http://www.businesstimes.com.sg/stoc...oling-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
[email protected]
@JudithTanBT
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."