S’PORE PROPERTY STOCKS FALL
But higher tax on home purchases above S$1m unlikely to derail price recovery, say analysts
SINGAPORE property stocks declined after the government raised taxes on home purchases of more than S$1 million (RM2.96 million), just as the housing market starts to recover from a fouryear slump.
UOL Group Ltd and City Developments Ltd fell more than two per cent in early trading, making them the biggest decliners on the benchmark Straits Times Index. CapitaLand Ltd, the largest developer, dropped for the first time in a week.
Stamp duty on the portion of a property’s price above S$1 million would be raised effective immediately, to four per cent from three per cent, said the government in its budget on Monday.
The move comes after home prices rose the past two quarters, ending a four-year decline.
The tax increase wasn’t “enough to derail an ongoing home price recovery”, said Morgan Stanley in a note to clients on Monday, “but this could weigh on sentiment on Singapore developer stocks in the near term”.
“Given the heightened interest in the residential market, the government has timed the increase well as prices and transaction volumes could return with a vengeance after Chinese New Year,” said Christine Li, a director of research at Cushman & Wakefield Inc. “The effective increase in the tax revenue is quite minimal, hence this measure acts more as a deterrent to the redhot property market.”
The move was less about cooling the real-estate market than about making the tax system more progressive, said S. Iswaran, minister of trade and industry, in a Bloomberg Television interview yesterday.
Existing property curbs had the desired effect, and if there was any concern about the realestate market, “we would have seen far more significant measures”, he said.
The increase would have more of an effect on ultra-luxury properties, said Li.