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Thread: Property stocks surge on tweaks to cooling measures

  1. #1

    Default Property stocks surge on tweaks to cooling measures

    Property stocks surge on tweaks to cooling measures

    CapitaLand, the most active counter, rises 3.6% while CDL gains 5.6%

    Saturday, March 11, 2017

    by Judith Tan

    PROPERTY counters surged on Friday in reaction to the government's easing of its property cooling measures, with the FTSE ST Real Estate Holding and Development Index closing 2.38 per cent up at 826.71.

    The government said that the holding period for the seller's stamp duty (SSD) would be shortened from four years to three, and the rate would also be lowered by four percentage points for each tier.

    The Total Debt Servicing Ratio framework will also no longer apply to mortgage equity withdrawal loans with loan-to-value (LTV) ratios of 50 per cent and below.

    The changes kick in on Saturday. Analysts see this as positive for developer stocks such as City Developments Limited (CDL) and Wing Tai.

    According to Bloomberg, stocks of Singapore real estate companies have rallied to the highest since July 2015.

    The top active counter of the day was CapitaLand, which rose 3.64 per cent to S$3.70. Its shares jumped to as high as S$3.79, 6.8 per cent from the opening, less than an hour after the announcement at 11.45 am on Friday.

    CDL spiked by 5.62 per cent to close at S$10.15.

    Others also notched large gains, with Wing Tai rising 8.1 per cent to S$1.84 and UOL Group adding 4.5 per cent to S$6.92.

    Bukit Sembawang Estates, whose shares were deemed to be undervalued by a research house earlier this month, also managed a rise, albeit just 1.5 per cent, to S$6.26.

    Singapore introduced measures to restrict speculation of residential and industrial properties after home prices climbed to a record high three years ago.

    In his report yesterday, senior economist at United Overseas Bank Alvin Liew said that Singapore private property prices have been on a cushioned decline in the last three years, an outcome that is likely in line with what the government had set out to achieve.

    "With the first easing since 2009, there is now greater anticipation for more easing to follow," he added.

    Maybank Kim Eng analyst Derrick Heng said: "We believe the surprise changes to the property cooling measures have positive implications for Singapore's residential market.

    "Relief from these changes to the SSD could nudge the marginal buyer, concerned with potential penalties, to buy a new property. This could have positive impact on sales volumes and prices."

    Both Credit Suisse and OCBC Investment Research analysts gave a neutral rating for Singapore property developers.

    OCBC's Eli Lee said: "On balance, we believe this set of changes will be marginally supportive of still-declining home prices but note that, by leaving the additional buyer's stamp duties (ABSD) intact and introducing the ACD (additional conveyance duty), the authorities have carefully calibrated these tweaks to not kick up excessive animal spirits in the market.

    "The ACD, in particular, will close one critical door for developers aiming to offload unsold units through share sales of PHEs (property-holding entities) so as not to incur penalties under the ABSD or Qualifying Certificate (QC) charges."

    With the latest measures, Mr Lee said, OCBC is adjusting the forecast for physical prices to decline to between one and 5 per cent this year, compared to the previous forecast for a 3-7 per cent drop.

    "(We) continue to advocate a bottom-up approach in stock picking, particularly given the sharp run-up in developer shares year to date," he added.

    NRA Capital research head Liu Jin Shu was, however, cautious.

    He told The Business Times: "The changes are relatively targeted and existing supply is still a concern. Therefore, it's still too early to judge the trend in the property market. We will have to look at the full data of the next few days to be better able to make an educated judgement."

  2. #2

    Default Property stocks pick up as some curbs are eased

    Property stocks pick up as some curbs are eased

    Home owners selling within one year will pay 12 per cent instead of 16 per cent, moving down to 4 per cent instead of 8 per cent for sales by the third year.

    Mar 11, 2017

    Seller's stamp duty tweaked; easier for some to borrow money against their property

    Wong Siew Ying

    In a surprise move, the Government has eased some residential property curbs for the first time since imposing a raft of measures from 2009 - sparking a modest rally among real estate stocks.

    The "calibrated adjustments" to the seller's stamp duty (SSD) and total debt servicing ratio (TDSR) unveiled yesterday came amid fairly solid demand for homes and after three years of falling home prices.

    While the main curbs keeping the market in check - such as the additional buyer's stamp duty (ABSD) and the loan to value (LTV) limit - remained intact, industry players and home buyers saw the latest moves as positive.

    The SSD, which has been paid on homes sold within four years of being purchased, will now apply for only three years. The SSD rate will also be cut by four percentage points.

    Home owners selling within one year will pay 12 per cent instead of 16 per cent, moving down to 4 per cent instead of 8 per cent for sales by the third year.

    These SSD changes apply to homes purchased from today.

    Financial consultant Sanjay Ashok Wadhwani said: "I don't think the SSD changes will affect me so much. As a buyer, the ABSD and LTV would have a bigger impact, but those were not changed."

    Others, like Dr Lee Nai Jia, head of South-east Asia research at Edmund Tie and Company, said the impact would be muted, though more units may be sold this year.

    The Government also relaxed a rule under the TDSR - designed to prevent borrowers from over- extending themselves - on loans where owners borrow against their residential property.

    If a home owner's total outstanding loans are 50 per cent or below of his property's value, the TDSR will no longer apply.

    "This allows for greater flexibility by borrowers to monetise their properties, preventing the need for a distressed sale in the event of economic hardship," Credit Suisse said in a report yesterday.

    The Real Estate Developers' Association of Singapore noted: "The adjustments will provide some relief and help to address the needs of some borrowers."

    While the announcement brings cheer to many segments of the property market, analysts said the tweaks are unlikely to have a big impact and are not a bid to spur the sluggish housing market on the Government's part.

    "Adjusting the SSD has the least impact on the property market. It does not change the availability of credit or liquidity, nor the cost of acquisition," said Mr Nicholas Mak, head of research and consultancy at SLP International.

    The SSD and TDSR were among a raft of cooling measures imposed since 2009 to cool a then red-hot market. But the retention of the ABSD and other loan curbs is seen as necessary to maintain a more sustainable property market.

    "While the growth in outstanding housing loans has moderated, it is prudent for households to further build up their financial buffers to protect against future interest rate increases or any losses in income," the Government said, in upholding other measures.

    Even though most of the cooling measures stay firmly in place, the optimism from the adjustments in SSD and TDSR sent the benchmark FTSE ST Real Estate Index surging yesterday, up 1.35 per cent to close at a level not seen since July 2015.

  3. #3

    Default Real estate market perks up on hopes of attracting more buyers

    Real estate market perks up on hopes of attracting more buyers

    Punters were betting that the rule tweaks would draw more home buyers back into the investment property market.

    Mar 11, 2017

    Marissa Lee

    Shares of real estate developers jumped yesterday after the announcement that property cooling measures would be eased slightly.

    Punters were betting that the rule tweaks would draw more home buyers back into the investment property market.

    Their optimism sent the benchmark FTSE ST Real Estate Index, which had been riding on good sentiment since the year began, up 1.35 per cent to close at a level not seen since July 2015.

    Wing Tai shares shot up 14.5 cents or 8.1 per cent to $1.935, after being upgraded to a "buy" by CIMB on Thursday. Wing Tai has three remaining Singapore residential projects, including Le Nouvel Ardmore, which is 15 per cent sold.

    Maybank Kim Eng said that for the developers it covers, Wing Tai and City Developments (CDL) have the biggest exposure to the local residential market.

    CDL jumped 54 cents or 5.62 per cent to $10.15. It intends to launch its New Futura condo and the second phase of its Gramercy Park condo project this year.

    UOL jumped 30 cents or 4.53 per cent to $6.92. It recently recorded healthy sales for its Clement Canopy condo project and plans to launch two more sites next year.

    CapitaLand was the top-traded property counter, with the stock closing 13 cents higher or 3.64 per cent to $3.70, despite its relatively low exposure to the local market.

    Frasers Centrepoint, which will roll out the 843-unit Seaside Residences in Siglap next month, climbed 5.5 cents or 3.28 per cent to $1.73 yesterday.

    DBS Vickers analyst Derek Tan believes the rally in property stocks can be sustained. He said: "The market had not priced in a policy tweak, given recent messaging from the Government."

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