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A Call To Review Previous Cooling Measures Prior To Imposing A New One

June 19th, 2012 · No Comments

Interested parties who were unsure whether the strong home sales by developers chalked up in the recent months can be maintained are now left with no doubt whatsoever subsequent to the release of Sales Figures for the month of April last Tuesday.

As a whole, there are a total of 2,487 new private homes with the exclusion of Executive Condominiums (ECs) which were sold last month. It accounts to a near 4-per-cent jump from March and is believe to be the highest monthly level ever since the 2,772 units that were sold in July of 2009.

At first, the skeptic credited the excellent performance to several projects having well-conceived developmental themes. Nonetheless, the Singapore property market has proven to almost all property experts wrong. It’s all been disaster and gloominess in the weeks subsequent to introduction of cooling measures in December of last year.

At present, the high monthly sales are being described by several people as the new norm, though, we can see, that there is nothing normal in here as the strong figures have already been achieved on historically low borrowing rates.

Furthermore, there are others who are even suggesting there is a need for review and revision concerning the volume of Government land sales in the event that the present pace of sales is sustained. It was also not so long ago – a little over a year – that the Real Estate Developers’ Association of Singapore (REDAS) recommended that the supply of state land be reduced as there were indications that the market might be oversupplied.

This makes me more analytical of the situation. If many property experts in te private sector interpreted it otherwise , how much more of our counterparts in the public sector, particularly persons whose tasked are to give advice to  the Government as to the five sets of cooling measures implemented so far?

Is there a possibility that they could have misconstrued the factors driving the private housing market? If the answer is in the positive then, surely it would be in the interest of the private housing market that they assess or re-evaluate some the earlier cooling measures implemented; in particular those that were not able to meet their objectives.

At the moment, as I saw it, a number of the measures – above all those connecting to stamp duties – are akin to slowly putting the private housing market into a straitjacket. In the near future, the market may find it hard to go forward or move backwards, to go up or to come down.

Already, we can see the deformation in the market being created by some of these cooling measures. In general, every segments of the housing market is supposed to behave in the same way, in terms of price trends or volume of sales. After all, they all provide the same service – accommodation – and are substitutes.

Today, we witness the volume of resale transactions decreasing while new sales are booming. The prices of suburban homes are moving in another direction as compared to those in the central areas. This is simply not normal.

And in addition, sizes of new apartments are getting smaller and smaller. Shoebox units of 50 sq m (538 sq ft) or less put up with the full impact of criticism, nevertheless, how many of us are conscious that half of all new apartment sales today are for those below 75 sq m? And that if more small units are being built, does it indicative of the fact that the supply of large or normal-sized apartments has been interrupted.

There have been many indications that the next set of cooling measures possibly will target the shoebox unit.

Consequently, we go to another set of cooling measures, it is vital that we should first fine tune the earlier ones. As I see it, both the sellers’ and buyers’ stamp duty measures have more or less the same impact on the market. With the implementation of the additional buyers’ stamp duty, definitely there can a case for the sellers’ stamp duty measure to be made less punitive.

If we keep adding on to the cooling measures – and I have a gut feeling that there will be more to come as there is a failure to addressed the liquidity problem – without reviewing  the earlier ones, time will come that the market will be caught in some kind of a deadlock.

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