The new cooling measures announced unexpectedly on the 5th of July has certainly delivered a shock to the housing market, and has shrouded it in uncertainty. Many investors will be hesitant to put their money into a new property, and homebuyers may be unsure about their home purchases.
For those of us who are not real estate professionals, the best thing to do then is have our ear to the ground, and find out what the experts are saying about the market before forming our own opinion.
From over 10 articles across major publications, we have compiled below the opinions of real estate professionals on various key topics:
Outlook of various markets
|Outlook of private residential market||Outlook of HDB resale market||Outlook of loan market||Outlook of collective sale market|
|Andy Wong, OCBC Investment Research analyst: “Coupled with the current macro uncertainties, near-term sentiment would be highly likely to sour”.||Ku Swee Yong, CEO of International Property Advisor: “There is some incremental increase but it is not solid enough to push resale prices up”.||Eugene Huang, Redbrick Mortgage Advisory director: “As LTV has been reduced to 75%, this would refer to a higher initial outlay, especially so for first property buyers that form the bulk of transactions. As such, growth of loans might be expected to slow down slightly”.||Tan Wei Leng, Colliers International managing director: “Typically, owners receive 50 to 60 per cent premium from selling their property collectively; they may now have to accept a lower premium”.|
|Tay Huey Ying, JLL head of research and consultancy, Singapore: “We expect sales to stall as soon as the measures become effective as buyers step back to evaluate the financial implications and developers reassess pricing strategies”.||Nicholas Mak, ZACD Group executive director: “There will be some turning from private to resale properties, but this number is so little that it’s not going to make a difference”.||Leng Seng Choon, RHB Research analyst: “The impact on banks’ housing loan growth over the next few quarters is likely to be muted, as most of these housing loans would be drawdown of loans already approved earlier”.||Tay Huey Ying, JLL head of research and consultancy, Singapore: “The collective sales market will also be dampened as developers become wary of end-demand and are hurt by the 5 per cent non-remittable ABSD on land purchase”.|
|Derek Tan, DBS analyst: “We expect demand from investors and foreigners to cool in the immediate term”.||Chris Koh, Chris Koh International director: “On the ground, we’re not seeing any impact on the HDB market. The HDB market is quite distinct from the private sector”.||Lim Sue Lin, DBS Equity Research analyst: “Loan growth sentiment will be dampened from here as this is currently driven largely by property development companies”.||Derek Tan, DBS analyst: “We believe that we have seen the end of the current collective sale cycle”.
|Tan Tee Khoon, Knight Frank executive director and head of residential (project marketing): “The market will need time to digest the new measures, with sales likely to be moderated over the next 3 to 6 months. However, projects that are in prime districts, growth areas and close to lifestyle amenities will continue to attract discerning buyers”.||Koh Ching Ching, OCBC head of group of corporate communications: “Given the extent of the new cooling measures, we expect the home loans demand to be subdued”.||Tan Hong Boon, JLL regional director of capital markets: “The market has already seen about 30 residential sites offered through collective sales tenders that have closed this year, but have yet to be awarded. With these measures, developers will become even more cautious on their next move, but I think the real demand is still there”.|
Perspectives of stakeholders
|Developer’s perspective||Government’s perspective||Home buyer’s perspective|
|Eugene Huang, Redbrick Mortgage Advisory director: “Cash outlay by developers for any project will increase 15% – 20% if they are taking financing”.||UOB head of research Suan Teck Kin & economist Ho Woei Chen: “The sharp increase in the ABSD rates is sending a strong signal on the Government’s reluctance to let property prices increase too quickly amid the recovery in the private residential prices over the past year”.||Augustine Tan, Real Estate Developers’ Association of Singapore president: “The new pre-emptive measures will also have a negative impact on first-time buyers; A lower LTV ratio will mean the homebuyer will need to stump up more cash or CPF outlay for down payments, which could come up to a considerable amount”.|
|CBRE: “Property developers will be affected most from these changes on their land acquisition costs”.||CBRE: “While we are not surprised at more measures given the emergence of warnings in calibrated measures in Q4 2017, we are surprised by its severity, which suggests the Government is evidently fearful of a bubble building up amid a rising interest rate environment and sizeable unsold launch pipeline”.||Si Xian Goh, Citigroup Inc. analyst: “That first-time home buyers were included in the policy dragnet, however, does suggest that the regulators are concerned that some first-time buyers are buying out of a fear of missing out and contributing to the overall spate of exuberance”.|
Opinions on cooling measures
|Opinions on the cooling measures|
|Andy Wong, OCBC Investment Research analyst: “A sledgehammer to kill a fly”.||Tay Huey Ying, JLL head of research and consultancy, Singapore: “We feel the additional measures have been introduced too hastily coming just after 9.1 per cent growth in PPI (Property Price Index) over four quarters. The market should have been given a chance to find its own level in response to the expected surge in launches in coming months”.||Andrew Lim, CapitaLand Group CFO: “I would say we are an architect of our own situation. The regulators have seen this threat (rapidly rising private residential property prices) and are trying to nip it in the bud in its infancy…On that basis, I suppose the reactions (implementing the cooling measures) are a fair one”.|
|Richard Lai, GuocoLand Group CFO: “This has completely different dynamics and one doesn’t throw in new measures just because of that”.||Real Estate Developers’ Association of Singapore: “No rationale…(the property market) should be allowed time to find its own course and reach a sustained equilibrium”.||Christine Sun, OrangeTee’s head of research: “For this current round of ABSD, the effect could be more pronounced and prolonged than the previous two rounds as a more draconian measure is in place”.|
Whether or not the cooling measures are good for Singaporean homebuyers, the fact is these cooling measures are likely here to stay. Similar to the time when the Total Debt Servicing Ratio (TDSR) was implemented in 2013, it will eventually become business as usual once the housing market gets used to the cooling measures. These measures will certainly force homebuyers and investors to be more careful and prudent with their purchases, but by no means spell doom and gloom, at least in the long run.