Property prices may plunge up to 30% over the next three years as a result of the Government’s new cooling measures, according to analysts.
(The Singapore property market has seen multiple predictions of growth slowing this year. Image courtesy of thinkstock.)
Standard Chartered analysts supplied the grim outlook, attributing the nosedive to slower population growth and the many new private homes expected to crop up in the next few years.
The new rules apply mainly to foreign buyers, who now will have to pay a stamp duty of 10% in addition to the existing buyer’s stamp duty of about 3%.
The rules will only affect Singaporeans who already have two residential properties; an extra 3% on subsequent home purchases will be exacted.
“This announcement is a negative surprise for the market,” the StanChart analysts said in a report. “It is also the first time since 1996 that the Government has imposed stricter residential market measures on foreigners and permanent residents.”
In addition, they expect sales volumes to fall 20% in the first quarter of 2012.
Other analysts were as bearish about the impact of the new policy. Calling these measures a “bazooka”, CIMB Research analysts forecast a 15% to 20% slide in property prices next year.
Analysts from OCBC Investment Research and UOB Kay Hian concur with the view. The former is expecting a 10% to 20% weakening of private home prices within the next two years while the latter believes the drop to be 10% to 15% over the next year.
Similarly, PropNex chief executive Mohamad Ismail told The Straits Times the new rules will pose “a major psychological setback” for the market.
“This increase in stamp duty, which can amount to $124,600 from an original $24,600 for a $1 million home, is going to dampen the interest in private property investment in Singapore,” Ismail was quoted as saying.
Private home properties in the higher end of the market, including those in Orchard and Newton, will be the hardest hit. This is because foreign buyers and permanent residents account for nearly half of the sales in these areas, according to Goldman Sachs analysts.
Ismail predicts sales for these properties will likely dive by 40%, while their prices will fall by 15% to 20% within the next six months. In comparison, Ismail expects prices of the mass-market segment to dip 10% to 15%.
To add more cause for concern, Goldman Sachs analysts anticipate a “state of paralysis” for the residential property market. They presage demand to tumble as foreign buying, job creation and credit availability—all important drivers of demand—experience a decline.
“While credit is relatively cheap, it is not as readily available, with banks more conservative on valuations and equity term loans,” they added.
|
|
|
|
|
|
|
Comments:
Please input the captcha text :
|