The government faced an onslaught of criticism and pessimistic predictions from analysts, regarding the latest property market cooling measures rolled out on last Wednesday.
(Analysts say Singapore property prices could slide by up to 30% in the next year because of the government's latest actions. Image courtesy of thinkstock.)
Experts claimed prices could plummet by as much as 30% next year, and likened this situation to the global financial crisis in 2008 and 2009, when home prices sunk by 25% over 12 months.
Their warnings came in a series of reports taking stock of the cooling measures, one of which being an unprecedented additional 10% buyer’s stamp duty on foreigners purchasing any property in Singapore.
Analysts from CIMB Research called the government’s sudden move a “bazooka” that could hurt overall property prices by 15-20% over the next 12 months. Goldman Sachs analysts predicted a “state of paralysis” and for private home prices to slide 15% in the coming 18 months.
Last week Standard Chartered Bank forecasted prices falling by 30% over the next three years. With the new measures in place, it now expects the same drop to occur within one year.
Developers told The Straits Times they were caught off-guard by the announcement and are reviewing action plans. Said a City Developments spokesperson, “The measures will have a dampening effect in the short term so we will have to re-assess the market situation and, if necessary, tweak our strategy.”
One unnamed developer also warned that the frequent policy changes do not reflect well on the country as an investment destination. It criticised, “If the Government wants to target foreign buyers, then it should also look at the entire spectrum and specifically the increasing presence of foreign developers here who are driving up land prices.”
UBS analysts suspect developers may soon offer partial absorptions or rebates of the extra 10% stamp duty to retain buyers, and that launches will be delayed so developers can “[build] up a critical mass of buyer interest before having the confidence to launch a project”.
Industry insiders expect transaction volumes and prices of the high-end segment—which sees the largest percentage of foreign buyers—to be more severely affected than the mass-market segment. In particular, sales of private houses in the core central region (including Orchard Road and Newton) could fall 40%, said PropNex chief executive Mohamed Ismail to The Straits Times.
Still, analysts said they suspect the mass-market segment not to go unscathed despite the lower foreign buyer make-up, as local buyers anticipate lower prices and hold back on purchases in wait of a better deal. Ismail said he expects mass-market prices to slide 10-15% within the next six months.
“I would expect transaction volume to fall within the next 30 days as buyers hold back,” commented Jones Lang LaSalle South-east Asia research head Dr Chua Yang Liang. “If prices ease, buyers might return but this is also conditional on whether the economy improves.”
In response, National Development Minister Khaw Boon Wan assured in a blog post yesterday that the measures “will further strengthen, stabilise and sustain our property market”.
Property investor, meanwhile, struggled to accept the news. One such investor is a 32-year old civil servant known as Mr Lim, who told The Straits Times of the $1 million Bedok Residences two-bedroom unit he purchased just weeks ago. “Originally I wanted to hold on to the investment for four to five years, now it looks like I need to have longer staying power.”
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Related Categories: Issues & Challenges, Market Reports
Tags: buyer’s stamp duty, cooling measures, effects of cooling measures, expert opinions, Foreign buyers, high-end homes, mass-market homes, private housing market in Singapore, private housing prices in Singapore, Singapore government, Singapore property market, Singapore property prices, stamp duty, stamp duty singapore, upmarket homes
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anonymous said...
Considering the fact that property prices in Singapore r expected fall this year, what is the market trend on commercial properties ? I have a property in Lucky Plaza & am eager to sell it as soon as possible this year. Is this a good time to sell & what is the current market value in Lucky Plaza ?
January 10, 2012 6:28:00 PM
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