Redas calls new private property cooling measures tough, and says no rationale for them

The Real Estate Developers' Association of Singapore (Redas) has said there is "no rationale" for the new private property cooling measures imposed on Friday (July 6).

In a statement on Friday evening, Redas labelled the moves to raise the additional buyers' stamp duty (ABSD) and tighten loan limits for individuals by 5 percentage points each "tough". This is especially since the "property market is in the early stages of recovery and that the recovery is in line with economic fundamentals", the statement said.

This was a clear dig at the authorities. In explaining the moves on Thursday evening, Minister for National Development Lawrence Wong said the Government was "very concerned that prices are running ahead of economic fundamentals".

In its statement, Redas said the market outlook has been gloomy since 2013, and only started to pick up in 2017, following brighter forecasts for the Singapore economy, which expanded 3.5 per cent by the end of 2017 and 4.4 per cent in the first quarter of 2018.

The organisation also noted that transaction volume is not high and within market expectation, adding that the old ABSD and total debt servicing ratios in place since 2013 "remain a restraining factor for foreign buyers and Singaporeans".

"Buyers are still price-sensitive," it said, adding that the property market "should be allowed time to find its own course and reach a sustained equilibrium".

It added that it did not see the rationale of imposing additional harsh measures on developers. Besides raising ABSD for entities by 10 percentage points to 25 per cent - a sum that can be waived if developers fulfil several conditions including completing and selling all their units in a prescribed timeframe - the Government has imposed an extra 5 per cent ABSD that cannot be waived.

Existing measures, such as financial considerations and "unfriendly business policies" such as the old ABSD and penalties were sufficient, it said.

"The new ABSD on developers will impose additional pressure on land acquisition as they compress their development, sales and land replenishment cycle time," it added.

"It is in the interest of the country to have a vibrant real estate industry and a steady growth in real estate value for home owners and investors in the long term," it said, adding that it hoped the Government maintains confidence in the market when it reviews these measures.

Adapted from The Straits Times, 6 July 2018.