Industry insiders reveal cooling measures that the government will relax starting 2H15

But the TDSR is not going away anytime soon.

Property developers and buyers are waiting on tenterhooks for the government to ease its stringent property cooling measures. Industry insiders say that a relaxation of the cooling measures is likely to happen starting the second half of 2015, by which time prices are expected to have corrected by 8-12%.

A survey by the Real Estate Developers Association of Singapore (Redas) revealed that 24% of industry insiders believe that the government is going to reduce the Additional Buyer’s Stamp Duty, while 19% believe that ABSD will be reduced for foreign purchase only.

In contrast, only 12% of polled realtors believe that the Seller’s Stamp Duty will be eased. 81% of respondents believe that increasing the TDSR is unlikely, as the TDSR is a long-term leverage framework for households.

According to CLSA, the existing ABSD is likely going to be the government’s weapon of choice, as the ABSD was implemented after the Global Financial Crisis as liquidity surged in global markets and drove up foreign demand in Singapore properties.

“With funding costs still depressed, driving liquidity in the market, the implementation of such an easing on ABSD is likely to take on the form of incremental relaxation rather than outright removal. This means a possible reduction for existing ABSF levels from 15% for foreign buyers, to, say, 10%,” stated CLSA.

The 5% ABSD for first-time purchases by PRs is also likely to be scrapped, as the measure is “draconian” in light of the fact that most PRs intend to make Singapore their permanent home. 

“We think this could be reduced from 5% or even removed totally for the first purchase, as by doing so, the distinction between Singapore citizens and PRs is still clear and would have met the government’s objectives,” noted CLSA.