From iTODAY: Mixed views on impact of new cooling measures

| 12 Jan, 2013 6:00 AM

SINGAPORE – Property analysts and others reacted with surprise towards the extent of the cooling measures announced by the Government yesterday, but were divided over just what their impact would be.

However, several of those contacted agreed that the immediate effect would be a short-term withdrawal from the market as buyers adopt a wait-and-see attitude.

OCBC Bank’s head of Consumer Secured Lending, Ms Phang Lah Hwa, echoed a common sentiment, saying: “We expect home buyers to naturally become more cautious and take time to review their options.”

Savills’ Senior Director of Research & Consultancy, Mr Alan Cheong, expects that – in the public housing sector, at least – that period might last only a month or so.

“If the overall sentiment remains positive, they will come back in again after that,” he said.

But PropNex Chief Executive Mohamed Ismail sees potential for a more sustained impact.

“Overall, the impact will be felt over a quarter to half a year, during which we will see a drastic drop in the buying activities for private homes; the impact on the HDB market won’t be as great, as demand will still be there.”

Meanwhile, the comprehensiveness of the measures raised eyebrows among those interviewed.

Mr Ismail labelled the package the “tsunami” of cooling measures, since they affect such a wide swathe of the property market.

Mr Steve Melhuish, CEO and co-founder of PropertyGuru Group, added: “Many analysts and market-watchers were predicting the introduction of further cooling measures, but we think the severity of what has been introduced will surprise many.”

The Real Estate Developers’ Association of Singapore reacted cautiously to the announcement, saying that it “will evaluate the impact of these measures on the sustainability of the property market. It is in the interest of the market to have a gradual trend in growth and value for home owners and investors in the long term.”

Some observers welcomed the measures as timely in the current economic environment.

“There is still significant liquidity in the market and possibility of QE3 funds flowing into the property market,” said Mr Lee Sze Teck, DWG’s Senior Manager for Training, Research and Consultancy, pointing to the measure to tighten the loan to value (LTV) ratio as an important move.

“With the economy likely to see tepid growth in 2013 … this change is crucial to protect buyers and the financial sector should the market turn,” said Mr Lee.

But some concern was expressed that there is a danger the measures could go too far.

Mr Melhuish, for example, noted that the flagging global and Singapore economy, as well as the large number of units in the pipeline, could mean that the market may have arrived at a tipping point and is primed for a correction.

“The Government will need to maintain a sharp focus to ensure these measures do not send the market into a downward spiral,” he added.