Are new property measures tough enough to tame Singapore’s soaring housing prices?

Find out how the new rules affect you.

Singapore has added more measures to curb speculation on residential properties after home prices climbed to a record in 4Q12.

The cooling package addresses wide-ranging issues from Permanent Residents and citizens, to HDB flats and ECs, and even on industrial properties.

Here are experts’ view on how these measures impact the property market moving forward.

Ms Chia Siew Chuin (谢岫君), Director of Research & Advisory, Colliers International

In 2013, new home sales is expected to decline from 2012’s record high level on the back of the new set of market cooling measures effective from 12 January 2013. The measures, which were the most extensive to date since 2009, were introduced to arrest the re-acceleration of private property prices and record level of housing transactions fuelled by the pro-buying environment – low interest rate and excess central bank-created liquidity that threatens to flood the local property market.

With the measures, only Singaporeans buying their first properties will be spared from the new rules. In fact the pool of potential buyers will shrink given that many will be priced out due to the curbs, while others will stay on the sidelines to assess the impact on the market, their ability to purchase and the bearing on their planned investments. Additionally, some buyers may also postpone their purchasing decisions in anticipation of price corrections. The increased ABSD to 15% will also undoubtedly make property investment less attractive and deter foreign buyers planning to make the plunge.

Notwithstanding, for foreign buyers, Singapore remains attractive for the fact that it is stable with good protection of property rights and minimal currency risk. Hence, while some of them could be deterred, there will still be those who view the latest curbs as just another one-time tax on property that they are willing to pay. Additionally, given that the world is now awash with liquidity amid low interest rates and high inflation, property will likely remain a viable option for investable funds. Coupled with genuine demand from first-time buyers and HDB flat owners, there will still be support for demand for new homes. 

Alan Cheong, Senior Director, Savills Research & Consultancy

Moving forward, we expect developers to maintain prices as their land costs from GLS sites had risen significantly throughout 2012. The latest round of property measures may induce the industry to adjust their land bid prices down for 2013 whilst holding sale prices firm. The extra margin would permit developers to account for the increased risk after the latest measures or even further measures in future whilst defending their inventory costs.

The immediate weeks following the January 13th measures will be crucial in setting the tone for new home sales this year. If a developer could take leadership, launch and successfully market a reasonably large project soon, the market will interpret this very positively. For example, just after the first ABSD measure in December 2011, the successful launch of Watertown in February 2012, assuaged the frayed nerves of both buyers and sellers.

Ong Teck Hui, National Director, Research & Consultancy, Jones Lang LaSalle

In view of the latest measures imposed on 11 Jan 2013, developers will have to be even more calculated in launching fresh projects in 2013 as setting the right price for launching can be tricky in this uncertain market. With a substantial portion of investment demand stripped out due to the latest measures, sales performance for OCR projects is unlikely to be as buoyant as before.

Of the 1410 private homes sold in December, OCR accounted for 620 units or 44%. This is also the lowest monthly OCR sales quantum and proportion in 2012. For the first 11 months, OCR sales averaged 1441 units or 75% of the total.

As expected 2012 ends as the record year for developer sales with 22289 units sold. With the tough new measures in place, demand by investors and foreigners will be curbed substantially. We may expect sales volume to decline by 30-40% and prices stagnating in the near term.