Review property curbs now, listed developers urge

It needs to be done as soon as possible.

Residential developers have intensified their call to ask the government to ease some property cooling measures, as their earnings continue to shrink in tandem with steadily falling property prices.

In its earnings statement released after market hours on Thursday, City Developments urged policymakers to lift cooling measures “as soon as possible”. Singapore’s second-largest developer suffered a 16% profit drop in the third quarter, mainly due to lower contributions from its property development segment.

“The Group continues to hold the view that the property cooling measures need to be reviewed as soon as possible, given that home ownership rate in Singapore is over 90%. Timing is the most important factor to achieve a healthy and sustainable property market,” CityDev said.

Earlier in November, the quarterly Real Estate Sentiment Index released by the National University of Singapore (NUS) and the Real Estate Developers’ Association of Singapore (REDAS) showed that market sentiment among developers dropped further during the third quarter.

“The sentiment in the market continues to weaken in 3Q2015. The weak sentiment has spilled over to prime retail and office sectors. More respondents have called for the removal of some of the cooling measures, such as ABSD and SSD to arrest the worsening market condition,” said Sing Tien Foo, Associate Professor at NUS.

An overwhelming 83.1% of the respondents felt that the government should lift or tweak the existing cooling measure over the next six months. 60.8% of them indicated that the additional buyers’ stamp duty (ABSD) should be lifted, while 56.7% of respondents indicated that the sellers’ stamp duty (SSD) should be lifted. 

“ABSD should be removed due to the tight supply of housing in the market. ABSD should not be a permanent policy as it creates inefficient market equilibrium. Furthermore, it does not encourage financial prudence. MSR and TDSR are based on ratios and percentages. Percentages only address the issues of the average category and could be too harsh or too lenient,” said one unnamed survey respondent.

““The Additional Buyer’s Stamp Duty should be lifted as private residential property prices had dropped by about 8% in 2Q 2015 compared to the third quarter of 2013. However, the Total Debt Servicing Ratio should be retained,” another added.