The full article can be found in The Straits Times, Top of The News Section, Page A13, 7 July 2018.

The Government has recently imposed cooling measures, which took many by surprise. Analysts cited why the Government did so.

One is to curb the collective sale craze, and the other is to stop buyers, developers and banks from overextending themselves.

In the first half of this year, there were a total of 35 collective sale transactions exceeding S$10 billion, and for the whole of last year, there were 27 deals amounting to S$8.13 billion.

Additionally, prices of private property have risen 9.1 per cent in the last four quarters. Prior to that, there was a decline in prices for 15 straight quarters, falling 11.6 per cent by the middle of last year.

Developers now have to pay a higher Additional Buyer’s Stamp Duty (ABSD) of 25 per cent, an increase from 15 per cent, when they purchase residential properties for housing development now.

This tax can only be waived if they meet several conditions; completing and selling all their units within a prescribed period. Above the 25 per cent, an additional ABSD of 5 per cent has to be paid, which will not be waived.

Analyst says that the new cooling measures may choke off demand and cause an oversupply in the property market.

“Whether you like it or not, these developers have already planned for a certain number of units to be launched at a certain price this year. Depressing the demand will only ensure an oversupply,” said ZACD Executive Director and Chief Investment Officer, Nicholas Mak.

“As for the new ABSD – land is essential to any developer for their business, so this means the extra costs will be passed on to the consumer. How can you consider that a cooling measure?” he added.

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