Jubilee Budget brings no respite for struggling residential developers

REITs and asset-heavy landlords are the top picks.

The Jubilee Budget brought no respite for struggling residential developers as the government showed no sign of easing property cooling measures.

According to Bank of America Merrill Lynch, this indicates that interest rates and the degree of physical price declines are not yet at levels that are worrying policy makers.

“We expect policy makers to remain vigilant on the physical market and make adjustments to the administrative policies in a measured fashion. The lifting of personal income tax rate for top income earners, while a slight negative to the private property sector, is unlikely to materially affect demand in our view,” BofAML stated.

A recent report by the Real Estate Developers Association and the National University of Singapore showed that 43.5% of developers wish that the government will be able to review the policies on Additional Buyer’s Stamp Duty (ABSD), Seller’s Stamp Duty (SSD) and Total Debt Servicing Ratio (TDSR) in 2015.

More than 70% of the respondents predicted that property prices will decrease by 5% to 10% and new sales transaction volume will drop by 15% to 20% in 2015.

BofAML continues to favor S-REITs and asset heavy landlords over residential developers.