http://www.businesstimes.com.sg/real...-to-tweak-absd

PropNex proposes new way to tweak ABSD

By Lynette Khoo

[email protected]

@LynetteKhooBT

Mar 10, 2016


PROPNEX Realty has proposed a tiered approach to tweaking the additional buyer's stamp duty (ABSD) in its recommendations on how property cooling measures can be adjusted.

Its detailed proposal was released amid increasing calls from the real estate industry for the government to review its cooling measures as the Singapore Budget draws near. A fuller list of recommendations has been submitted to the Ministry of Finance and the Ministry of National Development.

Chief among its proposals is for the ABSD to be scrapped for Singaporeans buying second homes, and to pare down the ABSD on their third purchases to 5 per cent (from 10 per cent currently).

PropNex's proposed ABSD model also differentiates foreigners buying homes of S$3 million or less and those buying homes of over S$3 million. For the first group of foreigners, PropNex noted that the ABSD of 15 per cent should be maintained.

But for the second group, PropNex suggests that the ABSD be trimmed to 5 per cent on first-time purchases and 10 per cent for second-time purchases rather than to have a flat 15 per cent ABSD on all purchases by foreign buyers.

In principle, these recommendations on ABSD consider the need to protect Singaporeans looking to buy a home in the city-fringe or suburban area, to stay or upgrade, from foreign competition while ensuring sustainable growth for high-end properties in the Core Central Region, PropNex said.

Singapore's second-largest agency by salesforce also proposed loosening loan-to-value (LTV) limits for the second and subsequent properties at 60 per cent for standard loans and 50 per cent for loans exceeding 30 years. It argued that the total debt servicing ratio (TDSR) that caps borrowings at 60 per cent of gross monthly income already curbs over-leverage.

In addition, PropNex sees the need to raise mortgage servicing ratio (MSR) for executive condominiums (ECs) to 45 per cent from the 30 per cent currently applied on both Housing & Development Board (HDB) flats and ECs, since the quantums for ECs are much higher than new HDB flats.

"Also, the side-effect of 30 per cent loan cap is that developers construct smaller sized ECs to meet the MSR restrictions, which again run contrary to the government's repeated calls for Singaporeans to procreate," it said.

PropNex argued that it is "the right time to calibrate some of the measures" given that speculative activity has tapered off and there is a major demand-supply imbalance in a paper released on Wednesday when some 2,500 agents and guests gathered at its annual convention at Star Vista.

But notwithstanding tough market conditions, PropNex still clocked in record gross commissions of more than S$200 million last year, compared to S$194 million in 2014. Transaction volumes crossed the 40,000 mark, up 22 per cent from 2014.

Group CEO Ismail Gafoor, who heads the 5,500-agent realty, noted that this is "exception to the norm of the industry" where overall transaction volumes have fallen 30-40 per cent from 2012.

The government has however repeatedly said it is not time yet to roll back its cooling measures. Last month, Minister for National Development Lawrence Wong reiterated the government's stance that it is "too early" to relax the measures, as doing so could result in a market rebound.

Echoing that stance on Wednesday was Minister for Social and Family Development Tan Chuan-Jin at a dialogue session at PropNex's annual convention. Asked if the government is seen as too cautious, Mr Tan said that the government has "no aversion to adjusting and changing when circumstances change".

"It's a question of whose timeline are we operating on," he said. "If at all possible, we try to take the politics out of decision-making, meaning we are driven largely by what we assess to be in the best interest of our people at large, and as you know, there is no policy that uniformly benefits everyone."

Mr Tan maintained that there are several factors to consider, such as interest rates, global macro-economic conditions and the local economy that affects employment and Singaporeans' capacity to buy homes.