It is an eventful time for the property market as the impact of multiple rounds of cooling measures, among other major policy shifts, starts to show.
(A shift in political stance has affected the property market. Image courtesy of Thinkstock.)
Last December’s property cooling measures are said to be among the harshest. They include an additional 10% buyer’s stamp duty exacted on foreigners purchasing any local residential properties. Corporate entities were also subject to the stamp duty.
These changes could have stemmed from a strident political shift. After the history-making General Elections last year, during which the ruling People’s Action Party received the lowest number of votes since Singapore’s independence, it seems the government is focusing on remedying the qualms of Singaporeans.
Just recently, The Straits Times quoted Bank of America Merrill Lynch economist Chua Hak Bin’s observation that since the watershed elections, Singapore has been moving towards a model that emphasises productivity-led growth and inclusiveness, as opposed to the prior population-led model.
“It actually strikes at the heart of what Singapore was five years ago, because Singapore was pitched to be a very open place. Open to capital, open to foreigners and open to ideas,” Chua said of the change in policy direction at a press conference.
As for Singapore’s property sector, Chua felt the change suggests the additional buyer’s stamp duty is unlikely to be nixed even after the economy recovers because it targets foreigners. However, other measures that were implemented to reduce speculation and stabilise price, such as the introduction and subsequent raising of a seller’s stamp duty and the raising of the loan-to-value limit, might be eased.
Separately, freshly appointed Minister for National Development Khaw Boon Wan has made clear his primary goal to provide sufficient Housing and Development Board (HDB) flats for first-time applicants. “My top priority is to meet the housing needs of newlyweds who are HDB First-Timers,” Khaw wrote on his Housing Matters blog.
The result: fantastic news for genuine homebuyers. Under Khaw’s aggressive HDB supply, the build-to-order (BTO) subscription rate reached 1.4 last November. This means there were averagely 1.4 applicants for every unit offered, down from July’s 3.4. As Khaw put it, “almost all first-timers [got] a chance to select a new flat”.
Additionally, HDB revealed that its decision to raise the income ceiling to $10,000 has allowed some 2,991 more applicants with an income of $8,000-10,000 to try for its flats. Furthermore, a recent Straits Times report of the slowed resale market growth has prompted industry watchers to predict a price stabilisation.
However, a new problem has surfaced: authorities are now in danger of losing appeal to overseas and local property investors.
One multiple-property owner wrote to the Straits Times Forum, accusing the cooling measures of penalising local investors. Said Tan Cheng Hock, “This is enough to drive me from the country I grew up in and in which I am still contributing, to […] invest in a property in another country that does not discriminate against high-income earners.”
The growing number of disgruntled property investors could hurt the overall economy, suggested Chua. “It's probably not a good time to embark [on this] completely when the whole world is in a storm and you're trying to force this structural change,” he said, referring to the current murky global economic outlook. He warned of a technical recession in Q1 2012, and a 30 to 40% chance of negative growth in Q2, adding that even when growth resumes after, “it will not be as strong an uplift as we saw in the past.”
So, will the government alter its property-related policy changes in fear of a ‘stagflation’?
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Related Categories: Issues & Challenges, Market Reviews & Market Outlooks
Tags: Bank of America Merrill Lynch, buyer's stamp duty, cooling measures, first time buyers, Foreign buyers, General Elections 2011, global economic uncertainty, HDB, Housing Development Board, Khaw Boon Wan, Ministry of National Development, politics, public housing market in Singapore, Singapore economy, Singapore government, Singapore property investment, Singapore property market, Singapore property market forces
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