View Full Version : Bloomberg:singapore-s-four-letter-word
ccreporter
19-12-15, 06:30
http://www.bloomberg.com/gadfly/articles/2015-12-18/singapore-s-four-letter-word
Singapore is caught between a rock and a hard place. On the one hand, a slowing Chinese economy and sputtering global trade are squeezing growth in the small Asian city-state. On the other hand, the mighty Federal Reserve's sway on global interest rates is causing a sharp jump in the island's benchmark borrowing cost.
SINGAPORE SQUEEZE
There's one -- and perhaps only one -- way for Singapore to wriggle out of the tight spot: scrap "ABSD."The four-letter acronym stands for additional buyer's stamp duty, a tool the authorities invented in late 2011 when Singapore's property market was being inundated by cheap foreign money. The duty, which has since risen to an onerous 15 percent upfront tax on Chinese and other overseas purchasers, is a big liability for companies like CapitaLand, City Developments and UOL Group, the city's top three developers by market value. Already, there are more than 24,000 unsold homes either ready or under planning and construction. During the past one year, developers have managed to sell only about 7,000 new homes. One way to clear the backlog is to let the buyers come. Otherwise, the 8 percent decline in property prices over the past two years could easily spiral out of control.NUMBER OF UNSOLD HOMES IN SINGAPORE24,149Smart money is positioning itself for a policy reversal. Out of Singapore's 33 publicly traded real estate companies, as many as five, including Wing Tai, a high-end developer, have reported at least a 10 percent increase in company insiders' stakes. In most recent filings, three other builders, including UOL, have seen a similar increase in institutional investors' shareholdings.Nomura economist Brian Tan recently told Channel News Asia that he expects Singapore to start relaxing some of the curbs on property demand. That could become necessary to avoid accidents in the sector. After all, rising borrowing costs don't just affect property buyers. The debt burden is getting bigger for smaller developers, too. If they start dumping their inventory, Singapore's property market may become unstable:
Weakening Finances
Ratio of retained cash flow-to-net debt for smaller Singapore developers
Source: Bloomberg
Blunt tools like ABSD were useful once, as an unusual barrier against unconventional money printing by the West. With the U.S. now back to a more traditional monetary regime, the case for Singapore to hold onto its discouraging stamp duties is fast vanishing. It's time to retire the four-letter word.
1) they should remove all additional buyer stamp duty for local and foreigners.
2) stop issuing land sales for private homes.
Amber Woods
19-12-15, 09:30
Every business and investment have risks and that includes property development. The primary role of the government is to redistribute wealth fairly to the people who in turn continue to vote for a responsible government. It is not the primary role of the government to help developers to make money. Developers weight their risk and choose to bid high prices for land. Instead of cutting losses like many average investors, these developers chose to hang on to their unsold units hoping for a turnaround or for the government to save them.
The government has saved many average Singaporeans by imposing various cooling measures so that less Singaporeans are exposed to inflated assets. Why would government remove cooling measures just to help the developers when the average prices have only come down by 8% since the peak in 2013.
It is going to be a long journey in price moderation over the next many years.
There is no other country on earth, where home ownership is so encourage. 90.3% of Singaporeans own a house. To be a Singaporean is to own a house. The gov cannot let more than 10% of its population having no house. That would create chaos for such a small island nation.
this article is complete rubbish...the govt would be stupid to remove the cooling measures now...price rush up again we will be in deep shi* when the economy tank in next few years....the developers should just book their losses and move on...its their choice to hold on to the inventory still wanting to make profit.....so what a joke to worry their debt burdens and inventory dumping....business sometimes win sometimes lose...just take cue from the govenment and stop whining....dont tell me they dont know in singapore government always win...we shd just be thankful govenment is focus to protect average singaporeans interest and not cower to their lobbying
Price rush up?
why?
Because foreigners buying?
Isn't foreigners buying causing the OCR property prices to remain at historical high despite the ABSD and yet the ABSD crashed the CCR property prices?
Is that fair to citizens (making up >80% of HDB dwellers) who wished to upgrade to an OCR property but can't because of the stubbornly high OCR property price because of foreigners shifting to buy mostly OCR properties? ("still-elevated" OCR property price as MAS called it).
Didn't government said property cooling measures is supposed to cool property prices but not crash it?
Now crash CCR property price, but yet can't cool OCR property price, double failure, so how?
this article is complete rubbish...the govt would be stupid to remove the cooling measures now...price rush up again we will be in deep shi* when the economy tank in next few years....the developers should just book their losses and move on...its their choice to hold on to the inventory still wanting to make profit.....so what a joke to worry their debt burdens and inventory dumping....business sometimes win sometimes lose...just take cue from the govenment and stop whining....dont tell me they dont know in singapore government always win...we shd just be thankful govenment is focus to protect average singaporeans interest and not cower to their lobbying
When the property price go down, people wait for it to go down some more.
When property price go up people wait for the price to go down.
Finally after many many years of waiting still did not buy.
If Bank can loan me money, I will go and buy another one.
When the property price go down, people wait for it to go down some more.
When property price go up people wait for the price to go down.
Finally after many many years of waiting still did not buy.
If Bank can loan me money, I will go and buy another one.
Property buyers don't buy properties like other commodities, either for own use or investment( preserve their wealth or accumulate the assets ) For 1st group of people (own use) they buy when they can afford. For 2nd group of people. ( investment ) they buy once they have access money. For speculative people usually choose other type of investments.
For those flippers, I think they do prepared long term, but accidentally price shoot up so high, selling become irresistible.
Bear bear don't bash me ok. I also want to buy low and sell high high. So don't have to work.
Price rush up?
why?
Because foreigners buying?
Isn't foreigners buying causing the OCR property prices to remain at historical high despite the ABSD and yet the ABSD crashed the CCR property prices?
Is that fair to citizens (making up >80% of HDB dwellers) who wished to upgrade to an OCR property but can't because of the stubbornly high OCR property price because of foreigners shifting to buy mostly OCR properties? ("still-elevated" OCR property price as MAS called it).
Didn't government said property cooling measures is supposed to cool property prices but not crash it?
Now crash CCR property price, but yet can't cool OCR property price, double failure, so how?
rush up because everyone buys...locals and foreigners...the high prices gets sustained...both OCR and CCR....i wonder why you think OCR price will reduce if ABSD is removed...to me it will sustain and let the developers clear their stock...when it could have made they sell at a discount in 2016-2017 when the massive supply comes in and the economy runs into problem...removing ABSD will bring the higher quantum foreigners back to CCR...not move the foreigner buying OCR to CCR...and it will invite another group of foreigners to OCR who were previously on the sideline because of the ABSD...
property price hasnt crash and will not crash because of the TDSR measure put in place...most people who bought in last few years can withstand even if interest rate move up to 3-5%...crash will only happen when price rocket up without control and measures are not put in place to curtail speculative buying...
just be patient...CCR price will fall.....just slower and need to wait for the massive supply to come into play....and ABSD will help it fall not prevent it from falling....correct gradually is better because gives people the chance to react....if ABSD is removed tomorrow...who is to say developers wouldnt increase OCR prices?
Bear bear argument is why CMs not as effective as on OCR than CCR. I believe is CMs is implemented against speculation and more effective on higher price properties. Just like restaurant and food court or hawker centre. No matter what measures tax implemented. Food court and hawker will be more crowded. But hawker price can never price near restaurant. Just like OCR and CCR price.
Let's see after AEC implemented 1st january if rental market is holding. If gain is registered, price in general could be firming.
Let's see after AEC implemented 1st January if rental market is holding. If a gain is registered, price, in general, could be firming.
How many people bother to know what is coming, most like to follow the herd.
When I buy in 2006, people tell me all the bad things you can think about the project and property.
We plan 5 and 10 years ahead and all the advance warning given way ahead of the implementation. But still people like to follow the herd.
Have been away oversea since Mar 2007 and now that I am back and feel the pulse of the city, still wonder why people keep their money in the Bank and CPF waiting for things to happen.
The Best part is they don't even need to remove the ABSD on 1 Jan.
http://www.asean.org/archive/5187-10.pdf
https://www.kpmg.com/SG/en/IssuesAndInsights/ArticlesPublications/Documents/Tax-Itax-The-ASEAN-Economic-Community-2015.pdf
I have few friends who just accumulate properties base on their individual capacity rather than news or interest rate thingy.
If you can't afford no matter how cheap also no use.
I have few friends who just accumulate properties base on their individual capacity rather than news or interest rate thingy.
If you can't afford any matter how cheap also no use.
Most Singaporean just need to max their two cherries and getting a private is quite easy.
And this will least a productivity problem if everyone don't work haha
I also want to buy low and sell high high. So don't have to work.
this article is complete rubbish...the govt would be stupid to remove the cooling measures now...price rush up again we will be in deep shi* when the economy tank in next few years....the developers should just book their losses and move on...its their choice to hold on to the inventory still wanting to make profit.....so what a joke to worry their debt burdens and inventory dumping....business sometimes win sometimes lose...just take cue from the govenment and stop whining....dont tell me they dont know in singapore government always win...we shd just be thankful govenment is focus to protect average singaporeans interest and not cower to their lobbying
ABSD should be scrapped for Sporeans. It can remain for foreigners.
The SSD and TDSR can stay, taking care of flippers and financial prudence respectively.
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