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Not the right time to withdraw property cooling measures, say analysts

Sales of new private homes in 2013 fell to levels last seen during the global financial crisis, while prices in the private and HDB resale market also saw declines. But some analysts say it may not be time just yet for the government to scale back on its property cooling measures.

SINGAPORE: Sales of new private homes in 2013 fell to levels last seen during the global financial crisis five years ago.

Prices in the private and HDB resale market also saw declines last year.

But some analysts have said it may not be time just yet for the government to scale back on its property cooling measures.

A slew of measures to cool Singapore's property market has been introduced since 2009 - from loan curbs to stamp duties and a Total Debt Servicing Ratio.

The effects are being seen more clearly now.

Private property prices fell 0.8 per cent in the final quarter of last year - the first dip since 2012.

HDB resale flat prices also declined in the last two quarters of 2013.

Some property analysts said this price correction could be healthy after so many quarters of strong growth, though more evidence may be needed that prices have gone back to their fundamentals before the government reviews its cooling measures.

That evidence could possibly be a price dip of two to three per cent over several consecutive quarters.

Associate Professor Sing Tien Foo from the Department of Real Estate at the National University of Singapore, said: "From a policy maker's perspective, they probably do not want to switch the policy that frequently.

"One, there is policy uncertainty, the other is if the market has not fully cooled down or adjusted, there is the rebound effect if you remove some of the stamp duty; maybe those people who are waiting at the sidelines may actually enter the market, and may cause the price to increase again."

Seah Kian Peng, member of the Government Parliamentary Committee for National Development, said: "We need a bit more time. I think all of us can be assured that the government has their eye on this. If the measures are too tough now, they need to recalibrate. I think they will.

"The main thing is to make sure prices remain affordable for home owners. We want to cut down as much on speculative investment, we also want to make sure people do not over leverage beyond their means.

"So all the measures that have been introduced are to address all this. It is certainly not in any one's interest to see prices falling drastically."

For the first time in four years, statistics from the Singapore Real Estate Exchange also show that valuations of HDB resale flats fell in the fourth quarter of last year.

But some said there may be some upside in this.

Mr Seah said: "If the concerns of most had been that prices have gone way above, I think inevitably, it needs a bit of correction. To what extent is the correction a meaningful and reasonable one?

"I think that is where probably some of the debate is. I would say that the bulk of the people would still feel the valuations can come down a bit, and that actually would benefit... the majority of the people and at the end of the day, we are all trying our best that for aspiring home owners, this is within their reach, especially for HDB flats."

In a recent Parliamentary report, it was noted that around five to 10 per cent of borrowers with property-related loans were highly leveraged.

Some property analysts said that if interest rates go up and borrowers are unable to pay, this may have a knock-on effect on the property market.

Associate Professor Sing said: "The borrowers, or even the banks, when they start to withdraw their loan or liquidity from the market, or start to call back some of the loan, this would have a significant impact on the property market as a whole. So I think it would be prudent to monitor this group of buyers."

Property analysts said this group would require close monitoring, to ensure any eventual impact is minimised. 

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