{"id":18246,"date":"2018-07-06T22:32:28","date_gmt":"2018-07-06T14:32:28","guid":{"rendered":"https:\/\/www.99.co\/blog\/singapore\/?p=18246"},"modified":"2022-07-01T04:57:27","modified_gmt":"2022-06-30T20:57:27","slug":"new-property-cooling-measures-singapore","status":"publish","type":"post","link":"https:\/\/www.99.co\/singapore\/insider\/new-property-cooling-measures-singapore\/","title":{"rendered":"New property cooling measures in Singapore: a cause and effect analysis"},"content":{"rendered":"
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The first week of July 2018 was a rollercoaster ride for the Singapore property market. First, on Monday, the Urban Redevelopment Authority (URA) released 2Q 2018 flash estimates that indicated a strong surge in private property prices towards its previous highs of five years ago — when a series of cooling measures brought property prices on a prolonged downtrend that lasted until 2Q 2017.<\/span><\/p>\n

After five days of optimism for the property market… <\/span>a bombshell dropped<\/span><\/i>.<\/span><\/p>\n

On Friday morning, the chief of the Monetary Authority of Singapore (MAS), Singapore\u2019s central bank, <\/span>issued a statement of caution<\/span><\/a> against \u201ceuphoria\u201d in the local property market. Citizens barely had time to start a discussion based on that when the government <\/span>declared new cooling measures<\/span><\/a>, which would take effect at the stroke of midnight. This sent buyers into a mad four-hour scramble to beat the deadline.<\/span><\/p>\n

Why the frenzy? Well, the severity of the <\/span>5 to 30% increase in Additional Buyers Stamp Duty (ABSD), coupled with a 5% reduction in borrowing ability in the form of a tighter loan-to-value (LTV) limit<\/b>, was a huge shock to property analysts and experts, who used words such as \u201cheavy-handed\u201d and \u201cdraconian\u201d to describe the measures. But when we got in touch with Associate Professor Sing Tien Foo of the National University of Singapore\u2019s real estate department, he begged to differ.<\/span><\/p>\n

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What made the government pull the trigger?<\/b><\/h3>\n

\u201cThe strong price growth in the last two quarters has been concerning [the government],\u201d A\/P Sing says. \u201cAt the macro level, the uncertainties associated with rising interest rates and international trade environment could be among other potential triggers for the additional cooling measures.\u201d <\/span><\/p>\n

He added that, at the local level, the large supply in the pipeline — 44,261 total units — could have been a contributing factor.<\/span><\/p>\n

\"Cooling
Credit: Urban Redevelopment Authority (URA)<\/figcaption><\/figure>\n

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Does the current situation merit strong additional cooling measures?<\/b><\/h3>\n

While analysts argue that the property market is only into its nascent stages of recovery, A\/P Sing felt that the pace of the recent price growth could be seen as \u201cunsustainable\u201d. If not addressed, he argues that property prices could run out of control with \u201cserious unintended consequences on the financial market and economics.\u201d<\/span><\/p>\n

So, it\u2019s a case of swallowing a bitter pill right now, no matter how premature analysts argue this pill might be. \u201cA more stable and sustainable housing market will be important for the long term stability of the market,\u201d the professor asserts.<\/span><\/p>\n

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What\u2019s the fallout of the new cooling measures?<\/b><\/h3>\n

If the government seems heavy-handed in increasing ABSD and tightening LTV, that\u2019s because it wants to be exactly that. A\/P Sing says the ABSD increase is intended to hit certain target groups where it hurts. These groups are: <\/span><\/p>\n