Despite falling private property prices, market stability is priority

FOR industry players and others holding out hope of a reprieve soon from the Singapore property market cooling measures amid current moribund market conditions, the government has reiterated its stand: The curbs will stay for a while.

In its latest financial stability review (FSR) published last week, the Monetary Authority of Singapore (MAS) maintains that "continued vigilance" is still necessary, not least with early signs of an uptick in demand, and with an economic outlook marked by increased uncertainty. For well over a year, industry players have called for an easing of the cooling measures - introduced over several rounds since the 2009 global financial crisis - with developers warning of an impending market collapse. The beleaguered sector was reeling from the compound effects of weak demand, an oversupply situation and rising vacancy rates, and the spillover effects on the larger economy would add to general economic weakness, the developers said. While tracking the situation closely, the government has held its ground, maintaining more than once over the year that it was yet "too early" to unwind the measures, which were aimed not just at ensuring a stable and "sustainable" property market but also at discouraging households from becoming over-leveraged. Relaxing the cooling measures - which include the additional buyer's stamp duty and loan-to-value limits - too early may risk a premature market rebound, the government said.

Developers would want to take note of MAS's current reading of the pulse of the property market, as outlined in the FSR. Yes, private housing prices have slid for 12 quarters, with the latest Q3 seeing a sharper than average 1.5 per cent price fall. And the risk profile of housing loans has continued to improve. But demand and transaction volumes have been firm, probably boosted by low interest rates. Resale activity has increased and take-up at some newly-launched projects has been strong, MAS notes. Indeed, figures from property consultancy JLL show an almost 12 per cent increase in the number of private residential housing transactions by foreigners in the first nine months of 2016, led by buyers from China. This despite the additional levy that foreign buyers are subject to. According to JLL, the Singapore market may yet see a return of foreign buyers as they adjust to the cooling measures and prices here "remain favourable".