Developers renew call to tweak cooling measures

Singapore

WITH the general election over, the developers' body is back to lobbying the government to tweak the property cooling measures.

Augustine Tan, president of the Real Estate Developers' Association of Singapore (Redas), said on Wednesday: "The property cooling measures, in the current tone and intensity, could actually increase the risk to the real estate market and economy."

Speaking at Redas' Mid-Autumn Festival lunch, he called for a re-examination and recalibration or "de-layering" of the permutations of the various cooling measures, and said that Redas would work with government agencies in the coming weeks to offer its "constructive input".

Responding, a Ministry of National Development spokesman said: "We will continue to monitor the market and adjust the measures as necessary.

"The property market cooling measures have been carefully calibrated to avert a major market correction and facilitate a soft landing for the housing market. We have seen the positive outcomes of this approach over the past two years, with the URA (Urban Redevelopment Authority) private residential property price index falling by an average 1 per cent per quarter."

Private home prices in Singapore have fallen for seven consecutive quarters. The market is in a period of sizeable supply of new private home completions and slower developer sales; vacancy rates are poised to rise, and rents are expected to fall sharply in the next 12 to 18 months.

Redas' Mr Tan said the worsening supply-demand imbalance, combined with a deterioration in economic sentiment, "risk precipitating a downward spiralling of property prices when people are selling because prices are falling".

There is thus an urgent need to manage the exit of the cooling measures to ensure a soft landing for Singapore's housing market, he added. "This is the chief worry of developers and the many diverse stakeholders of the real estate ecosystem."

He later told reporters that issues in the public housing or HDB segment have been resolved by the government. "I think it is time that we look at ... whether we can try and avoid a hard landing (on the private housing side)."

Agreeing, Knight Frank's executive director of residential services Tay Kah Poh said: "The HDB sector has already stabilised. For the private housing market, buyers need not be mollycoddled. The key risk to the banking system - that of over-leveraging by excessive use of credit - has been taken care of by the TDSR (total debt servicing ratio), which is set to remain as a long-term feature of the Singapore property market."

Giving his take on the timing of a reversal of the cooling measures, Chestertons managing director Donald Han said: "Judging from the strong results of the general election, the signal being sent to the government is that it is doing a good job and I think there's going to be a continuity of current policy, going forward. So I doubt there is going to be any reversal, refinement or recalibration of measures just yet."

That said, developers and property consultants at the Redas lunch said the additional buyer's stamp duty (ABSD) may be ripe for tweaking, and the seller's stamp duty (SSD), ripe for removal.

Knight Frank's Mr Tay said: "All these measures paralyse property transactions. Because of SSD, sellers cannot divest to downgrade or streamline their investments without taking a hit. Buyers from overseas who are interested in Singapore are put off by the 15 per cent ABSD rate, especially for a big-ticket property purchase."

Roxy-Pacific Holdings executive chairman and chief executive Teo Hong Lim added: "I think the first measure to remove is the SSD, because property speculation is no longer an issue. Today, the market is weak and moreover, SSD is very punitive for those who want to sell their property and downgrade to exercise prudence, for instance."

Calling for the ABSD to be reduced across all tiers of buyers, he said: "It could still be higher for foreigners, but the difference between the rates for Singaporeans and foreigners should not be a big difference of as much as 15 per cent, as it is in the current regime.

"That's as good as totally asking foreigners not to buy. We should not operate in that kind of mode."

The ABSD was rolled out in two instalments - in December 2011 and January 2013 - to rein in excessive property investment, particularly by foreigners, during the liquidity flush triggered by quantitative easing.