DEVELOPERS SAY: Mass-market and luxury homes 'will all be hit'
The measures announced yesterday will hit developers aiming for the luxury market but mass-market builders will not escape either, said analysts.
High-end developers such as SC Global and Wing Tai could see demand slip as foreigners, who generally account for more than half of the sales in the upper-price brackets, will be hit by the additional 10% stamp duty.
This is over and above the existing buyer's stamp duty of 3%.
Independent research firm Sabio Global director Alan Lok said: "Traditionally, the Chinese buyers come here because Singapore is considerably cheaper than Hong Kong, but a stamp duty of 13% is quite drastic.
"This will definitely make them (foreign buyers) think twice about buying property here."
The mass market will also feel the impact as Chinese buyers have been steadily moving into the suburbs so the stamp duty levy is likely to cool their buying.
While a decline in demand is almost certain, analysts and developers believe the measures will not do much to dampen property prices given that land is still pricey and construction costs are rising.
Property developer Roxy-Pacific executive chairman and chief executive Teo Hong Lim said: "Well, it doesn't mean that just because sales are slow, we have to sell at a loss, right? We still have to break even."
However, he does not think that the measures will affect his business very much as 50% of his pipeline is made up of commercial - mainly retail and office - units.
He also added that foreign buyers only make up about 10% of his clientele on average.
Mr Wong Heang Fine, chief executive of CapitaLand Residential Singapore, said: "Given the uncertainty in current market outlook, the latest measures on additional buyer's stamp duty were unexpected. We will study the details and take them into consideration."
While share prices of all developers are likely to slide today, Kim Eng analyst Wilson Liew believes the impact will not be that great for those with a more diversified business model.
"There will be weakness in the short term, but CapitaLand for example has significant businesses in China, and that will be a buffer for them even if their Singapore business is affected," he added.
BUYERS SAY: First-timers cheer move; others get cold feet
Early reactions to the latest round of property market measures were mixed though the consensus seems to be that home prices will moderate.
First-time Singaporean home buyers generally cheered the move, as they believe it will now be easier for them to get a foothold on the property ladder. Many have been concerned that foreign buyers, especially those purchasing mass-market homes, have been driving prices up.
But some foreigners and permanent residents (PRs) expressed disappointment at the measures, which they labelled as "harsh".
The hardest hit will be foreigners who are not PRs. They will be slugged with an additional 10% on any home purchase, on top of the existing stamp duty of about 3%.
For a foreigner buying a $1 million home, the stamp duty will jump significantly to $124,600 from $24,600.
PRs will also be slapped with a 3% additional stamp duty for their second and subsequent home purchases while Singaporeans will face the same charge only for their third and subsequent buys.
Property agents say that foreign buyers are likely to put any home purchases on hold in anticipation of prices dropping as the new measures take effect.
Some agents have already reported deals falling through in the first few hours after the measures were unveiled.
PropNex chief executive Mohamed Ismail said that two of his firm's foreign clients pulled out of separate deals at Marina Bay Residences. Another backed out of a deal for an Orchard Road property.
"Although one was already at his third viewing and will be unaffected if he closed the deal by today, he saw no pint because prices might drop," he said.
Mr Ismail added that the measures did not seem to be "well thought through" as their blanket application will adversely affect the high-end market in particular.
He suggested that the additional buyer's stamp duty be applied in a more targeted manner instead. For example, it could be applied to mass-market homes of less than $1,500psf so that the segment remained largely for Singaporean buyers, he said.
A Chinese buyer who wanted to be known as Mr Chen said that he was surprised at how "harsh" the new rules were. He had flown in from Shanghai last week to visit some friends but also to explore the possibility of buying a home in the prime districts of 9, 10 and 11.
He said that he would put his plans on hold until the market situation became clearer.
However, first-time Singaporean buyers and upgraders like human resource executive Germaine Lim welcomed the news, which they hope will bring prices down.
Ms Lim, 29, said: "Hopefully, without foreigners competing with us, we can finally find something within our budget."
Source: The Straits Times