Real Estate - RHB Invest 2023-04-28: A Surprise Harsh Measure To Cool Prices

Real Estate - A Surprise Harsh Measure To Cool Prices

Real Estate - RHB Investment Research  | SGinvestors.ioCity Developments (SGX:C09) APAC REALTY LIMITED (SGX:CLN)
  • The steep hike in the Additional Buyer’s Stamp Duty (ABSD) targeting foreigners and investors is likely to mark the turning point in the cycle for residential prices, with buying sentiment likely to cool significantly. Although targeted, the measures are potent when coupled with the sharp interest rate hikes and weakening economy.
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Measures targeted, unanticipated and pre-emptive in nature.

  • The Government’s key rationale for implementing measures at this juncture is due to the recent renewed interest in local and foreign investor demand as well as acceleration of price increase in 1Q23 (+3.2%). While the price increase in itself is not significant, we believe the Government’s concerns are centred on price acceleration coming at a time when Singapore as well as the global economy are facing a slowdown coupled with greater headwinds.
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Resale market and high-end segment should see a price correction.

  • Post measures, we expect further divergence in pricing expectations between buyers and sellers in the resale market. This should initially result in a slowdown in transaction volumes and eventually result in price corrections. We believe sellers are more likely to adjust their prices lower amid sharply rising holding costs and a slowing labour market.
  • Similarly, the high-end luxury market will also be impacted as foreign buyers typically account for a significantly high proportion (20-40%) in this segment.

Developers likely to postpone new launches, adjust and fine-tune the pricing strategy.

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Vijay Natarajan RHB Securities Research | 2023-04-28

More views on outlook of real estate sector:
Analyst Reports on Singapore Property Sector


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