Property cooling measures to be eased in Q4: report

They’re unlikely to be lifted in the upcoming Budget.

Analysts are still holding out that some property cooling measures will be relaxed within the year, even though policymakers have reiterated that home prices are still too high to merit an easing.

According to a report by UOB Kay Hian, the upcoming Budget 2016 statement is unlikely to contain any positive surprises for the property market. However, with the price index now down 8.4% from its recent peak, it is likely that some easing may occur in the last quarter of the year.

“With the correction of the price index now at 8.4% from 2013’s peak after nine consecutive quarters of decline, we opine that unwinding of severe policy cooling measures like the Additional Buyers Stamp Duty could occur in 4Q16. This would bridge the gap in valuations between undervalued developers (trading at discounts of 40-60% discounts to RNAV), and the physical property market,” UOB Kay Hian said.

“We expect the property price index to fall 12-15% from 2013’s peak, with individual projects likely to register 15-20% drops from the peak, before the government enacts measures to arrest the plunge and prevent value destruction on the 80% LTV taken by many homebuyers,” the report added.