People have been concerned about the effects of the cooling measures taken by the Singaporean government. Experts believe that high-end property will experience the most effects of these measures. However, mass-market projects are on the safer side.
People who have been interested in buying or investing in Singapore Condominium are waiting for a decline in property prices. But, these cooling measures will not cause any such changes, at least not in the near future. There may be slight changes but expectations of major price changes are very low.
The chief financial officer of GuocoLand, Richard Lai, says that the aim of these cooling measures is to provide flexibility to companies like his instead of offering bargained property prices. These steps will let companies sell out units that were not the most attractive to buyers.
Richard Lai, along with the CFOs of other major property firms, had a panel discussion to discuss the outcomes of these tweaks done by the government. This panel discussion took place on Thursday, July 12 at the Ritz-Carlton Hotel. CapitaLand and Mapletree CFOs were also part of this discussion.
The ABSD changes are most likely going to affect second home buyers. As for the market of first home buyers, no changes are to be expected, says Richard Lai. He also stated that since mass-market and higher-end markets have different target markets, the reactions will vary. Investors will pause their purchases. Since the majority of the investors are foreigners, they would hold back too.
The government has imposed a 12% duty on purchases of residential property that are second homes. Previously, it was only 7%. For permanent residents, the rate was first 10% but has now been increased to 15%. Similarly, for foreign buyers, the rate has been increased from 15% to 20%. This might keep some foreigners from immediate purchases but some may even want to invest instantly in case this percentage goes further up in the future. Developers will also be paying a 25% of the land cost instead of the 15% they had to pay previously. After the news spread, there was a fall in stocks too.
Richard Lai also told that these changes are a positive step for firms like his. They have been given a bigger margin which allows them to compensate buyers. Even after generous compensations, they can still earn profits instead of having to lose money. This does give these firms an advantage to be as flexible as they want. People of Singapore have been buying a lot of second and third homes. This step controls the market. However, at the same time, Richard Lai says that in his opinion, these cooling measures weren’t a necessary step as of now.
The government has implemented cooling measures to control the property market prices boosting up to the sky. However, the property prices are going up and expectations for the future are no different. This is why this ABSD rate increase was decided. These steps will ensure that big firms and investors still remain interested in the Asian property.
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