SINGAPORE: Shares of Singapore’s property firms fell on Thursday (Dec 16) after the Government unexpectedly announced a slew of new measures to cool the private residential and HDB resale markets.
City Developments plunged as much as 4.1 per cent in early morning trade. The counter later regained some ground to close 2.7 per cent, or S$0.19 lower, at S$6.88.
Other developers also managed to trim their losses in afternoon trade. UOL finished 0.8 per cent, or S$0.06, lower at S$7.04, after declining as much as 3 per cent when the market opened. Oxley Holdings fell as low as S$0.179 at the open before recouping some losses to close down 2.1 per cent at S$0.183.
GuocoLand dropped 0.7 per cent, or S$0.01, to S$1.51, while Frasers Property shed 0.9 per cent, or S$0.01, to close at S$1.14.
Property agency PropNex closed 3.9 per cent, or S$0.07, lower at S$1.71 after having plummeted as much as 14 per cent earlier in the trading day.
Real estate brokerage APAC Realty also finished in the red, down 10.5 per cent or S$0.08 at S$0.685.
As part of the latest cooling measures announced late Wednesday night, the Additional Buyer’s Stamp Duty (ABSD) rates for those buying additional properties will be raised.
From Thursday, Singapore citizens and permanent residents buying their second or subsequent homes will face a 5 to 15 percentage point increase in ABSD. Foreigners and entities will also incur more ABSD when purchasing any residential property.
The total debt servicing ratio (TDSR) threshold for borrowers will also be tightened from 60 per cent to 55 per cent. This will apply to property puchase loans where the option to purchase is granted on or after Dec 16, and for mortgage equity withdrawal loan applications made on or after Dec 16.
In addition, the Loan-to-Value (LTV) limits for loans from HDB will be lowered from 90 per cent to 85 per cent. This will affect new flat applications for sales exercises launched after Dec 16 and complete resale applications received by HDB from Dec 16 onwards.
The private residential and public housing resale markets have been buoyant, despite the economic impact of COVID-19, the Government said.
“If left unchecked, prices could run ahead of economic fundamentals, and raise the risk of a destabilising correction later on. Borrowers would also be vulnerable to a possible rise in interest rates in the coming years,” added the joint statement by the Finance Ministry, the Ministry of National Development and the central bank.
CGS-CIMB analyst Lock Mun Yee said the moves are targeted at “cooling investment”, rather than owner-occupier demand, as well as dampen market sentiment and volume demand in the near term.
Echoing that, OrangeTee & Tie senior vice-president of research and analytics Christine Sun expects some “knee-jerk reaction”, with sales volumes slowing down for about six months.
Private home prices may stabilise and rise at a much slower pace next year, she added. Given that, OrangeTee & Tie now expects prices for the private residential market to rise 0 to 3 per cent next year, down from an earlier forecast of 6 to 9 per cent.
Commenting on specific policy adjustments, Ms Lock noted that the rise in ABSD rates for entities, alongside the ramp-up in private and public housing supply, may impact the en-bloc market more adversely.
Impact from the tightening of the TDSR threshold and LTV for HDB purchases could be limited. On the latter, the additional down-payment that home-owners will have to fork out can be funded via cash or CPF, she added.