reporter2
21-02-19, 12:17
Redas explains why some cooling measures need to be revised
Wed, Feb 20, 2019 - 5:50 AM
UPDATED Wed, Feb 20, 2019 - 12:01 PM
THE Real Estate Developers' Association of Singapore (Redas) has given reasons why some of the property cooling measures should be revised, and at the same time called for more dialogue between the Government and property stakeholders.
Finance Minister Heng Swee Keat said afterwards that the real estate sector faces "bitter medicine" from time to time.
Speaking at the association's spring festival lunch at Shangri-La Hotel, Redas's new president Chia Ngiang Hong said there could be some flexibility in the timeframe needed to complete the sales of projects when it comes to the remissible additional buyers' stamp duty (ABSD) for developers.
Last July's cooling measures jacked up the remissible ABSD for residential developers to 25 per cent, from 15 per cent previously.
If a developer fails to complete their residential project as well as sell all its units within five years of acquiring the site, it will have to cough up the 25 per cent ABSD with interest. (Developers now also have to pay a 5 per cent non-remissible ABSD when they buy residential development sites.)
Mr Chia, who is also the group general manager of City Developments Ltd (CDL), said this has "pushed all developers to exhaust their inventory at around the same time, and could partly account for the land price escalation in 2017 and 2018 because everyone basically ran out of inventory at the same time".
Without a review of the ABSD, this situation could repeat itself in four to five years, he warned.
Mr Chia also said it may be timely to re-evaluate the loan-to-value (LTV) ratio for first-time property purchasers in order to allow young Singaporeans to own a private home, and review the timing of the upfront payment of the ABSD for upgraders.
The government tightened LTV limits by 5 percentage points for all housing loans granted by financial institutions as part of July's cooling measures.
Mr Chia added: "Although the Government formulates public policies, we believe that the private sector can contribute to help make policies better and more targeted."
Speaking to BT after the speech, Mr Chia said Redas and various government agencies already meet up often but should do it "more often and more vigorously if possible."
"If the government or agencies is able to communicate with us on a frequent basis and we give our feedback and... when it comes to their formulation of policy, the feedback on the ground can be taken into consideration, then that would be very good."
A veteran developer present at the lunch told The Business Times: "(The government and industry) have the same goal of wanting a sustainable market in the long run... We understand they can't tell us what (measures) they want to impose but it could be good to wind back and see if through the many rounds of cooling measures if there were unintended effects."
Broker RHB said in a note on Wednesday morning: “It is too early for the Government to consider the relaxation of cooling measures as property prices are still holding up well, and a premature relaxation could reinvigorate the property market amid dovish interest rate outlook.”
It also said it considered the Government’s tightening of loan-to-value (LTV) ratios prudent, and that the “careful calibration of the Government’s land sales programme” could help as well.
On Tuesday at the Redas lunch, Finance Minister Heng Swee Keat did not directly respond to the industry association’s comments about cooling measures or its suggestion that the private sector could contribute to improve policy.
But he likened Prime Minister Lee Hsien Loong’s characterisation of the Merdeka Generation as one that “faced the problems resolutely, worked with the Government, and when necessary, accepted the bitter medicine that made us strong again” as also applying to the real estate sector.
He said: “From time to time, there has been bitter medicine, but we face the problem resolutely.”
He also warned that “when you have a period of euphoria, you end up with a very hard landing in the form of a crisis,” after having witnessing the Asian Financial Crisis and Global Financial Crisis.
“The development of markets in Singapore, whether it is the stock markets or property markets, is closely tied to developments in the region, particularly in Asia and the world,” he added.
He said in his speech that the Government and real estate industry can partner up in several fields: such as infrastructure development in Asia, green and sustainable development and innovation in the real estate space.
He also highlighted the importance of innovation and science and technology on the real estate sector, with the Building and Construction Authority and HDB now testing the use of drones to inspect building facades.
The construction sector is also using technologies like Building Information Modelling which he said helps to raise productivity, he said.
Wed, Feb 20, 2019 - 5:50 AM
UPDATED Wed, Feb 20, 2019 - 12:01 PM
THE Real Estate Developers' Association of Singapore (Redas) has given reasons why some of the property cooling measures should be revised, and at the same time called for more dialogue between the Government and property stakeholders.
Finance Minister Heng Swee Keat said afterwards that the real estate sector faces "bitter medicine" from time to time.
Speaking at the association's spring festival lunch at Shangri-La Hotel, Redas's new president Chia Ngiang Hong said there could be some flexibility in the timeframe needed to complete the sales of projects when it comes to the remissible additional buyers' stamp duty (ABSD) for developers.
Last July's cooling measures jacked up the remissible ABSD for residential developers to 25 per cent, from 15 per cent previously.
If a developer fails to complete their residential project as well as sell all its units within five years of acquiring the site, it will have to cough up the 25 per cent ABSD with interest. (Developers now also have to pay a 5 per cent non-remissible ABSD when they buy residential development sites.)
Mr Chia, who is also the group general manager of City Developments Ltd (CDL), said this has "pushed all developers to exhaust their inventory at around the same time, and could partly account for the land price escalation in 2017 and 2018 because everyone basically ran out of inventory at the same time".
Without a review of the ABSD, this situation could repeat itself in four to five years, he warned.
Mr Chia also said it may be timely to re-evaluate the loan-to-value (LTV) ratio for first-time property purchasers in order to allow young Singaporeans to own a private home, and review the timing of the upfront payment of the ABSD for upgraders.
The government tightened LTV limits by 5 percentage points for all housing loans granted by financial institutions as part of July's cooling measures.
Mr Chia added: "Although the Government formulates public policies, we believe that the private sector can contribute to help make policies better and more targeted."
Speaking to BT after the speech, Mr Chia said Redas and various government agencies already meet up often but should do it "more often and more vigorously if possible."
"If the government or agencies is able to communicate with us on a frequent basis and we give our feedback and... when it comes to their formulation of policy, the feedback on the ground can be taken into consideration, then that would be very good."
A veteran developer present at the lunch told The Business Times: "(The government and industry) have the same goal of wanting a sustainable market in the long run... We understand they can't tell us what (measures) they want to impose but it could be good to wind back and see if through the many rounds of cooling measures if there were unintended effects."
Broker RHB said in a note on Wednesday morning: “It is too early for the Government to consider the relaxation of cooling measures as property prices are still holding up well, and a premature relaxation could reinvigorate the property market amid dovish interest rate outlook.”
It also said it considered the Government’s tightening of loan-to-value (LTV) ratios prudent, and that the “careful calibration of the Government’s land sales programme” could help as well.
On Tuesday at the Redas lunch, Finance Minister Heng Swee Keat did not directly respond to the industry association’s comments about cooling measures or its suggestion that the private sector could contribute to improve policy.
But he likened Prime Minister Lee Hsien Loong’s characterisation of the Merdeka Generation as one that “faced the problems resolutely, worked with the Government, and when necessary, accepted the bitter medicine that made us strong again” as also applying to the real estate sector.
He said: “From time to time, there has been bitter medicine, but we face the problem resolutely.”
He also warned that “when you have a period of euphoria, you end up with a very hard landing in the form of a crisis,” after having witnessing the Asian Financial Crisis and Global Financial Crisis.
“The development of markets in Singapore, whether it is the stock markets or property markets, is closely tied to developments in the region, particularly in Asia and the world,” he added.
He said in his speech that the Government and real estate industry can partner up in several fields: such as infrastructure development in Asia, green and sustainable development and innovation in the real estate space.
He also highlighted the importance of innovation and science and technology on the real estate sector, with the Building and Construction Authority and HDB now testing the use of drones to inspect building facades.
The construction sector is also using technologies like Building Information Modelling which he said helps to raise productivity, he said.