PROPERTY stocks took a beating yesterday after the Government announced measures to cool speculation in the sizzling property market. The sell-off in property heavyweight counters caused the FTSE Straits Times Real Estate Index to shed 3.41 per cent to 587.14 points.
Among the leading developers, Allgreen Properties fell 7.9 per cent to $1.16, while City Development lost 7.6 per cent to $10.24. CapitaLand was down 3.9 per cent to $3.72 and Keppel Land fell 6 per cent to $2.66. Shares of Ho Bee Group fell the steepest, down 10.3 per cent to $1.39 yesterday.
Still, analysts said the sell-off was mainly impulsive and investor sentiment was dampened partly because of the weakness in the broader market. The key Straits Times Index fell 1.5 per cent to end the day at 2,639.74 points.
"It is more or less a knee-jerk reaction, Overall, prices have picked up so some funds may be using this as an opportunity to take profit," said Kim Eng Resarch analyst Wilson Liew.
The removal of the Interest Absorption Scheme (IAS) and Interest Only Housing Loan scheme "would remove much of the speculative element from the burgeoning sales volume", said CBRE Research executive director Li Hiaw Ho.
But are the steps too little, too late?
Chesterton Suntec International head of research and consultancy Colin Tan said the measures do not address the problem at the root of the issue, which is liquidity. "There is simply too much money out there," he said. "If this is a liquidity issue, then how are the measures going to stop anything?"
Indeed, the view seems to be, do not expect developers to scramble desperately for new ways to entice buyers or to hold back on launches.
In a statement, the Real Estate Developers Association of Singapore (Redas) said: "The IAS was offered when the property market was facing challenging economic conditions during the global financial meltdown."
Given the firmer market now, there is less need for schemes like the IAS. "This change is unlikely to have any significant impact on developers' future launches," said Redas.
As for the reinstatement of the confirmed list of the Government land sales programme, Redas said this "should provide ample supply to meet demand".
Source: Today, 15 Sep 2009
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