SINGAPORE: Shares of Singapore’s property firms tanked on Thursday (Dec 16) after the Government unexpectedly announced a slew of new measures to cool the private residential and HDB resale markets.
City Developments plunged 3.1 per cent, or S$0.22, to S$6.85 in early trade. Other developers such as UOL fell 2.1 per cent, or S$0.15, to S$6.95, while Oxley Holdings lost 3.2 per cent to last trade at S$0.18.
Real estate agency PropNex plummeted 11.2 per cent, or S$0.20 to S$1.58.
Meanwhile, real estate brokerage APAC Realty retreated 13.1 per cent, or S$0.10, to S$0.66.
The new cooling measures involved adjustments to the Additional Buyer's Stamp Duty (ABSD) rates and Loan-to-Value (LTV) limits on residential property purchases.
The ABSD rates for Singapore citizens and permanent residents buying their first residential property remain at 0 per cent and 5 per cent respectively, but those purchasing their second or subsequent home will face a 5 to 15 percentage point increase in ABSD.
Foreigners and entities will also incur more ABSD when purchasing any residential property.
The TDSR threshold will be tightened from 60 per cent to 55 per cent. It will apply to loans for the purchase of properties where the option to purchase is granted on or after Dec 16, and for mortgage equity withdrawal loan applications made on or after Dec 16.
Separately, the LTV for loans from HDB will be cut from 90 per cent to 85 per cent. This applies to new flat applications for sales exercises launched after Dec 16 and complete resale applications received by HDB from Dec 16 onwards.
The authorities also pledged to increase the supply of both public and private housing to meet demand, with more details expected to be released on Thursday.
House price-to-income ratios have showed a “clear upward momentum” while transaction volumes in the private housing market and HDB resale market remained high despite the COVID-19 downturn, said the Ministry of Finance, Ministry of National Development and Monetary Authority of Singapore said in its joint statement issued late on Wednesday night.
“If left unchecked, prices could run ahead of economic fundamentals, and raise the risk of a destabilising correction later on. Borrowers would also be vulnerable to a possible rise in interest rates in the coming years," they added.
CGS-CIMB analyst Lock Mun Yee said a negative knee-jerk reaction for property counters is expected, with sentiment set to be impacted in the near term.
However with developers already trading at a steep discount partly due to expectations of new cooling measures, the "removal of this overhang and improved inventory situation from increased private and public housing supply may underpin share price performance in the medium term", she said in a note.
The analyst added that she maintains an overweight call on the sector.
The broader Straits Times Index edged up 0.1 per cent to last trade at 3,119.09 at 9.20am.
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City Developments plunged 3.1 per cent, or S$0.22, to S$6.85 in early trade. Other developers such as UOL fell 2.1 per cent, or S$0.15, to S$6.95, while Oxley Holdings lost 3.2 per cent to last trade at S$0.18.
Real estate agency PropNex plummeted 11.2 per cent, or S$0.20 to S$1.58.
Meanwhile, real estate brokerage APAC Realty retreated 13.1 per cent, or S$0.10, to S$0.66.
The new cooling measures involved adjustments to the Additional Buyer's Stamp Duty (ABSD) rates and Loan-to-Value (LTV) limits on residential property purchases.
The ABSD rates for Singapore citizens and permanent residents buying their first residential property remain at 0 per cent and 5 per cent respectively, but those purchasing their second or subsequent home will face a 5 to 15 percentage point increase in ABSD.
Foreigners and entities will also incur more ABSD when purchasing any residential property.
The TDSR threshold will be tightened from 60 per cent to 55 per cent. It will apply to loans for the purchase of properties where the option to purchase is granted on or after Dec 16, and for mortgage equity withdrawal loan applications made on or after Dec 16.
Separately, the LTV for loans from HDB will be cut from 90 per cent to 85 per cent. This applies to new flat applications for sales exercises launched after Dec 16 and complete resale applications received by HDB from Dec 16 onwards.
The authorities also pledged to increase the supply of both public and private housing to meet demand, with more details expected to be released on Thursday.
Related:
House price-to-income ratios have showed a “clear upward momentum” while transaction volumes in the private housing market and HDB resale market remained high despite the COVID-19 downturn, said the Ministry of Finance, Ministry of National Development and Monetary Authority of Singapore said in its joint statement issued late on Wednesday night.
“If left unchecked, prices could run ahead of economic fundamentals, and raise the risk of a destabilising correction later on. Borrowers would also be vulnerable to a possible rise in interest rates in the coming years," they added.
CGS-CIMB analyst Lock Mun Yee said a negative knee-jerk reaction for property counters is expected, with sentiment set to be impacted in the near term.
However with developers already trading at a steep discount partly due to expectations of new cooling measures, the "removal of this overhang and improved inventory situation from increased private and public housing supply may underpin share price performance in the medium term", she said in a note.
The analyst added that she maintains an overweight call on the sector.
The broader Straits Times Index edged up 0.1 per cent to last trade at 3,119.09 at 9.20am.
Continue reading...