Property curbs are to stay so stop complaining

Property curbs to stay, so say Monetary Authority of Singapore. Reported on Channel News Asia -

But honestly I am not surprised. Why am I not surprised you ask? Here is my analysis

1) property curbs in Hong Kong are still in place, so since HK has not lifted curbs, and if Singapore were to lift them, that would attract investors to storm to Singapore to start buying up properties and that would inflate the property market here, potentially causing a bubble.

2) Property market in China has recently seen recovery, so lifting curbs now may make it easier for such buyers to choose Singapore instead.

3) In 2016, we would see a surplus of properties completing, and therefore, it is expected for rentals to fall, observers are expecting some property owners who are unable to service their mortgage because of the poor rental market may have to sell below market value. By keeping the curbs, we will put off supply entering the market, and prices having to come down, and the focus on affordability via the TDSR helps keep our banking system healthy and robust.

4) Price reduction of private homes have not dropped by as much as expected. In some areas, prices have come down drastically, but in other areas they have not. The property curbs are making non-residents have to continue to rent, helping to alleviate the over surplus of units problem.

Everyone has a different opinion about the property curbs – should they stay, should they be removed. Surprisingly there were even calls for stiffer and additional cooling measures. I think the property curbs have been very effective, especially the TDSR, that really put the collar and leash on the Wild Stallion which was the Property market – both primary and secondary. As a property agent, when TDSR came in, transactions dried up. Since 2013, the property market has now somewhat accepted most of these property curbs.

According to flash estimates released by the Urban Redevelopment Authority (URA) earlier this month, prices of private residential properties fell by 0.9 per cent in the second quarter, marking the seventh continuous quarter of price declines since the record high in 2013. However, prices have corrected less than 7 per cent from their peak, and hence, the cooling measures introduced in 2009 such as the additional buyer’s stamp duty (ABSD) and the seller’s stamp duty are unlikely to be rolled back. (quoting TodayOnline)

While analysts are touting that prices should fall by 15-20%, so this means is that a previously valued at $1M property should now sell for $800K. But do you think this would be logical? If you were the owner of this property and your tenant is paying you a $2.5K rental (which is quite low for a 3 bedroom apartment in the suburbs), assuming that your mortgage is $3.3K, add property tax and maintenance/conservancy fees, $3.5K, you only need to top up $1K. Would you be forced to sell the unit at $800K? Highly unlikely don’t you agree?

Buyers are themselves putting offers 10-15% off the value of the property, Sellers are not willing to sell their properties at such depressed prices, they just can’t bring themselves to sell at such a discount. Only those that are hard pressed to sell would agree to such rates.

Our opinion is not if you need to pay ABSD, but if the property purchase fulfils the said objective, was the purchase done with a logical plan – did you buy the property and analysed the value of the property. Hence plan and understand the market or consult with an experienced real estate professional that is able to analyse it for you.

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