Thursday, March 14, 2013

Property stocks slide over fears of fresh curbs

The Straits Times – March 11, 2013
Developers worry that steps to lower prices of new HDB flats will affect private property market

Property stocks here have tumbled over the past three trading sessions amid growing concerns that the Government may bring in a fresh round of market cooling measures.
Comments by National Development Minister Khaw Boon Wan last Friday, that he wants to lower the prices of new HDB flats, only added to the jitters.

Property developers here are mainly concerned about private residential property, but such a move could affect the private market eventually as buyers switch to the HDB market.

And some observers interpret Mr Khaw's comments as a sign of the Government's willingness to further intervene in the market more generally - including the still buoyant private market.

South-east Asia's largest developer CapitaLand dropped nine cents to $3.53 yesterday, to take its drop since last Thursday to 25 cents, or 6.6 per cent.

Wing Tai Holdings slid 5.5 cents yesterday, and is down 5.1 per cent since Thursday. Keppel Land lost seven cents to $3.97, and has lost 3.4 per cent over the past three trading sessions.

City Developments rebounded five cents to close at $11.25 yesterday, but is still down 3 per cent over the last three sessions.

The FTSE ST Real Estate Holding and Development Index, which reflects the trading performance of such stocks, has lost 2.8 per cent since last Thursday.

Since last week, the market has been rife with talk of the Government planning a possible slashing in the mortgage servicing ratio for private homes - the proportion of monthly income a borrower spends to service his monthly mortgage instalments.

The sentiment for property stocks took another hit after Mr Khaw's comments.

"The minister's comments play in more towards sentiment and expectations of Round 8 of new cooling measures," said CIMB analyst Donald Chua, who covers property counters.

The seventh and toughest round of market cooling measures was unveiled in January.

"It is a signal that there could be more (measures) that could be introduced on the public and private (housing) side, and even on the credit side," Mr Chua said.

Experts said moves to cool the HDB market would have a longer-term effect on real estate here, particularly the HDB side, which will have a knock-on effect on private homes as buyers switch between the markets.

Singapore remisier Gary Goh said the latest potential developments coincide with government curbs on the inflow of foreign workers. The combination could hit developers' profits.

Sentiment for firms such as CapitaLand and Keppel Land, which have large exposure to the China residential market, has also been dragged down by the March 1 measures by the Chinese authorities to cool the property market there, said Mr Chua.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

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