Since 2009, the Singapore government has been locked in several rounds of policy aimed at cooling overheated property prices.

(The Singapore residential property price index rose an exorbitant 38.2 per cent in the year to June 2010.)

The policies have at last taken hold. At the end of last year, home prices recorded their ninth consecutive quarter of decline, and are now down 6.7 per cent from their 2013 peak. They fell 3.7 per cent in 2015 alone.

While the slowdown in prices has been the result of government policy, global and economic forces have also played a role. Oversupply of homes amid a massive construction boom, and weaker offshore demand, particularly from China, have hit Singapore prices hard.

But despite the clear correction in prices, it’s generally accepted that the Singapore government won’t change direction immediately, and the policies aimed at reining in property prices will remain in place for now. A gradual recalibration of policy is likely to occur later this year or even in 2017.

Raymond Chow, President and KEO of Ray International Real Estate Group, says the government doesn’t want to “stir up the market” so soon after the measures have begun to take hold, and will aim to maintain a more tempered rate of price growth.

The economic climate in Singapore is cautious, says Chow. “To be honest with you, Singapore is technically in recession. The economy is very bad. We are hit by the global market, the China economy,” he said.

Chow believes that two of the government’s levers, high stamp duty for foreigners and stringent Total Debt Servicing Ratio rules, are overly restrictive in the current environment.

Foreigners are currently charged up to 15 per cent stamp duty. “It’s too high,” said Chow, who has proposed the rate be lowered to around 10 per cent. “If not,” he said, “The whole market’s going to be dead.”

Chow also believes the government’s TDSR framework, with its stress tests and stringent debt ratios, can make it difficult for borrowers to gain finance.

Chow laments the weakness in real estate across the region. “Everything is so slow,” he said. “We used to sell like 10-20 units a week. Now we don’t even get 5 a week,” he said.

Amid this kind of sentiment, it can’t be too long until the government begins adjusting its policy levers.

Caroline Egan 
 

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