I read from some articles and find them interesting to share :
1) Transaction cost for investors will increase substantially, killing
investment demand.
Foreigners and companies will be the hardest hit. For example for a $1 million dollar purchase, the effective buyer’s stamp duty will increase from $24,600 to $124,600, a $100,000 or 500% increase! The effective tax rate will increase from 2.5% to 12.5%. This will effectively stamp out any investment demand from all but the wealthiest who may have other noninvestment considerations.
2) Even for Singaporeans who already own two and PRs who own one unit, they will
be heavily discouraged from investing in property as their effective stamp duty for the $1 million purchase will increase from $24,600 to $54,600, a 220% increase. The message to the rich is clear: “Don’t invest in residential properties.”
Transaction volumes will fall. Some analysts are looking for a 20% fall in volumes next year. With investing sentiments dampened by the continuous stream of government measures and the unstable economy in Developed countries, this is quite probable. Bid-ask spreads between buyers and sellers will increase, tanking volumes and setting the
stage for price decreases later.
3) The impact on prices will be negative but uncertain. The measures were
unexpected as property price momentum has already been falling for the past eight quarters. Some analysts expect a 10-15% fall in prices, but the impact is uncertain as interest rates remain low and unemployment
hasn’t rise, so property owners still have holding power. Furthermore economists are still expecting a 3-5% GDP growth rate for Singapore in 2012, which is not bad, although this number is volatile and can be revised downwards quickly if the external environment deteriorates. The large spike in supply is expected in 2014- 2015 so the market could be hit then if
this measure is still in place.
4)Foreigners will shrink as a percentage of all buyers. The recent wave of
foreigners (especially the Chinese) coming to Singapore to buy property will
think twice. Foreigners (excluding PRs) made up 18% of new units sold in 3Q11, versus ~15% in 1H11 and the last peak of 15% in 2007.
Negative impact on high-end market will be larger. The impact is likely to be
larger on the high end residential market as the share of foreign buyers there is higher. Foreigners (excluding PRs) and companies accounted for 34% of new sales in 3Q11 versus 17% in suburban locations. Some analysts are predicting a 40% fall in volumes in prime districts.
to be continued...