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Thread: Manage cooling measures exit 'for soft landing'

  1. #1
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    Default Manage cooling measures exit 'for soft landing'

    http://www.straitstimes.com/business...r-soft-landing

    Manage cooling measures exit 'for soft landing'

    Sep 17, 2015

    Negative factors and status quo on 'cooling' may cause downward spiral of prices: Redas

    Rennie Whang


    The head of Singapore's property developers' body has warned that various negative factors could cause home prices to plummet - especially if a sell-off gets under way.

    And property cooling measures, if left fully in place, "could actually increase the risk to the real estate market and economy", Mr Augustine Tan said yesterday.

    Mr Tan, president of the Real Estate Developers' Association of Singapore (Redas), was speaking at the association's mid-autumn festival celebration at Orchard Hotel.

    Senior Minister of State for Finance and Transport Josephine Teo was the guest of honour.

    Mr Tan, who is also executive director of property sales and corporate affairs at Far East Organization, congratulated the Government on the strong mandate it secured in last week's polls, adding: "The Government has shown it is prepared to listen and make the necessary changes to meet the aspirations and needs of Singaporeans."

    Mr Tan said the objectives of the Government and developers for a stable and sustainable property market are aligned.

    But the property market today is dramatically different from the one when cooling measures were put in place. Vast amounts of cash from quantitative easing had fuelled record sales and prices, he said.

    But in the wake of the cooling measures, prices had fallen for a seventh straight quarter in the April to June period, "the longest sustained period of decline in 13 years".

    There is a total supply of more than 67,000 uncompleted private homes in the pipeline, nearly 20 per cent of total stock. But the monthly volume of sales has fallen by over 80 per cent since the peak in early 2013, he added.

    Rentals are also expected to fall sharply over the next 12 to 18 months, while regional and global conditions remain uncertain.

    On top of this, there is increased volatility in financial markets, an imminent interest rate hike and slower economic growth.

    "This deterioration in economic sentiment, the worsening supply-demand imbalance and rising vacancy rates risk precipitating a downward spiralling of property prices when people are selling because prices are falling," he said.

    This has already unfolded at some Sentosa projects, for example, he said. "It is like the stock market. When prices come down, people sell as they anticipate further price falls. When prices come up, they buy," he added.

    "The property market is clearly heading for a different phase and there is an urgent need to think about how we can manage the exit so there is a soft landing for the market," Mr Tan said in his speech, on an exit from cooling measures.

    "We should re-examine and recalibrate or de-layer the permutations of the various measures to minimise risks," he added.

    Asked which measures should be recalibrated, he said it depends on what may be tweaked without causing great ripples to the market.

    Some industry players agreed with his broad analysis. Although there is no real panic in the market yet, it is possible for a perfect storm to take place, one of them said.

    "As an open economy, Singapore is affected by a slowdown in major economies, especially China; and the market can move into reverse gear very quickly... Higher interest rates could also have a knockout blow on sentiments and highly geared individuals holding properties," added Mr Donald Han, managing director of Chestertons.

    But Qingjian Realty (South Pacific) general manager Li Jun was a little more optimistic over how far prices could fall, noting that land supply has been trimmed, meaning fewer buying opportunities.

  2. #2
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    Default Developers renew call to tweak cooling measures

    http://www.businesstimes.com.sg/real...oling-measures

    Developers renew call to tweak cooling measures

    By Kalpana Rashiwala

    [email protected]@KalpanaBT

    Sep 17, 2015


    WITH the general election over, the developers' body is back to lobbying the government to tweak the property cooling measures.

    Augustine Tan, president of the Real Estate Developers' Association of Singapore (Redas), said on Wednesday: "The property cooling measures, in the current tone and intensity, could actually increase the risk to the real estate market and economy."

    Speaking at Redas' Mid-Autumn Festival lunch, he called for a re-examination and recalibration or "de-layering" of the permutations of the various cooling measures, and said that Redas would work with government agencies in the coming weeks to offer its "constructive input".

    Responding, a Ministry of National Development spokesman said: "We will continue to monitor the market and adjust the measures as necessary.

    "The property market cooling measures have been carefully calibrated to avert a major market correction and facilitate a soft landing for the housing market. We have seen the positive outcomes of this approach over the past two years, with the URA (Urban Redevelopment Authority) private residential property price index falling by an average 1 per cent per quarter."

    Private home prices in Singapore have fallen for seven consecutive quarters. The market is in a period of sizeable supply of new private home completions and slower developer sales; vacancy rates are poised to rise, and rents are expected to fall sharply in the next 12 to 18 months.

    Redas' Mr Tan said the worsening supply-demand imbalance, combined with a deterioration in economic sentiment, "risk precipitating a downward spiralling of property prices when people are selling because prices are falling".

    There is thus an urgent need to manage the exit of the cooling measures to ensure a soft landing for Singapore's housing market, he added. "This is the chief worry of developers and the many diverse stakeholders of the real estate ecosystem."

    He later told reporters that issues in the public housing or HDB segment have been resolved by the government. "I think it is time that we look at ... whether we can try and avoid a hard landing (on the private housing side)."

    Agreeing, Knight Frank's executive director of residential services Tay Kah Poh said: "The HDB sector has already stabilised. For the private housing market, buyers need not be mollycoddled. The key risk to the banking system - that of over-leveraging by excessive use of credit - has been taken care of by the TDSR (total debt servicing ratio), which is set to remain as a long-term feature of the Singapore property market."

    Giving his take on the timing of a reversal of the cooling measures, Chestertons managing director Donald Han said: "Judging from the strong results of the general election, the signal being sent to the government is that it is doing a good job and I think there's going to be a continuity of current policy, going forward. So I doubt there is going to be any reversal, refinement or recalibration of measures just yet."

    That said, developers and property consultants at the Redas lunch said the additional buyer's stamp duty (ABSD) may be ripe for tweaking, and the seller's stamp duty (SSD), ripe for removal.

    Knight Frank's Mr Tay said: "All these measures paralyse property transactions. Because of SSD, sellers cannot divest to downgrade or streamline their investments without taking a hit. Buyers from overseas who are interested in Singapore are put off by the 15 per cent ABSD rate, especially for a big-ticket property purchase."

    Roxy-Pacific Holdings executive chairman and chief executive Teo Hong Lim added: "I think the first measure to remove is the SSD, because property speculation is no longer an issue. Today, the market is weak and moreover, SSD is very punitive for those who want to sell their property and downgrade to exercise prudence, for instance."

    Calling for the ABSD to be reduced across all tiers of buyers, he said: "It could still be higher for foreigners, but the difference between the rates for Singaporeans and foreigners should not be a big difference of as much as 15 per cent, as it is in the current regime.

    "That's as good as totally asking foreigners not to buy. We should not operate in that kind of mode."

    The ABSD was rolled out in two instalments - in December 2011 and January 2013 - to rein in excessive property investment, particularly by foreigners, during the liquidity flush triggered by quantitative easing.

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