaporeans to turn overseas for property investments. In fact, data from the Monetary Authority of Singapore (MAS) showed that the value of overseas property acquisitions by Singaporeans hit over $2 billion in 2013, albeit the value eased to $0.4 billion in H1 2015.
“Maintaining Singapore’s status as a global city through an open and investment-friendly environment, which includes encouraging investment in residential real estate while at the same time preventing foreign capital from pushing up prices to unaffordable levels, is a delicate balance,” noted Chua.
“But a thaw to certain elements of the cooling measures could be particularly beneficial for the property market.”
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
