{"id":108720,"date":"2019-07-04T18:20:49","date_gmt":"2019-07-04T11:20:49","guid":{"rendered":"http:\/\/www.siamlandbank.com\/propertynews\/property-news\/one-year-on-how-the-cooling-measures-came-and-shook-up-the-housing-market\/"},"modified":"2019-07-04T19:03:36","modified_gmt":"2019-07-04T12:03:36","slug":"one-year-on-how-the-cooling-measures-came-and-shook-up-the-housing-market","status":"publish","type":"post","link":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/one-year-on-how-the-cooling-measures-came-and-shook-up-the-housing-market\/","title":{"rendered":"One Year On: How The Cooling Measures Came And Shook Up The Housing Market"},"content":{"rendered":"


\nToday marks exactly one year since the Government dropped the surprise announcement that it was raising Additional Buyer\u2019s Stamp Duty (ABSD) rates and tightening Loan-To-Value (LTV) limits just after 7pm on July 5.
\nThe measures, which took effect the next day, came as a surprise, arriving just as property developers replenished their land banks throughout 2017 and into 1H2018, in anticipation of blockbuster sales.
\nHow have the cooling measures impacted the housing market since and which segments were hit the hardest? More importantly, what should buyers and investors keep a lookout for moving forward? Read on for answers.<\/p>\n

ABSD rates pre-and-post cooling measures<\/p>\n

Source: IRAS
\n\u00a0
\n1) First things first, they DID curb soaring home prices\u00a0
\nIn the first place, the measures were introduced to cool an overheating residential property market.
\nThe move came just days after official data showed that private home prices had risen to its highest point in four years in 2Q2018 (as shown in the chart below), with analysts predicting that prices could soon recover to 2013 peak levels.<\/p>\n

Singapore Property Price Index<\/p>\n

Source: URA, PropertyGuru
\nThe effects of the property curbs were immediately felt, turning the tide on soaring home prices over the next quarter following its implementation. Total sales volume also plunged by almost half over the next 12 months.
\nDespite that, home prices remained relatively stable, with the price index rising by just 0.5% over the last two quarters of 2018, and registered just a slight dip in the first quarter of the year. But in a surprising turn of events, home prices unexpectedly rose again in 2Q2019 (more on this under point no. 3).
\nBut largely, it would appear that the property cooling measures have achieved just what they were put in place for, which was \u2013 as Mr Lawrence Wong, Minister for National Development (MND) puts it \u2013 to stabilise the property cycle.
\nPrices were rising very sharply and there was a very real risk that prices would outpace fundamentals, said Wong at a recent Bloomberg interview. \u201cIt (the cooling measures) was, as we had stressed then, not to bring down prices but to stabilise and moderate the cycle, and I think we have achieved that effect,\u201d he said.
\n\u00a0
\n2) They also caused an overall slowdown in buying demand (but sparked some oversupply fears)
\nIt goes without saying that a slowdown in buying demand was what led to a stabilisation in home prices in the first place. But what\u2019s interesting here is that while resale transactions are observed to have plummeted over the past year, the volume of new sales transactions have remained relatively stable.
\nBased on caveats lodged, we saw a -57% reduction in resale volume from 3,951 units in 2Q2018 to 1,689 units in 2Q2019. New sales volume on the other hand, fell by just -3%, with 2,215 units in 2Q2018 to 2,147 units in 2Q2019.
\nWhat this suggests is that while buying demand has been dampened by the measures, they have not been completely quelled and there remains an appetite for new projects that are attractively priced for their tenure and locations (more on this in the next point).<\/p>\n

The resale market bore the brunt of the property cooling measures<\/p>\n

Source: URA, PropertyGuru\u00a0
\nHowever, while reduced buying demand is an intended effect of the cooling measures, the large overall dip in buying activity has sparked some oversupply concerns, which prompted the Government to act to reduce private housing supply under the GLS programme for 2H2019 by 15%.\u00a0
\nIn the mid to long term, the cutback is expected to even out the supply-demand equilibrium in the Singapore housing market.\u00a0
\nLooking for a new home but not sure where to start? Check out our\u00a0Area Insider Guides\u00a0for insights!
\n\u00a0
\n3) But even with higher stamp duties, certain new projects continue to enjoy healthy demand (while hitting new price highs)
\nAs mentioned above, after two consecutive quarters of decline, private home prices rose unexpectedly in 2Q2019, during which the URA flash estimate registered a positive change of 1.3%. This brought the year-to-date change for 2019 to +0.6%.
\nThe uptick was led by a strong growth of 3% in the Rest of Central Region (RCR) and 1.5% in the Core Central Region (CCR) prices.
\nDesmond Sim, CBRE\u2019s head of research for Southeast Asia, attributes the upswing to new launches that are achieving new benchmark pricing on the back of increased land costs. He noted that certain new launches sold well during the quarter, and these projects were\u00a0 \u201cvalued on their tenure, location and reputation of the developer.\u201d
\nHe cited examples such as the freehold Amber Park and Coastline Residences in the East Coast, whose units achieved high take-up rates and pricing points, and were likely the key drivers behind the 3% growth in RCR home prices.
\nWithin the CCR, high-end projects such as Boulevard 88\u00a0enjoyed buoyant sales. Launched in March 2019, the ultra-luxury freehold project moved 34 units during 2Q2019 at a median price of $3,692 psf, compared to 25 units in 1Q2019 at a median price of $3,606 psf.\u00a0<\/p>\n

Within the CCR, high-end projects such as Boulevard 88\u00a0enjoyed buoyant sales in 2Q2019.<\/p>\n

Notably, a 5,673 sq ft penthouse at the development sold at $28 million or $4,936 psf in May \u2013 the highest in psf terms to be achieved at the development.
\nMeanwhile, the nearby 3 Cuscaden, launched in November 2018, sold 27 units in 2Q2019 at a median price of $3,601 psf, up from 12 units at $3,506 psf in 1Q2019.\u00a0
\nIn the grander scheme of things, CBRE\u2019s Sim believes that the uptick of prices in the second quarter of the year is merely an anomaly\u2019 and that the property index should still remain relatively stable in the near term.
\n\u00a0
\n4) However, the measures killed the en bloc market, and are likely causing the current holdback in new launches
\nFinally, let\u2019s take a look at the segment that was perhaps hit the hardest by the cooling measures.\u00a0
\nAlong with higher stamp duty rates for buyers, the 2018 cooling measures also introduced a new, non-remissible 5% ABSD for developers when they purchase residential development sites (including en bloc sites).\u00a0
\nIn addition, the remissible ABSD for residential developers has been raised to 25% from the previous 15%. If a developer fails to complete a project and sell all of its units within five years of acquiring the site, it will have to pay the 25% ABSD with interest.\u00a0
\nIt is for this reason that the booming collective sales cycle quickly came to an end post-cooling measures.\u00a0<\/p>\n

The cooling measures spelled the death of the en bloc market<\/p>\n

Source: URA, PropertyGuru
\nTo give you an idea of just how hot the collective sales market was \u2013 at its peak, there was a total of 50 en bloc deals in the whole of 2017, and 38 en bloc deals in the first six months of 2018 alone (so imagine where the market would have headed if the property curbs were not enforced).
\nPost-cooling measures, en bloc deals were decimated to just one in 4Q2018, and just one in the year of 2019 to date.\u00a0
\nIn the meantime, the roll-out of new private homes for sale has also been slower than initially predicted, with property developers holding back on new launches.\u00a0
\nFor the whole of 2019, analysts were expecting to see about 40 to 60 new launches from the previous en bloc fever, which could bring about as many as 23,000 to 25,000 new private housing units to the market. The bulk of these new launches were expected to be launched during the first two quarters of the year, but so far, we are only seeing half of those projects being launched.
\nAccording to Winston Lee, PropertyGuru\u2019s Regional Head of Special Projects, developers are currently adopting a \u2018wait-and-see\u2019 approach. \u201cThose who can wait, will wait until market sentiment improves before they launch their new projects.\u201d
\nMeanwhile, CBRE\u2019s Sim says that developers who are unfazed by the sell-by deadlines are unlikely to reduce prices of these new launches.\u00a0
\nHome buyers looking for\u00a0Singapore Properties\u00a0may like to visit our\u00a0Listings,\u00a0Project Reviews\u00a0and\u00a0Guides.\u00a0\u00a0
\n\u00a0
\nWhat\u2019s next?
\nIn the near term, it is unlikely that the authorities will introduce more cooling measures, though it doesn\u2019t look like they\u2019ll relax existing ones either.\u00a0
\nThis comes especially after Ravi Menon, managing director of the Monetary Authority of Singapore (MAS) announced at an annual report media briefing that the measures were implemented only a year ago and it takes time to allow them to work their way. But price increase has dampened and the market is more sober, and there is a good balance holding up the market, he said.
\nMoving forward, he assured that the Government will continue to monitor the property market to ensure a healthy and sustainable market.
\nFeeling the pinch of paying more upfront after new measures in 2018? Turn back time and save on your new home with the biggest deals in town! Get it now at:\u00a0www.propertyguru.com.sg\/gurudeals<\/p>\n

Fiona Ho, Digital Content Manager at PropertyGuru, wrote this story. To contact her about this or other stories, email\u00a0fiona@propertyguru.com.sg
\n
\nSource : proppertyguru.com.sg\/Property Market
\nRead more…One Year On: How The Cooling Measures Came And Shook Up The Housing Market<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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The Government on Wednesday (15 December) unveiled a package of measures to cool the private residential and HDB resale markets.\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.siamlandbank.com\/propertynews\/wp-content\/uploads\/2021\/12\/Buildings-singapore.jpg?fit=820%2C410&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":100382,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/sentiment-among-property-developers-down-on-july-cooling-measures\/","url_meta":{"origin":108720,"position":1},"title":"Sentiment among property developers down on July cooling measures","date":"October 23, 2018","format":false,"excerpt":"\r The latest round of cooling measures were described as unexpected and surprising, as well as extremely disruptive. Property cooling measures announced in July have dampened sentiment in the property market, with the Real Estate Sentiment Index (RESI) falling sharply to 4.0 in Q3 from 6.6 in Q2, reported the\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":104187,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/redas-calls-on-government-to-tweak-property-cooling-measures\/","url_meta":{"origin":108720,"position":2},"title":"REDAS calls on government to tweak property cooling measures","date":"February 20, 2019","format":false,"excerpt":"\r Last year, the government raised the ABSD payable by developers from 15 percent to 30 percent, of which five percent is non-remittable. Real Estate Developers\u2019 Association of Singapore (REDAS) president Chia Ngiang Hong has urged the government to review the additional buyer\u2019s stamp duty (ABSD) policy to avoid the\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":123859,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/govt-carefully-considered-scope-timing-of-new-cooling-measures\/","url_meta":{"origin":108720,"position":3},"title":"Gov\u2019t carefully considered scope, timing of new cooling measures","date":"December 17, 2021","format":false,"excerpt":"\r Gov\u2019t carefully considered scope, timing of new cooling measuresThe higher ABSD aims to moderate the demand from those who wish to purchase investment properties, while tighter loan limits aim to encourage \u201cgreater financial prudence\u201d among home buyers. The Government has \u201ccarefully considered\u201d the scope and timing of the new\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"https:\/\/i2.wp.com\/www.siamlandbank.com\/propertynews\/wp-content\/uploads\/2021\/12\/singapore-marina.jpg?fit=820%2C411&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":113626,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/foreign-buyers-show-resilience-in-the-luxury-condo-market\/","url_meta":{"origin":108720,"position":4},"title":"Foreign buyers show resilience in the luxury condo market","date":"January 15, 2020","format":false,"excerpt":"\r While the cooling measures in 2018 have dampened demand for residential properties, foreigners who bought top-end condos are showing more resilience.\u00a0 The cooling measures implemented in July 2018 may have lowered general home-buying demand, but foreigners appear to have been more resilient towards high-end condos, reported The Business Times,\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":42517,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/replace-absd-with-a-new-property-tax-jll\/","url_meta":{"origin":108720,"position":5},"title":"Replace ABSD with a new property tax: JLL","date":"February 1, 2017","format":false,"excerpt":"\r More calls to tweak the property cooling measures. With house prices under considerable pressure, given the subdued economic outlook both locally and globally as well as the expectations of rising interest rates, now could be the right time to consider property cooling measures, said JLL in a report. 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