Analysts see an end to property cooling measures as sorry sales trend continues

It might happen in 1H16.

Singapore’s onerous property transaction charges may well be lifted in less than a year, according to a report by UOB Kay Hian.

UOB Kay Hian analysts Vikrant Pandey and Derek Chang noted that weak home sales in May, as well as drastic cuts in private residential land supply, all point to the possibility of regulatory easing in the first half of 2016.

“The sharp drop in units sold in May suggests ongoing dampening home-buying sentiment, which could prompt the government towards demand-side policy easing after the massive scale back in supply. We believe the supply side scale-back is to avert a drastic price correction. The risk of overshooting the desired correction in property prices amid prolonged weak home-buying sentiment may prompt the government to look into demand-side policy easing next,” they said.

Here’s more from the report:
Possible early elections post SG50 celebrations may light the fuse towards policy easing. It is likely that elections could be called in end-15, timed to coincide with the conclusion of the nation’s 50th anniversary.

We believe the newly elected government could look into demand-side policy easing towards the middle of next year after a 10- 15% correction in property prices.

Recall that Singapore has among the world’s highest home ownership rates at over 90% and a drastic correction may result in alienating its voter base. We believe the government will likely start with easing of the onerous transaction charges (buyers stamp duty and sellers stamp duty).