What Would Happen When We Relax Property Cooling Measures?
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Ryan J
- September 29, 2024
- 4 min read
4 min read
Sometimes, a good way to gauge cooling measures is to check who’s doing the opposite.
How do we tell if the cooling measures in Singapore are working? Well, the most obvious answer is to check the results in a few months. But here’s another unorthodox way: to look at countries fixing the direct opposite problem (i.e., restoring a tanking real-estate industry) and check if their measures are just the complete opposite of ours. Today, the best case study for that is China.
China’s property market has been in crisis mode since 2021 (though some analysts may argue it started a year earlier, with the three red lines rule.) Regardless, China’s property giant Evergrande Group encountered serious financial issues, and was unable to meet debt deadlines. When it defaulted on an offshore bond in December of ‘21, it knocked over the first domino: an estimated US$310 billion was owned by Evergrande alone, which couldn’t be covered. Other real estate entities like Fantasia Holdings, Sinic Holdings Group, etc. soon joined the fall, and China’s real estate market has been anaemic since then.
Recently, however, China has unveiled a big aid package for its property market – and it’s an almost exact opposite of our cooling measures.
China slashed mortgage interest rates by 0.5 per cent on average, for individual borrowers. On top of that, the maximum Loan To Value (LTV) on home loans was raised to 85 per cent, over the previous 75 per cent.
This is largely the opposite of what we’ve seen here in Singapore. While our government hasn’t raised interest rates, we have raised the floor rate for TDSR and MSR calculations, making it tougher for borrowers to qualify. We also reduced the LTV on home loans to 75 per cent even for HDB loans, back in August 2024.
If our cooling measures have helped to moderate prices, then their opposite should help to boost prices instead – and it will be interesting to observe the degree of the effect on the Chinese market.
Regarding interest rates for example, how will a 0.5 per cent reduction help with prices? This is of relevance right now in Singapore, as if a jumbo rate cut in the US will lower mortgages here as well. The last time we saw this in 2018/9 and Covid, the lower interest rates drove up real estate prices significantly. We recently studied how, between 2000 and 2024, interest rates played a key role in raising even resale flat prices. A 0.5 per cent interest rate cut in China could prove a useful study, of how much it affects prices in the current era.
As for reducing LTV ratios, its ability to revive the Chinese real estate market will be interesting to us as well. If it has little to no effect, for example, then perhaps we should also expect a smaller impact from the latest cooling measures. It’s a useful study of how much leverage is needed before real estate starts luring in new investors (and vice versa).
Then there’s the issue of further hits to our Core Central Region (CCR)
Those with luxury CCR properties should pay closer attention to China right now. Chinese buyers still make up a significant percentage of buyers, within the CCR. At least, this was the case in 2022, when they were the main buyers of local luxury properties.
Singapore now charges 60 per cent ABSD to foreigners; this is at the same time that the Chinese government is easing up on mortgages. That’s a big incentive for their investors to abort buying in Singapore, and look back home.
The combination of ABSD, coupled with the moves of China’s central bank may have an effect on CCR values in the near future. Unless, that is, Singaporeans rush to fill the gap (unlikely, since a CCR condo is out of reach for even many upgraders today.
Meanwhile, in Singapore’s property news…
- If you need to rent a one or two-bedder, we have some places where rates are as low as $1,700 a month. Look them up here.
- Old condo? No problem, it’s an en-bloc goldmine. The short lifespans of Singapore condos are considered a money machine by some: this is why and how it started.
- We tend to think of stairs or high light switches as an issue for the elderly – but are you ready for health conditions that could drive you to move? Here’s one cancer patient’s story of the unexpected impact.
- Most of us know resale flats have gotten pricey; but did you know just how much the price has increased? The answer may surprise you.
Weekly Sales Roundup (16 September – 22 September)
Top 5 Most Expensive New Sales (By Project)
| PROJECT NAME | PRICE S$ | AREA (SQFT) | $PSF | TENURE |
| MIDTOWN MODERN | $6,530,000 | 1808 | $3,611 | 99 yrs (2019) |
| WATTEN HOUSE | $5,084,000 | 1539 | $3,303 | FH |
| KLIMT CAIRNHILL | $5,035,240 | 1432 | $3,517 | FH |
| PINETREE HILL | $3,666,000 | 1464 | $2,504 | 99 yrs (2022) |
| 8@BT | $3,590,000 | 1356 | $2,647 | 99 yrs |
Top 5 Cheapest New Sales (By Project)
| PROJECT NAME | PRICE S$ | AREA (SQFT) | $PSF | TENURE |
| KASSIA | $1,177,000 | 549 | $2,144 | FH |
| LENTORIA | $1,276,000 | 538 | $2,371 | 99 yrs (2022) |
| LENTOR MODERN | $1,301,460 | 527 | $2,468 | 99 yrs |
| 8@BT | $1,338,000 | 517 | $2,590 | 99 yrs |
| HILLHAVEN | $1,495,931 | 700 | $2,138 | 99 yrs (2023) |
Top 5 Most Expensive Resale
| PROJECT NAME | PRICE S$ | AREA (SQFT) | $PSF | TENURE |
| REGENCY PARK | $8,450,000 | 3649 | $2,316 | FH |
| ARDMORE II | $6,880,000 | 2024 | $3,400 | FH |
| REGENCY PARK | $6,600,000 | 3175 | $2,078 | FH |
| 8 SAINT THOMAS | $5,100,000 | 1744 | $2,925 | FH |
| CAIRNHILL PLAZA | $5,000,000 | 2820 | $1,773 | FH |
Top 5 Cheapest Resale
| PROJECT NAME | PRICE S$ | AREA (SQFT) | $PSF | TENURE |
| CRADELS | $740,000 | 441 | $1,677 | FH |
| ROSEWOOD SUITES | $810,000 | 657 | $1,234 | 99 yrs (2008) |
| ARCHIPELAGO | $838,000 | 527 | $1,589 | 99 yrs (2011) |
| ORCHID PARK CONDOMINIUM | $875,000 | 893 | $979 | 99 yrs (1991) |
| THE FORESTA @ MOUNT FABER | $880,000 | 431 | $2,044 | FH |
Top 5 Biggest Winners
| PROJECT NAME | PRICE S$ | AREA (SQFT) | $PSF | RETURNS | HOLDING PERIOD |
| PARKSHORE | $3,450,000 | 1722 | $2,003 | $2,230,000 | 25 Years |
| ONE AMBER | $3,405,000 | 1615 | $2,109 | $2,205,000 | 18 Years |
| THE STERLING | $3,294,000 | 1464 | $2,250 | $1,934,676 | 24 Years |
| MEIER SUITES | $4,500,000 | 2228 | $2,020 | $1,720,000 | 14 Years |
| OCEAN PARK | $4,025,000 | 2110 | $1,908 | $1,685,000 | 10 Years |
Top 5 Biggest Losers
| PROJECT NAME | PRICE S$ | AREA (SQFT) | $PSF | RETURNS | HOLDING PERIOD |
| CORALS AT KEPPEL BAY | $2,610,000 | 1281 | $2,038 | -$190,000 | 10 Years |
| DUO RESIDENCES | $1,138,000 | 527 | $2,158 | -$70,000 | 11 Years |
| KALLANG RIVERSIDE | $1,360,000 | 517 | $2,632 | -$6,952 | 6 Years |
| THE FORESTA @ MOUNT FABER | $880,000 | 431 | $2,044 | $26,600 | 13 Years |
| L’VIV | $1,470,000 | 657 | $2,239 | $57,700 | 14 Years |
Transaction Breakdown
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