Rise in property stocks
Adjustments made recently to cooling measures may appear unlikely to boost sales in Singapore’s property market, however there is a different outlook on real estate stocks. Following recent announcements the easement of two residential property curbs, some of the key players in Singapore’s real estate market, UOL Group, City Developments, and CapitaLand were seen registering a surge of at least 4% on the Straits Times Index.
The Business Times reports that an index covering of 44 real estate companies in Singapore – the FTSE ST Real Estate Index – went up to its peak since July 2015. The property stocks jump comes immediately following the announcement made by Singapore’s Government on property cooling measures “calibrated adjustments.”
From March 11, two rules, total debt servicing ratio (also known as TDSR) and the seller stamp duty got relaxed. However, even before the announcement of this important boost to the market, already, a rise was been seen in property stocks.
Based on a report by the Singapore Exchange, the Real Estate Developers & Operators Index actually went up to 12.4%; faring even better than the 8.2% gain that STI has achieved. The index has, the basis of 12 months, returned to 34.7%, in comparison to the 22.5% STI has.
In addition, the Business Times report noted that real estate development and management stocks have, for the initial 6 weeks of 2017 been leading the real estate sector, in turn, turning tables on the Real Estate Investment Trusts which led the sector in 2016.
Tan Dehong and Peter Ng, analysts at PhillipCapital are of the view that the two rules easing were not likely to boost private sales of the Singapore Condo and apartments. They believe that the tweaking of cooling measures such as the Additional Buyers’ Stamp Duty and TDSR framework will more likely have a more significant impact.
Likewise, DBS analysts also felt that the impact of the current relaxation of the cooling measures will be minimal. In fact they felt that the relaxation might instead, create expectation among market watchers that the government will ease the cooling measures furthermore.
The Government, on the other hand, has also restated that the current set of cooling measures remain necessary for the residential property market Singapore in order to ensure that the property market is sustainable as well as encouraging financial prudence among Singaporean households.
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