SINGAPORE: The imposition of new cooling measures introduced earlier this month could worsen the high supply situation of private residential units, the Real Estate Developers’ Association of Singapore (REDAS) president Augustine Tan said on Tuesday (Jul 17).
The new measures include raising the Additional Buyer’s Stamp Duty (ABSD) and loan-to-value ratio in an effort to "cool the property market and keep price increases in line with economic fundamentals", said the government.
Mr Tan said that market indicators had been trending up until the government’s announcement, which had the effect of curbing the housing market and altering market sentiments.
He was speaking at the association's property market update seminar, which was attended by around 260 participants, including developers and property consultants.
“With improved market sentiments, home prices gained 1.1 per cent in 2017, compared with the 3.1 per cent decline in 2016 and a 3.7 per cent fall in 2015,” Mr Tan said.
“Although there is no visibility on how the economy will pan out for the rest of 2018 and in 2019, demand for non-housing property will be further dampened as the measures continue to bite, exacerbating the high supply situation."
LARGE SUPPLY OF PRIVATE RESIDENTIAL UNITS
Analysts have also called the move "heavy-handed", as launch and sale activities were starting to pick up.
Mr Tan noted the large supply of private residential units coming in from various fronts, including uncompleted private residential units in the pipeline with planning approvals that remain unsold, potential units from the second half of the 2018 Government Land Sales (GLS) Programme, as well as a potential supply of units from GLS sites and awarded en-bloc sale sites that have not been granted planning approval yet.
“All in, an estimated 36,030 private residential units could be available for sale in 2018 to 2019,” he said.
Mr Tan also added that the latest measure has raised the cost of home ownership, and cooled demand from investors and foreigners.
For example, Singaporeans buying a second home will now pay ABSD of 12 per cent instead of 7 per cent previously, and 15 per cent for their third and subsequent properties.
In response to this, crowds of potential buyers flooded showflats across Singapore shortly after new cooling measures were announced in the hope of avoiding a hike in stamp duty or tighter loan limits.
“The market is barely into its first year of recovery and has not been allowed time to find its own course and reach a sustained supply-demand equilibrium,” said Mr Tan.
Earlier REDAS also said that there was no rationale for the new housing curbs while the market is in the early stages of recovery.
While REDAS “shares the government’s interest in maintaining a stable and sustainable property market”, Mr Tan said developers would have to take stock and reassess the imbalance supply-demand situation.
Despite the backlash against the measures, some experts believe that the government introduced them after keeping a "watchful eye" on the property market amid the slew of en bloc sales, record breaking land prices and strong residential price recovery.