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December 8, 2011, 4.49 pm (Singapore time)

UBS sees more downside to property on gov't new cooling measures

By YEO AIQI


UBS Investment Research on Thursday sees further weakness in the physical prices of property given the severity of the government's new measures unveiled on Wednesday.

'We believe it is not in the government's interest to drive down property prices. But, given the severity of the new measures, it is hard to see how physical prices will not start falling. Assuming stocks fall as per Jan 2011, first quarter of 2012 may be a good time to start putting cash to work in the developers. In 2009, stocks recovered in Mar 2009, even as property prices fell another 14 per cent quarter on quarter in first quarter 2009 and 4.7 per cent quarter on quarter in second quarter of 2009,' said UBS.

It cited historical data where stocks typically bottomed ahead of physical market prices. In 2009, the Singapore market index bottomed in March 2009, even though the URA property price index continued falling.

Similar experiences happened during the Asian crisis in 1998, post the 9/11 incident, in 2001 and SARS period in 2003.

On Wednesday, the government announced harsh new measures that will raise buyer's stamp duties to as high as 13 per cent for foreigners and companies, 6 per cent for permanent residents buying beyond their first property and 6 per cent for citizens buying beyond their second property.