For the second time in five months, the executive chairman of Hong Leong Group Singapore and City Development Limited (CDL), Kwek Leng Beng, has called on the government to review property restriction measures here.
He told the press on Tuesday that “foreigners were choosing to plough their investment dollars into countries like Britain, Australia and the US over Singapore, while Singaporeans have been investing abroad.”
"We are losing these investments to other countries even though these foreign properties have a higher risk profile," Mr Kwek told The Straits Times. "It is unlikely these investment dollars will return to Singapore."
In February, while receiving a lifetime achievement award from the Real Estate Developers' Association of Singapore (REDAS), Mr Kwek suggested that as the property market starts to cool “this may be the right time to tweak the control measures in the light of concern over the global economy even in the year of the horse.”
“It does take time for the medicine to work,” he said, referring to the measures put in place. “Both the private and public sectors want a soft landing.”
Mr Kwek’s concerns stems, in particular, from the 7 per cent Additional Buyer’s Stamp Duty (ABSD) which a buyer of a second home has to pay; a Loan-to-Value (LTV) limits which indicates how much cash a buyer has to put down when buying a home; and a total debt servicing ratio (TDSR) which caps home buyers' total debt repayments at 60 per cent of gross monthly income.
These so-called cooling measures have dampened sentiments in the market, with prices of both private and public housing falling more than projections since the last quarter of last year, when “private home prices slid 0.9% and Housing Board resale prices tumbled 1.5% - both worse than the Urban Redevelopment Authority's flash estimates”, according to a Straits Times report.
Flash estimates on Monday showed a further 1.1 per cent slide in prices for the second quarter of this year.
Mr Kwek said “it is crucial to ensure that the property sector is in good health as it is a crucial pillar of the economy.”
"The overall picture seems to suggest that it may be timely now for the Government to take another look at the cooling measures introduced and make adjustments accordingly," he said.
It is a point shared by some property consultants and agents, who feel that “some property curbs could be modified to prevent the market from going into a tailspin.”
In May, Member of Parliament, Foo Mee Har, also expressed concerns about the curbs, saying that upgrading has become "much more difficult for the middle income group", due to the measures.
"This aspiration to upgrade is important to the middle class; many had worked hard towards this goal, only to be frustrated just when they thought it was within reach,” she said.
She called for some of the restrictions to be eased to help give more Singaporeans "a chance to realise their aspirations and 'level up'."
However, there are also those who are against any easing of prices, citing the reason that prices are still high, coming as they did on a bull run for several years.
In a reaction to the report of Kwek’s remarks, a young concerned Singaporean posted the following comments online:
First, the government has no business helping private real estate companies like Kwek Leng Beng’s to attract international business. Nor, as [Straits Times’] Cheryl Ong put it in her opinion article in ST A20 yesterday, no obligation for the government to "give a lift" to the property market." The real estate industry is an industry that basically thrives on monopolistic rents. It is not a productive industry, in a strict sense of the term. If Kwek Leng Beng finds it hard to make money, he only has himself to blame for not working harder. Meritocracy, right?
Second, it is of no loss to Singapore if we miss out on Kwek Leng Beng's so-called [foreign] "investments." In fact, what we have observed is the extreme negative externalities wrought by the free flow of such "investments" (read: cash) due to excess liquidity which has its roots in the liberal cash-printing US, EU and Chinese central bank policies. The spike in commercial rental increases (again monopolistic rents) has caused consumer prices to increase, and the spike in home sale and rental prices in all sectors has caused plenty of problems for Singaporeans who wish to own a home.
Third, by Cheryl Ong's calculation, private home prices have spiked 60% since 2009.
Assuming a generous sustainable rate of 6% compound increase for home prices since 2009, home prices should only have increased by 33.8%.
We are about 25% over-valued. Quarterly decreases of 1.5% is nothing.
Forth and finally, the government's role should be to develop a sustainable, moderate, gradual increase in home prices (just like overall inflation!) so that homes remain affordable for the masses in land-scarce Singapore – and not to indulge folks like Kwek Leng Beng who are too happy to make a quick buck from policy errors and mistakes.
The Ministry of National Development said on Monday that “as prices have remained largely unchanged, the time is not ripe to lift policies targeting runaway prices.”