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SG Property market more subdued in 2014?

Property Here - Monday, December 16, 2013

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With the government unlikely to roll out any new policies in 2014, next year is expected to be more subdued than 2013 which saw various property cooling measures, stated media reports quoting analysts.  

However, they are not ruling out the possibility of the government revising some of the existing measures.

“Policy changes, if any, may most likely be of the ‘unwinding’ kind - that is, rolling back earlier policies,” noted Chua Yang Liang, Head of Research South East Asia at Jones Lang LaSalle.

“The timing will depend very much on the pace of economic growth and the response from the property market during the period. We reckon a healthy long-term growth rate of one-two percent a quarter on the Property Price Index is what the state is comfortable with.”

Chia Siew Chuin, Director of Research and Advisory at Colliers International, believes that this year's most significant event was the introduction of the Total Debt Servicing Ratio (TDSR) framework, with its impact felt across the private residential and strata-titled retail, industrial and office sectors.

As of 29 June, the TDSR requires banks to take into account the total debt obligations (including other mortgages and car loans) of a borrower prior to granting a new home loan. Notably, a total debt obligation was capped at 60 percent of a buyer’s gross monthly income.

The implementation of the TDSR followed the government's seventh round of cooling measures in January, which included higher cash down payments, lower loan-to-value limits, anti-speculation measures aimed at the industrial sector and rules on sizes ofexecutive condominium (EC) developments.

With the two rounds of measures, Chia described 2013 as a “tale of two halves”, noting that the introduction of TDSR marked the turning point of the healthy sales level for strata-titled, non-residential properties seen during the first half of 2013.

“To date, TDSR appears to have had the most far-reaching impact on property compared with the previous property-specific measures,” said Joseph Tan, Executive Director for Residential at CBRE.

“Overall, residential prices will end about two percent higher from a year ago and flat over the last quarter. For the most part, developers have been able to hold onto current prices for luxury projects but may be pressured to adjust prices to a competitive level with more projects receiving their Temporary Occupation Permits (TOP) next year.”