Analysts don’t see significant impact of tweaking cooling measures

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The latest policy relaxation is seen as the beginning of the unwinding of cooling measures, an analyst said.

Although analysts welcomed the move to ease the Seller’s Stamp Duty (SSD) and the Total Debt Servicing Ratio (TDSR) framework, they do not expect the latest measures to have a significant impact on the property market, reported Channel NewsAsia.

ERA Realty Key Executive Officer, Eugene Lim, for instance, noted that while the reduced stamp duty will “bring relief and a way out” for owners looking to sell their properties within three years, the adjustment will unlikely push prices up in both the primary and secondary markets.

This comes as the measure is a forward-looking one, hence, applicable only to housing units purchased on or after 11 March 2017.

Given the abundant supply in the residential market and the Additional Buyer’s Stamp Duty (ABSD) and loan-to-value (LTV) limits still in place, “developers and sellers are expected to remain realistic when pricing their units for sale”, he noted.

Mohamed Ismail, CEO of PropNex Realty, described the latest tweak as a minor change that will only affect a small group of owners.

“We feel that changes to the TDSR framework will help homeowners to monetise their properties in their retirement years,” he said.

The government eased the TDSR, with the 60 percent threshold no longer applicable to mortgage equity withdrawal loans with LTV ratios of 50 percent and below.

Nonetheless, Ong Kah Seng, Director at R’ST Research, believes the cut in the SSD could lead to a “positive knee-jerk effect” on developer sales.

“We may see developers (being) able to clear stock rapidly at least in these two months. This includes projects that were launched a while ago and saddled with substantial unsold stock, as well as projects with strong selling points.”

Meanwhile, Ong Teck Hui, National Director, Research and Consultancy at JLL, sees the policy relaxation as “the beginning of the unwinding of cooling measures and this is expected to lead more buyers back to the market”.

“Buyers would perceive the market as bottoming and be hopeful of a price recovery.”

Separately, Hari Krishnan, CEO of PropertyGuru Group, said the tweaking of the measures indicates that the “government is closely watching the sector and seeking to ensure a healthy, thriving real estate market, while addressing concerns from homeowners and investors”.

He expects the downward revisions on the SSD to stimulate investment sales, particularly in the short- to medium-term.

The change will “most likely benefit real estate investors looking to exit their investments after three years, as they will be able to place their properties on the market earlier, without the burden of stamp duties”, he noted.

 

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg