Property developers and real estate firms are lobbying for the Singapore government to remove the Additional Buyer’s Stamp Duty and Total Debt Servicing Ratio, to inflate the currently-cooling property prices.
According to a media interview with a director at real estate services firm SLP International, Nicholas Mak, the Singapore government should remove the cooling measures during a recession to allay concerns about a property rebound. Nicholas Mak claimed that property prices will not spike as a weakening economy will offset the demand.
“If the Government’s main concern or restrictions against removing or lessening some of the cooling measures are fears that once the measures are reduced, prices will again rebound and grow quite rapidly, then perhaps the best environment for the Government to ease off on some of the cooling measures is when the economy is in the slow state of growth or even maybe in a recession.
In such a situation, housing demand will naturally be weaker if the Government were to remove any of the cooling measures in such an environment, then the chances of prices growing strongly are minimised.”
Another ERA Realty Network executive, Eugene Lim, claimed that people should not be worried about the recent increase in interest rate as he believe that it will not go higher than 2.5%.
“The only kind of risk is maybe interest rates increasing in the coming year. However the market would have already factored that in, because loan approvals are based on a 3.5 per cent interest rate calculation, whereas current housing rates are at 2 per cent, or if even there was any increase, it would possibly be quite less than 2.5 per cent in total.
So you’d still be paying less than what your approval was based on. There’s still quite some buffer. There is no danger of people being priced out of the market because of interest rate increase.”
Another property lobbyist, director of real estate firm Savills, Alan Cheong, predicted that resale property prices and volume will start rising in 2016 while new sale market will not fall further.
“In 2016, we’ll see buyers starting to come back into the market because in the new sale market, prices will remain pretty firm. And it has been remaining pretty firm for areas like the RCR (Rest of Central Region) and OCR (Outside Central Region), the mid-tier and mass market for new sales, because land costs have not really fallen that much. In fact it’s gone up for some recent tenders.
It’s only in the resale market that transaction volumes may start to pick up (as) the number of buyers who’ve been sitting on the sidelines start to see value emerge in the resale market.”
Property prices in Singapore however remained unaffordable for Singaporeans as mortgage debt is still at long as 25 years, or half of the average person’s working life span. Retirement is in jeopardy as Singaporeans spent too much of their CPF funds on exorbitant property prices while wages continue to stagnate.
The government property cooling measures have been blamed for the steady decline in property prices from 2013, and property lobbyists have been continuously calling for them to be removed. The newly-appointed Minister for National Development Lawrence Wong has however rebuked that cooling measures will remain as the removal will cause another wave of property speculation seen before 2013.