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With no hints from Budget speech, analysts expect status quo for property sector

SINGAPORE – When he delivered his maiden Budget speech last year, Finance Minister Heng Swee Keat devoted just three sentences to the closely watched property sector and said the Government had assessed that it was “premature” to relax the cooling measures.

SINGAPORE – When he delivered his maiden Budget speech last year, Finance Minister Heng Swee Keat devoted just three sentences to the closely watched property sector and said the Government had assessed that it was “premature” to relax the cooling measures.

Last Monday (Feb 20), in his 80-minute Budget speech for this year, Mr Heng made no direct mention of the property market or the curbs currently in place, though he announced increased housing grants for couples looking to buy their first resale flat.

As property analysts and industry players see it, the lack of specific language, or even hints, about the sector’s future likely suggests that the Government thinks this is not the right time to introduce policy changes.

“We believe the government does not want to risk a quick escalation in property prices should they tweak any of the cooling measures for the moment, as this would quickly unravel the slow but steady progress they have made over the past three years in stabilising the property market,” said Mr Eugene Lim, ERA Realty’s key executive officer.

With prices coming down very slowly and prices in the HDB resale market remaining virtually unchanged, there is “little impetus at the moment for the government to make any changes”, he added.

The soft landing of the property market is another likely reason why the secctor was not directly mentioned in this year’s Budget speech, said Mr Chris Koh, director of property firm Chris International.

“The government will probably leave things status quo, and let the forces of demand and supply, coupled with the cooling measures, correct the market accordingly,” he added.

City Developments (CDL) executive chairman Kwek Leng Beng, speaking at a financial results briefing for the developer (Feb 23) days after the Budget speech, noted that the real estate sector is not a priority for the Government at the moment.

He added: “They do not think this is the right time (but) that does not mean they will not (make changes) this or next year or year after.

“I believe they have a bigger picture in mind. We tend to look at it in a narrow way and have our own interests in mind. For the sake of Singapore we should look at the overall picture.”

The Government has been trying to rein in property prices since 2009, with some of the strictest curbs implemented in 2013. Despite repeated calls to ease the cooling measures amid a slowing economy, the Government has signaled it will stay the course.

Mr Jeffrey Hong, Group CEO of HSR International Realtors, said he expects genuine buyers who have been watching property prices over the last six months to a year to enter the market, now that they “clearly know that there’s no further lifting of cooling measures or further measures to cool off the market”.

“Therefore, for those who are genuinely looking to buy a home or upgrading, this is actually the best time,” he added.

Overall, however, he anticipates a relatively lackluster year for the property sector, with downward price adjustments of between 0.1 to 1 per cent from quarter to quarter.

Mr Nelson Lim, key executive officer of C&H Properties, similarly expressed expectations for prices to continue to consolidate at the low levels, which he attributed to the effective cooling measures, weak global economic outlook and impending increase in US interest rates this year.

Still, Mr Hong of HSR International Realtors feels that the market is at a “healthier level than before” and that industry players should be “cautiously optimistic.”

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