As the slowdown in Singapore’s housing market grows, investors are wondering when the government will relax its anti-speculation curbs.
According to an estimate by the Urban Redevelopment Authority (URA) on Tuesday, the prices for private residences in the city-state dropped 1.1 percent in the April-to-June period, marking three consecutive quarters of declining prices. In the previous two quarters prices had dropped 1.3 percent and 0.9 percent.
Singapore to Relax Property Cooling Measures
Factors that are expected to contribute to lower property prices over the course of 2014-2015 include increased supply, rising mortgage rates, and a weak rental market.
Tan Xuan, an analyst at the Malaysia-based lender CIMB, wrote: “Combined, we believe these (factors) will exert further pressure on property prices in the mid-term.”
CIMB predicts prices will fall 10-15 percent during this period, while Barclays expects a 5-15 percent decrease in 2015.
Although there is impending risk of correction, analysts say that it is doubtful the government will take its foot off the break until next year, and cite recent comments from the Ministry of National Development (MND).
Risk Of Too Sudden Price Collection of Singapore Properties
On Monday, the MND said that it is still too early to pull back on property cooling measures as current prices have remained stable, even though home sales have declined.
Adrian Chua, an analyst at Citi, stated: “Any reversal of policy measures in 2014 remains unlikely in the context of the moderate price declines that have played out thus far.”
Since 2009, the government established seven rounds of cooling measures in the property market that include tighter loan requirements and higher stamp duty rates for buyers. However, these measures failed to take the heat out of the market.
While pricing for private homes have calmed in recent months, they are still 57 percent over 2009 levels, according to Barclays (London Stock Exchange BARC-GB).
Tricia Song, an analyst at Barclays, has also dismissed a pull back on cooling measures, noting that the statement from MND confirms her belief that “the government will only start unwinding measures when prices fall steeper 10-15 percent, perhaps in 2015.”
Home to one of the world’s most extravagant real estate markets with the absence of land and popularity, Singapore is an investment destination in the region, triggering a swift rise in prices over the past two decades.
As a result of this boom, many Singaporeans feel they cannot meet market demand prices, making housing affordability a government priority.