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Buyer’s stamp duty hike may lead to higher prices for new projects: Redas president

SINGAPORE — Coupled with developers’ bullish bids for government land sales (GLS) and some en bloc sites, the move to raise top marginal buyer’s stamp duty (BSD) rate for residential properties — announced during Budget earlier this week — may translate to higher prices for new private housing projects, Real Estate Developers’ Association of Singapore (Redas) president Augustine Tan said on Friday (Feb 23).

SINGAPORE — Coupled with developers’ bullish bids for government land sales (GLS) and some en bloc sites, the move to raise top marginal buyer’s stamp duty (BSD) rate for residential properties — announced during Budget earlier this week — may translate to higher prices for new private housing projects, Real Estate Developers’ Association of Singapore (Redas) president Augustine Tan said on Friday (Feb 23).

As a result, transaction volumes could soften as homebuyers are still “price-sensitive”, but the property market recovery is unlikely to be derailed, said Mr Tan who was speaking at Redas’ annual spring festival lunch which was attended by about 620 guests.

Calling 2018 the “year to watch” for the performance of the property market, Mr Tan said: “(It) is in the early stages of a recovery and positive buying sentiments are likely to continue.”

Citing data from the Urban Redevelopment Authority, Mr Tan noted that developers sold 10,566 units for the whole of last year, a 53 per cent increase compared to 2016. Home prices gained 1.1 per cent in 2017, reversing the 3.1 per cent and 3.7 per cent declines in 2016 and 2015, respectively.

Developers have also been actively replenishing their land banks through GLS and the collective sale market, he said, noting the “bumper transactions and benchmark prices for GLS sites”.

Finance Minister Heng Swee Keat announced during the Budget statement that buyers of residential properties valued at more than S$1 million acquired on or after Feb 20 will have to pay higher stamp duties. The BSD is computed on the purchase price or the property’s market value, whichever is higher. A 4 per cent BSD — up from 3 per cent previously — will be imposed on the price or value of homes in excess of S$1 million.

During his speech at the Redas lunch, Mr Tan pointed out that Singapore properties are still “competitively affordable”, compared to those in other cities such as Shanghai and London.

Nevertheless, he stressed the need for industry players to be “mindful of the longer term and keep tab on developments which could affect the property market”. These would include the supply-demand equilibrium and the global economic outlook, he said.

Mr Tan cited the potential supply of 26,450 private residential units from land sale sites that have yet to be granted planning approvals - comprising 7,800 units from awarded GLS sites, and 18,650 units from 49 successful collective sale sites that were sold up to the middle of this month.

A potential yield of about 8,045 units could also be derived from the GLS programme in the first half of this year, which comprises six confirmed list sites and nine reserve list sites. In total, an estimated 34,495 private residential units could be available for sale this year and next, he said.

Barring unforeseen circumstances, last year’s sales momentum is likely to carry through to the next few years, Mr Tan said. But weak global economic growth may pose risks to Singapore’s open economy, he cautioned, citing a CIMB report which said growth remains weak in many countries and inflation is below target in most advanced economies. “It is therefore prudent to keep an eye on the structural challenges in the global environment and investment behaviours,” he added.

Meanwhile, the real estate industry is expected to be affected by the country’s changing demography. Developers will have to look at new building concepts, for example, he noted.

At the lunch, Second National Development Minister Desmond Lee reiterated the need to transform the built environment sector. Referring to the industry transformation maps (ITMs) for the cluster, he said: “Now, we are starting to shift gears into the implementation stage. This is where the rubber hits the road.”

To date, four out of five ITMs for the cluster have been launched — construction, real estate, security, and environmental services. The last ITM to be launched will be for landscaping.

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