It’s not yet time to ease cooling measures, says DBS

Prices must decline by at least 13% first.

Developers and homeowners alike are all hoping that property cooling measures will finally be eased this year, but they might have to wait a little bit longer before the much-awaited easing arrives.

According to a report by DBS, policymakers are only going to ease measures if “material stress” is seen in the system. In past cooling cycles, measures were only tweaked after prices dropped by 13% to 15%.

“While that are calls by developers to the government to relax some of the property anti-speculation curbs given that the aim of minimising hot money and speculation in the property sector has somewhat been achieved, we believe that timing remains uncertain,” said the report.

DBS said that the government will keep a watchful eye on the health of Singapore’s property market and only react when there is “material stress” in the system. An excessively large drop in property prices will do more harm than good, the report added.

“We believe that the government’s key focus is still the overall health of the Singapore’s economy and its intertwining relationship with property prices. With property forming close to 46% of total household wealth, it is not in the government’s interest to have a rapidly declining property market,” DBS said.

“However, we believe the scenarios that may warrant a re-look at policies will be a marked drop in prices in a certain quarter or a potential tweak in certain policies on a selective basis. On that front, we believe that “cyclical measures” such as the buyer stamp duties/seller stamp duties which have been effective in curbing speculative demand, could be re-looked if transaction volumes continue to remain tepid over 2016,” the report added.