Here’s why it’s still too early to tinker with policy cooling measures

Curbs won’t be tweaked until the end of 2015.

Property developers are holding out hope that the government will soften its stance on property cooling measures soon, but DBS analysts warn that policy easing is unlikely to happen until the end of 2015.

According to DBS, it is still too early to tweak cooling measures because prices remain considerably elevated. Home prices have only declined by a modest 6% from their peak in 2013, and such a small slip is not likely to result in an early intervention by the authorities.

 “We believe that any policy actions will likely come towards the end of 2015 and targeted towards the mass market where the pressure is coming from increased supply completion,” stated DBS.

DBS believes that the end of 2015 is a more likely timeframe as interest rates are projected to shoot up to around 1.5% to 2.0%, while close to 50,900 new housing units will be completed, which will tilt the market back towards a more balanced supply-demand state.

“We believe that tweaking any stamp duties especially in the high-end market in response to dismal sale volume at this time will likely be seen as insensitive towards the mass market, in light of the upcoming general elections within 2015-2016,” DBS added.