More cooling measures ahead

And not only because the National Development Minister is worried.

If there is continued strength in mass-segment prices, according to OCBC Investment Research, they believe the government would likely have to implement more cooling measures.

OCBC Investment Research noted:

On his blog, National Development Minister Khaw Boon Wan expressed his worries about "a sharply rising property market". As noted in our previous report dated 8 June 2011 ("Closer look at the possible BTO ceiling hike), we estimated that the effects of the BTO ceiling increase on the private property market would likely be muted and back-loaded. Hence, we believe the government would likely have to implement more cooling measures, especially if there is continued strength in mass-segment prices.

Meanwhile they continue to forecast a 5-10% fall in the mass-segment over FY11-12.

Given policy risks over the shorter term and headwinds from interest rates and physical completions from FY12, we continue to forecast a 0-5% dip in high-end property prices and a 5-10% fall in the mass-segment over FY11-12. We maintain our NEUTRAL rating on the residential property sector, as we believe these price dips are mostly priced in given the significant forward visibility at this juncture. Note that share prices of major property developers (City Development and CapitaLand) have fallen significantly year to date too, despite continued increases in property prices, as investors brace for potentially lower prices ahead.
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