Tuesday, October 09, 2012

New cooling measures dampen stocks


Following the Monetary Authority of Singapore’s (MAS) new home loan restrictions, there are rumblings in the market of possibly more measures by the government to cool off the property sector. This led to a drop in bank and property stocks on Monday, reported The Business Times.

While developers feel that the new rules will have minimal impact on their sales, analysts predict more stringent measures ahead.

“The new cap on the loan tenure announced last Friday is unlikely to have any significant impact on the property market in the long run if there’s liquidity and interest rates remain low,” said Wong Heang Fine, Chief Executive at CapitaLand Residential Singapore.

Keppel Land noted that “well located properties with good attributes” will likely continue to see robust sales as there is still genuine demand for housing.

“As these measures have just been released, the market will take time to absorb the news and we will assess the situation accordingly,” said a spokesman from Hong Leong Group.

Hong Leong’s Bartley Residences sold 20 units last weekend, while 14 units were taken up over the previous weekend.

Moreover, property observers believe the new rules from MAS are largely preventive in nature rather than punitive.

This is attributed to other key liquidity drivers like healthy system liquidity, easy loan access and low forward rates, which are likely to remain conducive for housing demand, said Eli Lee, analyst at OCBC Investment Research.

While the effect of the new measures on demand may be minimal, the government’s commitment to keep home prices down signifies further policy headwinds for developers, said CIMB analyst Donald Chua.

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