It has been two years since the Government implemented measures to cool the property market. While the Government says the measures won't be removed anytime soon, property market watchers say a slow economic growth climate may be a good time to at least tweak these measures.
SINGAPORE: The property market could finally be showing signs of stabilising, two years after the Government introduced a slate of measures, including the Additional Buyer's Stamp Duty and the Total Debt Servicing Ratio.
HDB resale prices have fallen about 10 per cent from their highs in 2013, while private resale prices have come off by about 8 per cent.
After taking office, the new Minister for National Development Lawrence Wong said that the cooling measures were here to stay for now as the Government did not want to risk a premature market rebound. However, he added that the situation was still “fluid” and some measures may be adjusted going forward.
One analyst said a slowing economy could also provide the environment to tweak some measures without fear of market spikes.
"If the Government's main concern or restrictions against removing or lessening some of the cooling measures are fears that once the measures are reduced, prices will again rebound and grow quite rapidly, then perhaps the best environment for the Government to ease off on some of the cooling measures is when the economy is in the slow state of growth or even maybe in a recession,” said Mr Nicholas Mak, executive director of research and consultancy at SLP International.
“In such a situation, housing demand will naturally be weaker if the Government were to remove any of the cooling measures in such an environment, then the chances of prices growing strongly are minimised," he added.
One area of concern among potential homebuyers is the normalisation of interest rates and in 2015, some key benchmark rates in Singapore have started to creep up. Higher interest rates would mean higher mortgage and borrowing costs.
However, an industry watcher said he thinks the market has already factored this in.
Mr Eugene Lim, key executive officer at ERA Realty Network, said: "The only kind of risk is maybe interest rates increasing in the coming year. However the market would have already factored that in, because loan approvals are based on a 3.5 per cent interest rate calculation, whereas current housing rates are at 2 per cent, or if even there was any increase, it would possibly be quite less than 2.5 per cent in total.
"So you'd still be paying less than what your approval was based on. There's still quite some buffer. There is no danger of people being priced out of the market because of interest rate increase."
With prices stabilising, transaction volumes have picked up slightly, especially in the resale market. Looking ahead, an industry watcher expects next year to pick up where 2015 left off, and that transaction volumes could continue to improve as "50-50" buyers may be lured back into the market.
Said Mr Alan Cheong, senior director for research and consultancy at Savills: "In 2016, we'll see buyers starting to come back into the market because in the new sale market, prices will remain pretty firm. And it has been remaining pretty firm for areas like the RCR (Rest of Central Region) and OCR (Outside Central Region), the mid-tier and mass market for new sales, because land costs have not really fallen that much. In fact it's gone up for some recent tenders.
"It's only in the resale market that transaction volumes may start to pick up (as) the number of buyers who've been sitting on the sidelines start to see value emerge in the resale market."
According to statistics from the Urban Redevelopment Authority, the total number of completions for 2015 is expected to hit 22,414 units, including executive condominiums (ECs), with another 27,149 units, including ECs, completed in 2016.