https://www.mnd.gov.sg/newsroom/press-releases/view/measures-to-cool-the-property-market
New cooling measures overturn sanguine outlook for new private home market for 2022
Dec 15, 2021
DEVELOPERS' prognosis for the positive momentum in private housing spilling over into 2022 was overturned last night when the government announced a slew of property cooling measures.
In the first 11 months of the year, developers sold 12,467 new private homes - a “spectacular performance”, highlighted Cushman & Wakefield’s head of research Wong Xian Yang, who pointed out that sales for 2021 are on track to pip 13,000 units. This would represent the highest annual tally since 2013, which saw 14,948 new homes snapped up. Last year, developers sold 9,982 homes.
Wong added: “Given expected stable economic growth and the improving job market, home buying demand is expected to stay robust, further bolstering price growth into 2022.”
He made the comments before the government announced at almost midnight new measures to cool the red-hot private residential and housing development board (HDB) resale markets.
Additional buyer's stamp duty (ABSD) will be raised with effect from Dec 16, while the total debt servicing ratio threshold will be tightened.
The loan to value limit for loans from HDB will be tightened from 90 per cent to 85 per cent. Public housing and private housing supply will also be increased to cater to demand, the Ministry of Finance, Ministry of National Development and the Monetary Authority of Singapore said in a joint statement.
Earlier in the day, ERA’s head of research & consultancy Nicholas Mak had said the bumper year that developers are enjoying also heightens the risk of cooling measures. “They should pop the champagne before the government spoils the party, possibly with the introduction of the wealth tax that could target property investments.” Mak projects that developers could release between 10,500 and 11,000 private homes and sell about 13,300 to 13,700 units this year.
CBRE’s head of research (South-east Asia), Tricia Song, expects the momentum in the private housing market to remain positive, citing demand from local homebuyers as well as the transition to endemic living. Song estimates that private home prices could clock an increase of 6 to 7 per cent for 2021, in line with the government’s GDP forecast of about 7 per cent.
Meanwhile, PropNex estimates new home sales will moderate slightly to between 11,000 and 12,000 units next year on the back of diminishing unsold stock and limited mega launches. PropNex’s head of research, Wong Siew Ying, said: “With inflation likely to tick up in 2022, we could see some buyers turning to residential properties as an inflation hedge. However, should the inflation lead to sharp interest rate hikes, this may deter some homebuyers as borrowing cost rises.”
For 2022, OrangeTee & Tie’s senior vice-president (research & analytics) Christine Sun forecasted that about 9,000 units (including executive condominiums or ECs) or fewer may be released for sale - 17 to 20 per cent less vis-a-vis 2019 and 2020 - while 9,000 to 10,500 units (excluding ECs) could be sold. She said: “Next year, we anticipate that a constrained supply and robust demand may continue to prop up prices.”
In November this year, developers sold 1,547 new private homes, up 70 per cent month on month as more homes were released for sale vis-a-vis October, according to data from the Urban Redevelopment Authority (URA). Compared to the corresponding period a year ago, the number of homes sold doubled in November.
Some 1,283 units were launched for sale that month, almost double the 661 units launched in October but slightly lower than the 1,375 units released in the corresponding month a year ago. Around two-thirds of the units launched in November were in the rest of central region (RCR).
Analysts say that sales in November were driven largely by CanningHill Piers and The Commodore, which collectively accounted for nearly 48 per cent of the total sales tally for the month.
The figures exclude ECs, which are a public-private housing hybrid. Including ECs, developers sold 1,610 units in November, jumping around 54 per cent month on month and 96 per cent year on year. Sixty-three EC units were sold in November - less than half of the 136 EC units sold in October - as limited choice might have prompted some homebuyers to sit on the sidelines until new launches surface, highlighted Mak, adding that there are only 178 launched and unsold EC units available island-wide. The next EC launch could be North Gaia, which could take place in March next year.
The top performer in November was CanningHill Piers – located at the former Liang Court site – which sold 576 of its 696 units at a median price of S$2,887 per square foot (psf). Meanwhile, 164 units at the 219-unit The Commodore were sold at a median price of S$1,513 psf. Both are 99-year-leasehold projects.
“The two projects were launched in the later part of November when Covid-19 infections were on the decline,” pointed out Ong Teck Hui, JLL’s senior director of research & consultancy, adding that there were expectations that safety measures would be relaxed as the situation improved.
Of the 1,547 units sold in November, the bulk - or nearly 60 per cent - were located in the RCR, while roughly 30 per cent were in outside the central region (OCR). The rest were in the prime core central region (CCR).
Huttons Asia’s senior director (research) Lee Sze Teck said: “There are an estimated 24 launches in 2021, similar to 2020. However, developers are estimated to have sold 30 per cent more in 2021. The market will cap off an excellent year, with three launches in December.” Roxy-Pacific Holdings’ Mori at Guillemard Road and Jalan Molek sold about 45 per cent of its 137 units on launch day earlier this month, while Perfect Ten along Bukit Timah Road and Zyanya in Geylang are slated to kick off sales this weekend.
According to Huttons, upcoming launches in 2022 could include projects from Government Land Sales (GLS) sites at Jalan Anak Bukit, Northumberland Road, and Lentor Central.
Knight Frank’s head of research, Leonard Tay, said: “Developers who had purchased land in late 2020 and in 2021, or with projects on hand, will use the next six to nine months to launch and reduce inventory before the anticipated increase in mortgage rates.”
“Nevertheless, at the moment, supply remains tight as limited land for development was acquired in 2020 and 2021 via both the GLS or the collective sales route,” he added.
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Singapore announces new property cooling measures
Dec 16, 2021
SINGAPORE on Wednesday moved to cool its housing market amid rising concerns that the property boom might tip the market into bubble territory.
From Thursday (Dec 16), the government will raise additional buyer’s stamp duty (ABSD) rates and tighten the total debt servicing ratio (TDSR) threshold.
The current ABSD rates for Singapore citizens and permanent residents buying their first residential property will remain at 0 per cent and 5 per cent respectively. But the ABSD rates for all other individuals and entities will be raised by 5 to 15 percentage points.
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The TDSR threshold will be tightened from 60 per cent to 55 per cent. It will apply to loans for the purchase of properties where the option to purchase (OTP) is granted on or after Dec 16, and for mortgage equity withdrawal loan applications made on or after Dec 16.
The loan-to-value (LTV) limit for loans from HDB will be tightened from 90 per cent to 85 per cent. Public housing and private housing supply will also be increased to cater to demand, the Ministry of Finance, Ministry of National Development and Monetary Authority of Singapore said in a joint statement on Wednesday night.
This comes in the wake of strong sales just announced in the Urban Redevelopment Authority's latest data on sales of new units. In November this year, developers sold 1,547 new private homes, up 70 per cent month on month as more homes were released for sale vis-a-vis October.
Private residential and HDB resale prices have gained ground on the back of a low-interest rate environment despite the economic impact of the pandemic.
Private housing prices have risen by about 9 per cent since the first quarter of 2020 while HDB resale flat prices have risen about 15 per cent, recovering sharply from a 6-year decline.
While house price-to-income ratios remain below their historical averages, there is “clear upward momentum”, the joint statement noted.
Transaction volumes in the private housing market and HDB resale market have been high despite the Covid-19 situation.
“If left unchecked, prices could run ahead of economic fundamentals, and raise the risk of a destabilising correction later on. Borrowers would also be vulnerable to a possible rise in interest rates in the coming years,” the statement said.
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The measures were implemented to promote “continued housing flexibility”, albeit in a bid to dampen broad-based demand especially from those purchasing property for investment rather than owner-occupation, the agencies noted.
The revised ABSD rates will apply to cases where the OTP is granted on or after Dec 16.
There will however be a transitional provision where ABSD rates before that date will still apply. In these cases, the OTP is granted by sellers to potential buyers on or before Dec 15, is exercised on or before Jan 5, 2022 or within the OTP validity period, and has not been varied on or after Dec 16.
The additional conveyance duties for buyers of equity interest property-holding entities will be raised from up to 34 per cent to up to 44 per cent.
As for the LTV limit of 85 per cent, it will apply to new flat applications for sales exercises launched after Dec 16, and complete resale applications which are received by HDB from Dec 16 onwards.
Details of measures to increase the supply of public and private housing will be announced by the government on Thursday.
https://www.businesstimes.com.sg/real-estate/singapore-announces-new-property-cooling-measures
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