Straits Times: Tue, Jun 19
A FRAGILE economic outlook and the soft property market have lessened the risk of new cooling measures, some experts say.
Bank of America Merrill Lynch economist Chua Hak Bin noted last week that despite increased speculation of a sixth round of cooling measures, they are likely to be unwarranted at this point.
Comments from National Development Minister Khaw Boon Wan about the increasing number of shoebox apartments in the market and rising suburban prices had raised concern that tougher policies might be in the offing.
But Mr Chua pointed out that the December round of cooling measures has dealt a severe blow to sentiment, with a resulting hit to transactions.
Prices of private homes dipped 0.1 per cent in the first three months of the year compared with a 0.2 per cent gain in the previous quarter, while total value of flats sold plunged 26 per cent in the same period.
Foreign buyers have also retreated. They accounted for 23 per cent of transactions in the first five months of the year - well down from 35 per cent in the same period last year.
'The luxury property market, defined as sales at more than $5 million, has practically collapsed, with the number of transactions falling by some 61 per cent (in the same period),' Mr Chua added.
Other indicators also point to a continuing slowdown. Economic growth came in at a weak 1.6 per cent in the first quarter with growth in this quarter possibly slowing further, Mr Chua noted.
Manufacturing also contracted in April in the wake of Europe's escalating debt crisis and China's slowing economy.
'In an ugly scenario where Greece exits (the euro zone) and a disorderly default occurs, Singapore's economy may contract by 1 per cent this year,' Mr Chua cautioned in his report.
'Maintaining the threat of additional property measures is a sensible policy to cool the market, but current conditions probably do not warrant another round.'
Some experts even suggest that some existing measures might be scaled back.
PropNex chief executive Mohamed Ismail said that the additional buyer's stamp duty - which imposes an extra 10 per cent tax on all foreign home purchases - should be reviewed since the high-end market has seen lacklustre sales.
Further measures, if any, could involve capping the percentage of shoebox homes - usually apartments under 500 sq ft - in a development to safeguard the interest of family units, but nothing specifically to dampen buying demand, he added.
Savills Singapore research head Alan Cheong, who expects private home prices to be stable this year, said some cooling measures could be reversed or fine-tuned by the end of this year to make them less draconian...
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Martin Koh/ Sherry Tang
Martin Koh/ Sherry Tang