Such sweeteners artificially inflate prices, make property curbs seem ineffective
The Straits Times - February 6, 2013
THE dangling of sweeteners to home buyers by developers to take the sting out of recent property cooling measures is being reviewed by the Government.
It is concerned that sweeteners such as stamp duty rebates and furniture vouchers cause home prices to be artificially inflated.
The Straits Times understands that the Urban Redevelopment Authority (URA) is looking into the practice and might act soon, as indirect discounts could make the cooling measures seem ineffective.
Unlike upfront discounts, some rebates and vouchers are given only after a buyer has completed a purchase, so the price cuts are not reflected in the sales caveats lodged with the URA.
That means home prices fed to the URA quarterly price index - based on caveats lodged - might not reflect real property values.
Experts say this causes home prices to be less transparent and keeps them artificially inflated.
But developers prefer indirect discountsas they do not affect the caveat pricing. This keeps the official pricing firm so earlier buyers are not unhappy at missing out on price cuts, and also props up home prices islandwide.
Sources say as a start, the URA could be looking at publishing net prices that take into account indirect discounts as part of its monthly developers' sales data.
The latest property curbs last month led developers to pull out all the stops. Some offered rebates to lessen the impact of the additional buyer's stamp duty (ABSD). Frasers Centrepoint, for instance, offered stamp duty discounts of 5 to 7 per cent to all buyers of Q Bay Residences in Tampines. Buyers could take an upfront discount or a rebate after 20 per cent of the price had been paid.
Giving full or partial ABSD rebates is not new but if the latest curbs lead to an increase in the practice, it would distort prices.
Developers say URA has already been encouraging them informally to be more transparent with prices. Some add there is no benefit in masking prices as the Government has stated its intention to see prices soften and artificially propping up prices might only attract more measures.
Some experts add that the review is overdue as developers' indirect discounts are negating the impact of the measures.
Chesterton Suntec International's research head Colin Tan said more information - such as the discount given - should be put in caveats so buyers have a better sense of prices.
OrangeTee managing director Steven Tan said the review was expected as "it is important for the true value of homes to be reflected in order to ensure that the cooling measures are effective".
A National Development Ministry spokesman said the true purchase price of the property must be accurately conveyed to the potential buyer so that he can make an informed decision.
The Commissioner of Stamp Duties can also recover any deficient duties if the declared price of a property falls below its market value, he added.
The Monetary Authority of Singapore said that since 2002, it has required banks to factor in any discount or other benefit when calculating an appropriate loan.
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