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Further home price spikes may spell risk of renewed cooling measures

Posted by Developer Sales on April 11, 2018
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PUBLISHED 11th April 2018

Numerous successful quarters of private residential home prices moving upwards may leave property market a possibility of refresh cooling measures.

There is an amazing 3.1% jump in the first quarter which led to the property circles to think how policymakers would respond if this uptrend of same or even higher price spikes continue in the next 2 quarters.

As accordingly to the past record, the authorities will start do to some actions when they see a double digit growth in the price index. said Dr Lee Nai Jia, research head at Edmund Tie & Company. This would also hint the authorities to wait until the Urban Redevelopment Authority overall price index for private homes rises another 5.1 percent from existing level.

it was expected a much higher estimate for URA’s Q1 2018 overall private home price index came after slower increase per quarter of 0.8% in the fourth quarter of 2017 and 0.7 in Q3 2017 and declining out of index in Q2 in the previous year.

Set aside the price index, researcher mention that another potential red flags the authorities would be the income growth falling behind the escalation in home and a slight increase in the proportion of foreign purchasing.

The government are eyeing on bank exposure to real estate lending, regardless for land acquisition or housing mortgages, including proportion of household wealth being tight up with real estate. Said Savills Singapore research and consultancy head Alan Cheong.

A study vacancy trends includes comparing the number of private homes sold against the growth in the number of Singaporean households, would be able to give us a estimate study if private home is driven by investment or home stay.

Researcher suggest that the developer may try to phrase out the launches and slow down the developing sites if there is a new cooling measures at this junction.

Savills’s Mr Cheong highlights another potential negative fallout from a premature intervention. “The private housing market is only beginning to find its footing after a prolonged slump. If the invention causes volume to clash, it would increase the risk to financial institutions that have belted out loans to the developers who have been stocking up on land either from GLS (Government Land Sales) programme or through collective sales.”

Cooling measures that government will unloose?

√ The Seller Stamp Duty from 4 years to 3 years back in March last year. And the reduction of 4% for each tier.

√ May reduce potentially loan-to-value limits for the second and subsequent housing loans

√ Increase the 7% additional buyer stamp duty (ABSD) rate on Singaporean buying their second residential property

√ Singaporean are exempted from ABSD on their first residential property purchase and pay 10% ABSD on their third and subsequent residential property purchases.

Source: The Business Times


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