The latest round of cooling measures, which saw higher ABSD rates, a tighter TDSR threshold and a lower LTV limit for HDB-granted loans, impacted Singapore property stocks negatively.
Singapore’s property firms saw their shares drop on Thursday (16 December) following the Government’s unexpected announcement of new property cooling measures, reported Channel News Asia (CNA).
City Developments fell by over 3% in early trade before recovering at $6.89 as of 2.49pm, down 2.6% or $0.18 lower.
UOL lost 1.1%, or $0.08, to $7.02, while Oxley Holdings fell 2.1% to $0.18.
PropNex retreated 4.5% to $1.70, after falling by as much as 11% in early trade. APAC Realty fell 8.5% to $0.70, trimming its earlier losses of over 10%.
The latest cooling measures included higher Additional Buyer’s Stamp Duty (ABSD), tighter Total Debt Servicing Ratio (TDSR) threshold and lower the Loan-to-Value (LTV) limits for HDB loans.
CGS-CIMB analyst Lock Mun Yee believes the measures are aimed at “cooling investment” instead of owner-occupier demand and dampen market demand as well as volume demand in the near term.
Expecting some “knee-jerk reaction”, Christine Sun, Senior Vice-President of Research and Analytics at OrangeTee & Tie sees sales volumes slowing down for around six months.
Private home prices, on the other hand, may stabilise and increase at a much slower pace in 2022, she said. In fact, OrangeTee & Tie has trimmed its earlier price forecast of between 6% and 9% growth to between 0% and 3%.
OCBC Investment Research Head Carmen Lee said the latest measures directly affect two types of property stocks – the property agencies and the developers.
She believes that the initial impact on developers was more measured, while real estate agencies have taken a bigger hit considering how their share prices registered significant gains in 2021.
“It is our view that the sales and transactional nature of the agencies’ operations are perceived to be affected more directly by the cooling measures, as opposed to the developers who are ‘shielded’ to a certain extent by diversified portfolios of assets,” she added.
However, RHB Analyst Vijay Natarajan does not expect the downward trend in property stock prices to persist following the initial knee-jerk sell-off.
“We believe the market has been anticipating this for some time and pricing it in, although the measures in our view are slightly more harsher than anticipated,” he told CNA.
Meanwhile, Lee believes the latest cooling measures did not come as a great shock to the Singapore market considering the familiarity of property buyers and investors to the additional duties and taxes.
“Unless buyers are purchasing more than one property for investment, they remain relatively unaffected,” she said as quoted by CNA.
“Overall, we assess that the latest measures are fundamentally meant to ensure that there continues to be enough supply of affordable homes for citizens or PRs who truly need a first home, and that they have enough funds to purchase it.”
Looking for a property in Singapore? Visit PropertyGuru’s Listings, Project Reviews and Guides.
Cheryl Chiew, Digital Content Specialist at PropertyGuru, edited this story. To contact her about this story, email: cheryl@propertyguru.com.sg.
