A new round of cooling measures were introduced last July to dampen demand in the property market.
Higher additional buyer’s stamp duty (ABSD) rates and stricter loan-to-value (LTV) limits on residential property purchases were imposed to dissuade buyers from overextending themselves financially, said National Development Minister Lawrence Wong when the measures were announced.
The move came amid rising private home prices, which had soared 9.1 per cent over four quarters at the time.
The rule change meant that Singaporeans and permanent residents have to pay 5 percentage points more for stamp duties on buying their second and successive properties, while for foreigners, the ABSD applies even on the first property.
The proportion of a property’s value a buyer can borrow – known as the loan-to-value limit – was slashed by five percentage points.
With the property curbs, local banks DBS, OCBC and UOB found their home loans either reduced or remaining flat.
Home loan growth decelerated to 0.9 per cent in March, the weakest increase since at least 1992, according to data from the Monetary Authority of Singapore.
The cooling measures have stabilised the property cycle, Mr Wong said last month in a Bloom-berg interview. Private home prices dipped 0.1 per cent in Q4 2018 after the curbs, the first time in six quarters. This was followed by a 0.7 per cent fall in Q1 2019.
However, new private home prices managed a 7.9 per cent gain last year, compared with a 1.1 per cent rise for 2017.
It was announced last month that home buyers can draw more from their Central Provident Fund (CPF) to buy ageing flats, provided the property’s remaining lease covers the youngest buyer till age 95, amid a shifting focus towards whether a property can last a home owner for life, instead of the years remaining on its lease.
This means that middle-aged buyers can buy ageing flats and face fewer restrictions on CPF use. But younger people buying old flats may have to pay more cash, if the lease does not cover the youngest buyer until at least 95 years of age.
For instance, a couple aged 25 who buy a flat with 65 years remaining on a lease can use their CPF to pay only 90 per cent of the valuation limit, down from 100 per cent.
CBRE’s head of research for South-east Asia Desmond Sim feels the move expands the number of potential buyers and sellers.
“Apart from unlocking additional value to older properties, this will also allay the fears of owning ageing assets,” he said, adding that the move allows buyers to qualify for developments that might otherwise have been out of their reach.
However, Huttons Asia head of research Lee Sze Teck feels the change will not affect demand for older flats much, due to restrictions on the withdrawal of CPF money in cases where the lease does not cover buyers until age 95.
“Rather, it will encourage younger buyers to go for either BTO flats (Build-To-Order) or younger properties,” he said.
More mega projects in the pipeline
Project launches have slowed slightly since a bumper crop of releases earlier this year, and there is likely to be a hiatus this month as developers break for the holidays.
However, more large-scale projects with more than 1,000 units each are expected later this year.
There was a slew of 10 launches in March, which included mega projects Treasure At Tampines (2,203 units) and The Florence Residences (1,410 units), before developers held back in April with just three launches.
Projects that entered the market last month include Amber Park in East Coast, Olloi Condo in Changi Road, The Woodleigh Residences in Bidadari, The Gazania and The Lilium in How Sun and Parc Komo in Changi.
According to Huttons, there were more than 200 new sales in the first week of May alone. Because of this, May’s total may just oust the 735 units sold in April.
If April’s numbers are seen monthly for the rest of the year, the 2019 figure will be comparable to the 8,795 homes sold last year.
Some other big projects being launched later in the year are UOL’s 56-storey Avenue South Residence in Silat Avenue, with 1,074 residential units, and the 1,468-unit Parc Clematis by SingHaiyi Group in Clementi.
Experts predict about 40 to 50 new launches this year, coming from the wave of collective sale deals seen in the past few years.
“Source:[Property cycle stabilises, thanks to cooling measures] © Singapore Press Holdings Limited. Permission required for reproduction”
