ANALYSTS say the latest round of property cooling measures is unlikely to be a permanent feature in Singapore if the property
market grinds to a standstill amid the upcoming economic downturn.
But if home prices continue surging despite the new rules, buyers can expect that the measures will stay.
Developers have been sounding the alarm bell since the new rules were announced, saying that they could drive down home
values, turn away foreign investment, and thus potentially damage an already fragile economy.
At Tuesday's Real Estate Developers Association of Singapore's 52nd anniversary dinner, president Wong Heang Fine warned
of a knock-on effect on mortgages resulting in a possible decline in home equity values and,
consequently, shrinking wealth, he said.
The Government has argued that the measures, which include an additional buyer's stamp duty of 10 per cent on foreigners
buying homes, are necessary to maintain a sustainable property market.
At the dinner, Minister of State for National Development Tan Chuan-Jin said he did not expect developers to welcome the
measures,
but that given the volatile equity markets and a worsening economic situation, 'our small property market is attractive to
foreign funds'.
The moves are meant 'to moderate such investment demand in order to avoid the need for a major correction down the road.'
The outspoken views from the property developers have raised questions if the measures are here to stay.
Bank of America Merrill Lynch economist Chua Hak Bin has said that the new stamp duty could be permanent, as it is a
political step in line with the Government's aim to
differentiate the privileges and rights of Singaporeans, permanent residents and foreigners.
But property consultants reckon that if the property market turns south too rapidly, the Government will look to remove the
new rules.
'While the recent measures may seem to be more political rather than economic, I believe the Government... will relax the
measures if the economic situation worsens significantly,' said Mr Png Poh Soon, Knight Frank's head of research and
consultancy.
'After all, it would not be politically acceptable if the property market comes down and people start blaming the Government
for all the cooling measures which may have triggered or further exacerbated the downturn.'
Typically, property cooling measures last for an average of two to 2-1/2 years, Mr Png said. Most of the time, such measures
are removed due to a sharp slowdown in Singapore's economic performance.
Associate Professor Sing Tien Foo of the National University of Singapore's department of real estate agreed that the measures
will likely be removed if the property market slows down too much.
However, if prices continue to rise in the face of these tightening measures, the new rules will likely remain in place, he added,
as measures targeting the private market are likely to have a trickle-down effect on the public market.
'I think the Government's main concern is more on public housing. It has to make sure that public housing remains affordable,
but the private and public markets are quite integrated in Singapore,' he said.
Some local investors have welcomed the latest measures. One home buyer, who declined to be named, recently bought a
property in the East Coast, and said she was happy about the new rules because she felt it 'levels the playing field' for local
buyers.
She said: 'When I was house-hunting, there were several foreigners viewing the same properties, and they have the buying
power. At least now we don't have to compete with them.'
yasminey@sph.com.sg
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POLITICS AND ECONOMY
'I believe the Government... will relax the measures if the economic situation worsens significantly. After all, it would not be
politically acceptable if the property market comes down and people start blaming the Government for the cooling
measures which may have triggered or further exacerbated the downturn.'
Mr Png Poh Soon, Knight Frank's head of research and consultancy
Source: The Straits Times
