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Bloomberg
Singapore’s renewed clampdown on speculative property demand sent real estate stocks reeling, as analysts predicted the end of a nascent home price rebound and the deflation of a buoyant market for collective sales.
The tightened rules sharply increase buyers’ stamp duties for entities such as developers. Singapore’s benchmark Straits Times Index dropped 2 percent Friday as property developers and banks led declines, with City Developments Ltd. and UOL Group Ltd. sliding more than 13 percent each.
As major property markets from New York to Sydney show signs of cooling, Singapore and Hong Kong prices are on a tear, causing unease among local policy makers. In Singapore, a sudden rebound in speculative demand, stoked by record land bids and redevelopment deals, threatened to undo years of carefully implemented curbs that had given the city-state an edge over Hong Kong in quality of living.
“This is a preemptive move by the government to cool down the market before it gets too hot,†Irvin Seah, an economist at DBS Group Holdings Ltd., said.
The en-bloc market, where a group of owners band together to sell a collection of apartments, surged in recent months thanks to demand from developers. Officials had repeatedly warned that such exuberance was unsustainable, and Ravi Menon, managing director of the Monetary Authority of Singapore, sounded a cautious note on en-bloc developments on Wednesday.
With the latest curbs, the en-bloc market is “potentially grinding to a halt,†DBS analysts led by Derek Tan said.
Individuals taking up their first housing loan will face tighter borrowing limits under the new rules, meaning they have to put up more cash to buy property.
For foreign purchases of residential property, the additional buyer’s stamp duty increases to 20 percent from 15 percent, while for
Singapore citizens the extra charges apply only from their second home purchase, the MAS, Ministry of National Development, and Ministry of Finance said.
For entities buying any residential properties for development, the additional buyer’s stamp duty rises by 10 percentage points to 25 percent, with a further five percentage points imposed for developers.
“Given the extent of the new cooling measures, we expect the home loans demand to be subdued,†said Koh Ching Ching, head of group corporate communications for Oversea-Chinese Banking Corp.
An index tracking property stocks excluding real estate investment trusts dropped 6.4 percent in Singapore. Oxley Holdings Ltd. plunged 16 percent, and stocks including CapitaLand Ltd., Keppel Land owner Keppel Corp. and Wing Tai Holdings Ltd. also declined.